For the second year in a row, the state of Illinois owes NIU money. A lot of money.

The state’s debt to NIU of $77 million is worse than its debt at this time last year, according to a Jan. 25 Committee on Resources, Space, and Budgets Report.

NIU President John Peters said the debt is a “severe” problem.

To meet its own payment obligations, NIU has implemented a hiring freeze for non-critical positions, reduced summer operating hours and winter break operating days and deferred non-emergency maintenance. NIU has also been unable to invest in new equipment and technology, Peters said.

Peters said staff and faculty have had to make sacrifices by taking on more work during the hiring freeze.

Employees and retirees have also felt the impact of the state’s debt through required up-front health-care costs.

“Many of our employees do not have the cash to pay up front for the service and wait for a reimbursement check from the state, so they are delaying important medical treatment,” Peters said. “This is sad.”

The state owes NIU an additional $12 million for MAP grants from the fall 2010 semester, according to the report.

“This cash flow issue cannot go on much longer,” Peters said, “It has to be resolved.”

The tax increase that went into effect Jan. 1 is a step in the right direction, Peters said.

State Rep. Bob Pritchard, R-Hinckley, said the recent tax hike will not bring about quicker payments to NIU or any other universities. The revenue from the tax hike won’t go towards paying back any of the debt the state has accrued in the last decade; it will just allow the state to keep spending without adding further debt.

“What we did was perpetuate a growth in current spending,” Pritchard said.

Peters said to solve Illinois’ fiscal crisis the state also needs to raise revenue. If a bond bill is passed by the legislature the state may be able to use that revenue to pay off its current debt. The overall state debt is $16-$17 billion, according to the report.

The state also needs to control spending and become more efficient, Peters said.

Pritchard agreed with Peters that the state needs to run more efficiently, including the operations of state-run institutions of higher education. Pritchard said efficiency involves graduating students in four years or less and reducing all of the “red tape” that goes on at universities.

Peters said NIU has had to figure out ways to run more efficiently over the last 11 years because the state’s contribution to NIU’s operating budget has remained the same. The state’s contribution of about $100 million annually has not increased since 1998 while the cost of living has risen.

Pritchard said the state used to fund a larger percent of students’ educations but that figure has dwindled.

The percent of the operating budget funded by the state has decreased from 67 percent in fiscal year 1999 to 41.7 percent for fiscal year 2011. The portion of the operating budget not covered by the state is covered by student tuition and fees. The operating budget is about $242 million for fiscal year 2011. The total budget for NIU is about $439 million per year.

Peters said the students have not felt much of the impact of the state’s late payments.

“We have tried as best we can to protect students and their educational experience,” he said.

He said students have probably felt the impact of the state’s static contribution to the operating budget.

Across the whole country costs have shifted to the student, Peters said.

“It’s not just us, it’s everyone. It’s all the state universities,” he said.

This represents the trend towards the privatization of higher education, he said. Costs have shifted from state subsidization to students and external funding.

“I think the public has a responsibility to subsidize the education of its citizens,” Peters said.

Pritchard said the significant reduction in public investment in higher education has come during a time when an increase is needed and the work force needs more trained and skilled employees.

“We’ve got a huge financial hole, and as we make priorities [of where] to spend money, education has not come out very high in the minds of the leadership in Springfield,” Pritchard said.

The future of the situation will be determined by Gov. Pat Quinn’s budget speech Feb. 16 and the legislature’s actions throughout the rest of the year, Peters said.

But Peters isn’t counting on the state of Illinois. Part of the Vision 2020 Initiative he announced during the State of the University address Sep. 6 focuses on gaining more external private funding for NIU like grants and more scholarships for students.

“I want to make sure by 2020 that this institution is thriving and can sustain itself irrespective of what the state does,” Peters said.