As states grapple with how to fund colleges and universities in an equitable and sustainable way, several are revising their higher education funding formulas. These formulas — a primary mechanism by which states distribute funding to and among institutions of higher education (IHEs) — are a critical piece of the overall funding picture for colleges and universities, with state and local funds augmented by other sources like tuition and federal funding. For example, to better align their funding formulas with state goals and priorities, states have adjusted formulas by incorporating new student weights and adopting outcomes-based approaches. But, how do those changes come about? And what do these policies look like as they are implemented?
Dollars and Degrees: Perspectives From the Field is an ongoing series of discussions with leaders from states where higher education finance policy reform recently occurred or is happening now to answer these questions and more. By talking with leaders involved in reform efforts, advocates and policymakers elsewhere can learn promising practices from the challenges and successes their states faced.
Spotlight on Illinois
Illinois is in the midst of considering a major reform to how it funds its public universities. In 2021, Gov. JB Pritzker signed Senate Bill 815 into law, which created the Commission on Equitable Public University Funding. The Commission was tasked with evaluating the state’s current “base-plus” approach to funding public universities and recommending a more equitable approach for Illinois moving forward.
In spring 2024, the Commission released its final report, recommending the state adopt an adequacy-based, equity-centered funding model, which calculates adequacy targets and gaps for each public university — a novel approach in the higher education funding landscape. The proposed revisions would require an additional $1.4 billion in investment from the state legislature.
To learn more about the Commission’s proposed changes, the legislative climate in Illinois, and the road to implementation, I spoke with Robin Steans, president of Advance Illinois; Lisa Castillo Richmond, executive director of the Partnership for College Completion (PCC); and Mike Abrahamson, Associate Director of Research & Policy at the PCC.
Christine Dickason: How did the idea for higher education funding formula reform begin in Illinois? What role did each of your respective organizations play?
Robin Steans: Advance Illinois is a bipartisan education policy organization that launched 16 years ago to work on advancing opportunity and equity for all students from early childhood through higher education. Many of the issues we work on are structural; few issues are deeper or more structural than how funding mechanisms work and whether they’re equitable. Illinois has made a lot of progress in the K-12 funding space and significant progress in the early childhood funding space. Higher education was the last bastion of education funding structures in the state that didn’t make sense. It’s not tethered to anything real, and it doesn’t support equity — in many cases, it actually hinders equity.
A case in point: We’ve seen how powerful change is when the systems are working for all students for a more equitable, stable, sustainable outcome. At the same time, you had the Illinois Legislative Black Caucus, in the wake of the George Floyd murder in 2020, saying, “This is our moment to be clear about what it’s going to take to ensure that Black students in particular are no longer being deliberately left behind.” It was an inflection point and recognition that, as a state, it’s time to change the way we’re funding and supporting higher education.
Lisa Castillo Richmond: Higher education finance reform — and particularly issues of affordability and access — were one of the founding principles of the PCC when we launched in late 2016. What really stood out to us was that Illinois is one of the only states that doesn’t currently have a funding formula for the way in which higher education, specifically public universities, receive state appropriations. They make it sound like a rational process by calling it “base plus,” but really it’s just a political approach to distributing resources that results in inequitably investing and disinvesting, which has been most of the narrative of our higher education system for the past couple of decades.
CD: Which stakeholder groups and agencies were involved in the actual design of the proposed formula?
LCR: There were a number of advocates at the table. Senate Bill 815, created in partnership with the Legislative Black Caucus, established a 33-member Commission of advocates, legislators, and institutional representatives. Philanthropic funding allowed the Commission to hire HCM Strategists and host a number of other individuals at the table. Illinois’ Commission was large, but it was able to take the original mandate, and — while it took a lot longer than originally intended — produce a set of workable recommendations for a higher education funding formula that could quickly be converted into a new piece of legislation. What was produced was a funding formula that could be implemented.
CD: Were there any challenges that arose from having so many people at the table?
RS: I think the size of the Commission is part of the reason it took so long. First, there’s just a lot of information. This is such a different approach for Illinois, and frankly, the state is taking a different direction than you see elsewhere in the country. The Commission wound up doing something that’s never been done, and doing it with a large group of people. It takes time to both build knowledge and bring people along. It takes time to get the information that we need to fully assess the current situation. What does it really cost to educate all students well? What do universities need in order to accomplish their missions and to serve their particular student body, knowing that students are going to come in with different needs and different levels of readiness? From there, we had to figure out how to put that into a formula. I think the biggest obstacle was the significant technical lift we had to undertake, with a lot of smart people at the table with different levels of experience, expertise and, to some extent, different goals.
Mike Abrahamson: I’d add that there are both strengths and difficulties to having a big group. One of the difficulties is that you’re not going to get everyone to agree on everything. At a certain point, you’ve done all the aligning you can. That said, I’m very pleased with what we did come out with, because it’s not just a vague set of principles. It’s operational. To take something from an unexplored concept to an operational model is very impressive for a 33-member Commission. Having a large Commission of stakeholders has hopefully deepened knowledge around the new proposed formula, and ultimately, support for its implementation and success.
CD: What is the role of adequacy in the proposed formula?
RS: We started with a simple question: What do universities need to improve student outcomes? Everything from operations to enrollment size to types of programs offered were considered.
MA: We then considered both the current funding situation and current student outcomes. For example, we looked at Illinois’ current aggregate graduation rate, which is 63%. We then looked at research on what increased state spending can lead to in terms of better outcomes, and then we looked at what it would take to increase the graduation rate to 70%. Similarly, we looked at research on what it takes to narrow existing equity gaps. On top of the spending that IHEs already do, we added what equity adjustments we would need to narrow and ultimately close those gaps. That’s how you end up with an adequacy target for each IHE.
CD: Where do the Commission’s recommendations stand now?
RS: Senate Bill 3965 and House Bill 5907, aimed at implementing the Commission’s new funding formula, have been filed and are now being negotiated. It’s notable that, by the time the bills were filed, you couldn’t find anybody who thought that we should continue the state’s status quo on higher education funding. I think it’s clear that the state is going to do something.
The Commission identified that we’re underfunding our system by $1.4 billion. That’s hard to unsee, but it’s also a lot of money that requires basically doubling what we’re currently giving to our universities. Accordingly, the bills call for this increase to scaffold over 10 years — an increase of $135 million in funding per year. We’ve got to get the bill right and pass it. I think people intend to do just that, but we’re still going to have some thorny issues to work out and we’re going to have to grapple with funding. Stay tuned, but the negotiations continue in the meantime.
LCR: I’m also optimistic, but there’s a lot of things we need to continue to work through. There’s some understanding that we can make some concessions and still preserve the integrity of the formula. But at what point do concessions mean we’re shifting priorities? I think the investment piece of this is big as well. The current state administration has made significant reinvestments in higher education, but that came after a very significant period of disinvestment, and you cannot dig out of that hole in one administration. We’re thinking about potential new sources of revenue. And if we’re not going to have new investments at the scale we want, what does that mean for the formula? What does that mean for the timeline for implementation and how we prioritize equity and adequacy?
CD: What have you and others in Illinois learned through this process that other states can learn from?
RS: It matters to get everybody to the table. It’s not always easy, but it’s been a clear strength in Illinois. It matters to educate, inform, communicate, and bring a broader array of folks along. Funding for higher education is very poorly covered in the news media, and this is complex work. It’s of enormous significance to the state, but it’s going to take real effort to make sure that people understand what we’re proposing and why it matters.
For other states considering higher education finance reform, be prepared to do the work. This is a tough issue, and higher education doesn’t have the same basic starting point of shared understanding and broad-based support that K-12 finance reform does. You’re going to have to put in the hours, energy, and effort to make up for that disparity.
LCR: One of the things I feel most excited about is that we’ve been able to effectively make the case that the status quo disinvestment is not going to take our state where we need to go, and so we need a very significant reinvestment. How we do that is tricky and challenging, but I have been so heartened by the fact that we have had to spend very little time in the past couple of years making the case for our “why.” This is true on both sides of the aisle, because you can take a look at the data and recognize what we’ve been doing is not going to serve our state’s long-term economic interests.
MA: It is hard to be the first to do something, and we don’t have a copyright on this, right? All of the years of the Commission’s meeting materials are public. Everybody’s willing to engage and talk about it. If I were in another state considering reform, I would at least look at what we’ve done as a Commission here in Illinois and then build from there. There’s so much promise in this type of model, and it’s a great jumping off point for other states.
For more from Bellwether on higher education finance, check out the Dollars and Degrees series that offers a crash course in the essentials of higher education finance for policymakers, advocates, and others interested in improving postsecondary funding.
