Illinois Issues: A Crash Course In Economics

Jan 5, 2017

Campus communities in the state feel the consequences of drastic higher education cuts. 

Editor's note: The state is once again without a spending plan for higher education after partial funding for universities and community colleges ran out on January 1.

Over the summer, Hannah Meisel took a look at how the lack of a full state budget was affecting businesses in university towns. This week, Illinois Issues is revisiting that story because as the budget impasse drags on, several universities could face fiscal crisis and college-town economies continue to suffer.

Summer is always a quieter time on college campuses — most students go home for a summer job or take an internship elsewhere. Faculty and staff typically have less to do on campus. Some might even leave town for a vacation.  

For three months of the year, the local businesses and industries that profit from the needs and wants of the university community adjust: They open their doors for fewer hours, or they carefully budget the other nine months of the year.

But in the middle of an unprecedented time in Illinois — when the state doesn’t have nearly to enough money on hand to pay for what it’s promised — the future of Illinois’ public universities is unclear. And that doesn’t leave much wiggle room for those businesses that have built up around the schools.

Eastern Illinois University: Small Businesses Suffer

On a warm Sunday afternoon in late July on the campus of Eastern Illinois University in Charleston the peace is only briefly disturbed by the occasional car or skateboarder — until a marching band from Minooka High School, all clad in orange for band camp, marches to its practice field.

There aren’t many EIU students on campus on this Sunday. That may be typical in the summer, but enrollment overall has steadily dropped in recent years.  The most recent official numbers won’t be out for another month.

EIU has also laid off 400 faculty and staff over the last fiscal year, during which time Illinois was not giving that institution or any other public university their usual funding. A historic budget impasse and political fight between Republican Gov. Bruce Rauner and Democratic legislators left the state without a spending plan for all of Fiscal Year 2016. 

A lone cyclist bikes down the otherwise empty quad at Eastern Illinois University.
Credit Hannah Meisel

In June, they managed to compromise on a six-month budget to tide the state over until after the November election, in which the two parties will fight over several seats in the General Assembly.

But for now, even the six month Band-Aid isn’t doing much to quell the anxieties of business owners in Charleston or the state’s other regional public universities. They’re concerned the fiscal turmoil could lead to more layoffs and fewer students attending Illinois schools — further cutting their customer bases.

About a mile from the heart of campus, Jackson Avenue Coffee has been providing students with their caffeine fix for 14 years. Dan Reible, or Dano to everyone who knows him, has owned the shop since 2010. Reible had been a customer of “The Jac” since 2002.

“Jackson Avenue Coffee is basically my life,” he says. “I wake up with The Jac and go to sleep with The Jac.”

Reible has taken care to make Jackson Avenue Coffee an eclectic place to sip coffee, have a snack, meet up with people or do some studying. And over the last six years, business has been good, Reible says. The coffee shop and a disability check his wife collects are the couple’s sources of income.

In the past, they’ve been able to plan for down times when fewer students or university employees are around. Reible says he typically sees a quarter of his business drop off in the summer. But this year, he says his revenues have dropped more to the tune of 50 percent.

And his normal tricks for adjusting to summers — hiring fewer employees, being smart about ordering — they’re not working. Instead, Reible has done the only thing he can think of: work for free. “If I can save $300 a week by working myself a lot more, then that’s what I have to do,” he says. “And it’s been hard because I have a back injury and such. So, it’s difficult, but we’re making it happen, I mean we have to. We have no choice.”

Reible was back to work the day after a minor back procedure. He opened up the shop in the morning and performed a show with his band later that afternoon, after moving much of his own equipment from the back music performance space.

He says he hates cutting down on payroll hours for student workers, especially ones who are dependent on that income for tuition, rent or groceries. But, the shop’s electric bill has gone up, he says. He’s resorted to training workers on how to conserve as much as possible when making drinks. He has projects that need to be done at home that he just can’t afford with this summer’s profit margin. They’re desperate times, he says.

“It’s scary. It really is scary,” Reible says.

But he insists he’s lucky. He knows there are many EIU students and staff who’ve had a rougher summer than he has.

“I see a lot of people at the store and such that I haven’t seen in here in a while, and they come up and say, ‘Hey I’m sorry we just don’t have the extra funds right now. We miss coming to The Jac,’” he says. “And I understand that, I know that. It’s just the way it is if you’re trying to feed your family and take care of the small stuff, having the budget to come have a latte and a bagel just isn’t there.” 

A twice-monthly Irish music circle plays a tune at Jackson Avenue Coffee in Charleston.
Credit Hannah Meisel

This broadened economic downturn is what University of Illinois economist Geoffrey Hewings calls the “ripple effect.”

“When those businesses receive less revenue, they hire less people,” he says. “So there’s less money circulating within the region. And we put this all together and we call this a ripple, a multiplier effect.”  

Hewings, who studies regional economies for the Institute of Government and Public Affairs, says that even when a primary economic driver recovers, that negative impact on smaller surrounding businesses lingers. “Whenever you see a downturn in a major economic engine within a community, the ripple effect is usually much, much larger than the direct effects.” According to statistics kept by local economic development organization Coles Together, EIU is the second largest employer in the area, trailing closely behind Sarah Bush Health Systems, which runs the nearby hospital.

Hewings says he can’t be exact in predicting when or how a regional economy could recover from a downturn like business owner like Reible say they have observed in the Charleston area. But Reible says it could take his business up to a year, or maybe even more.

Yard signs dot the lawns of many Charleston houses near campus. Most of the royal blue signs express their love for EIU, sporting phrases like “#EIUforever” and “Proud EIU Alum.”

There are also signs that urge a Republican state representative, who is personally invested in the local economy, to “stand up” to Rauner, who’s painted as a hostage-taker in this narrative.

Republican Rep. Reggie Phillips lives in Charleston. He and his wife own Unique Homes & Lumber, which runs several apartment buildings catering to EIU students and Lakeland College students, in the neighboring city of Mattoon. According to Phillip’s campaign biography, his company employs about 400 people. That would put the business in the top five employers for its industry in the area, according to Coles Together.

Yard signs calling for full funding of EIU
Credit Hannah Meisel

Phillips voted in favor of the six-month budget but has rejected other legislation that called for funding universities at a higher level. He’s joined Rauner in describing such plans as “shams” because the state doesn’t have the money to back them up.

Phillips did not respond to multiple requests for comment for this story. He did support a plan in February that called for emergency funding for universities and community colleges. In a previous written statement on higher education funding, Phillips said: “I was fortunate enough to attend and receive my degree from Eastern. Because of that education, I have been able to start a business and raise my own family in the Illinois community I grew up in. I want my children and grandchildren to be able to build their lives here as well, so for me supporting our universities isn’t about policy; it’s about family and community.”

Rauner gave Phillips $53,000 in campaign funds before the Republican primary this spring. However, Phillips later said he planned to donate the money to organizations affected by the impasse.

Rauner says he is sorry for what is happening to the state’s universities and community colleges. “You know we’ve got some financial difficulties, I apologize for that. The university, along with many other great institutions are suffering as a result. I apologize,” he said in October at the University of Illinois Urbana-Champaign.  “We’re going to get through this as fast as we can. I am personally committed to making sure the University of Illinois is fully supported, that its mission is enhanced, that it can grow and benefit our state to the maximum degree possible as soon as possible.”  Apologies aside, the governor says he will not consider any increased revenue, which the state would need to fund higher education at historical levels, until lawmakers approve key parts of his so-called Turnaround Agenda.

House Speaker Michael Madigan, the Democrat most publicly butting heads with Rauner, has not apologized. Instead, he points the finger at Rauner for interjecting his agenda into the budget debate.  Madigan calls the governor’s business-friendly, anti-union plan “extreme.”

"What we need is for the governor to become reasonable, to recognize that Illinois is not some extreme right state in the right part of America,” Madigan told NPR Illinois a few weeks ago. “It’s a moderate state. It’s in the middle of the country. It’s a mainstream state, and the people of the Illinois expect the public officials in the state not to be extreme, but to be reasonable."

Western Illinois University: Largest Local Employer Takes A Hit

About 200 miles west of EIU is its counterpart for the parallel section of the state: Western Illinois University. Fiscally, WIU’s been having the same kind of year as Eastern. Administrators say it’s had to dip into its reserves to the point of near depletion, and lay off faculty and staff where it can.

The university, which is in Macomb, has gone through multiple rounds of laying workers off and then asking them back.  As it stands now, 131 people were laid off. But after the passage of the stopgap budget 65 of them — all civil service employees, not faculty — have been asked to return. For now, art history professor Sherry Lindquist is in the laid off camp. Sort of.

Lindquist is in a gray area. In the spring, in the midst of layoffs and budget uncertainty, Lindquist was told to apply for tenure anyway. So she did. 

Sherry Lindquist is a history professor at Western Illinois university.

“I was granted tenure,” she says. “But I’m told that I’m still laid off, and that I have tenure for one year.” So Lindquist will stick around Macomb for one more year, while she looks for another job. That endeavor could take up to a year.

WIU is by far the largest employer in Macomb, and its effect on the surrounding area is noticed by those keeping close tabs.

In its monthly newsletter, Macomb’s Chamber of Commerce collects economic statistics for the region. Two thousand fewer people are part of Macomb’s workforce since the same time two years ago. That either suggests a drop in those looking for work, or shrinkage in the area’s overall working-age population.

Real estate sales are anemic. Just 16 listings were sold in June. Sales were up from 12 at the same time last year, but that came after four months of them falling below last year’s numbers. The slowdown, local realtors say, has been palpable. No realtors were willing to be quoted for this story, fearing loss of business as a result.

Hewings, the U of I economist, says that if the housing markets in university towns are experiencing a chill, it’s likely tied, in part, to the state’s budget uncertainty. “Do I really want to make an investment in a house, given the state of the economy — given what’s happening in Springfield or not happening in Springfield?”

Areas where the largest employers rely on state support don’t look appealing to jobseekers as long as Illinois’ leaders can’t agree on a long term spending plan. “If I were looking for a job right now, I would be very, very hesitant to want to come to Illinois in a job that was dependent in large part on state government funding,” Hewings says.

Professor Lindquist doesn’t live in Macomb full-time. Her primary residence is in St. Louis. Her husband and two college-aged kids call that home. Lindquist herself rents a house in Macomb. But she does contribute to the tax base, revenues from which have consistently been down in month-to-month comparison over the last fiscal year.

Lindquist, though worried about her own financial situation, says it’s the bigger picture of WIU’s belt-tightening that’s more of a concern for her. “It’s only for these regional universities who serve largely first-generation students, who are being offered this ‘university education lite,’” she says. “And I’m particularly invested in this because I’m a first-generation college student.”

Chicago State University: On The Edge

Of the state’s 12 public universities navigating the budget impasse in the last year, CSU University has faced the most treacherous waters. Just a few weeks before its planned spring break, the university announced that it would have to skip the break to keep operating until the end of the school year.

To cut costs, Chicago State University canceled spring break and held graduation ceremonies early.
Credit Chicago State University

It was a move designed to save on utility and maintenance costs, but it also garnered a lot of attention, including from then-Democratic presidential candidate Bernie Sanders, who held a rally at CSU. “I come here, and I find out that this great university is also being threatened with cuts,” Sanders told the crowd in February. “What is going on in America? Where are our priorities?”

CSU serves many nontraditional students on the city’s southeast side. The poverty rate for the zip code where the school is located is 30 percent, which is about twice the state’s poverty rate.  

Administrators made appeals to students, lawmakers and the media. They said they were out of options after tapping out reserves and making nearly 400 layoffs. There was even talk of having to close in the fall.

In the end, the short-term budget fix the governor and lawmakers passed in June provided 31 percent funding for most universities, but 60 percent for CSU.

Local economies are not the only ones counting on the state’s colleges and universities for stimulus. Students also look to intuitions to increase their earning power, and sometimes, to offer them employment to make college more affordable.  

Omega Judkins is a 25-year-old student working on her second bachelor’s degree in nursing at CSU. She dreams of becoming a labor and delivery nurse, and maybe even getting her nurse practitioner license someday. Judkins says the uncertainty of CSU’s fiscal situation hurts her and her fellow students the most.

Omega Judkins is studying nursing at Chicago State University.

Judkins earned her first undergraduate degree at the University of Illinois, but chose CSU to pursue nursing because of its proximity to her southeast suburban hometown of Robbins. Because Judkins is getting her second bachelor’s, she’s not eligible for many government grants given to first-time college students. So she got a job at CSU as an office assistant in the dean’s office. She does that on top of another job in retail and her academic demands, including serving as treasurer for her class. 

In April, her job at the university was cut. Judkins says the loss of income almost pushed her to the brink of quitting school. “All this summer, I was trying my best to work as hard as I can to basically come up with a down payment for school,” she says. “But (quitting) did cross my mind … There were times that I thought about maybe I might have to sit out a year and just work.”

Judkins made it through the summer working her retail job. She came up with the money for the fall, and she’s been told that she can start her office job again in September.

Her experience this year with state funding has left her feeling doubt about whether she and her fellow students are valued. She says she’s seen a lot of her classmates make the decision to quit school because of money. CSU serves a largely minority student population, many of whom have gone back to school like Judkins. “We’re trying,” she says. “We’re trying to get there, and it’s like no one can hear us.”

Judkins and many thousands of students, faculty and staff at public universities and colleges will feel the next effects of the state budget fight as legislators attempt to cobble together a budget when the short-term fix runs out in a few months.

Chicago Democratic Rep. Elgie Sims, who has been a vocal advocate for CSU, says he’s calling for “a responsible budget that funds our priorities that is not based on political ideas or political ideals, but it funds the needs that our government is charged with. And that’s really what government is supposed to be there for. Government is supposed to be there to improve the quality of life of the citizens that it serves.”

But the timing could make it difficult to put “political ideas” aside. When the state’s leaders come back together to try and find a solution, it will be after an election season that already promises record spending — private money spent on messaging that players on all sides hope will eventually translate to public money spent on places that need it.

 Illinois Issues is in-depth reporting and analysis that takes you beyond the headlines to provide a deeper understanding of our state. Illinois Issues is produced by NPR Illinois in Springfield.