A university in Chicago’s South Side is on the brink of running out of money as soon as March because of Illinois’s budget impasse, providing the most prominent example yet of the consequences of the seven-month political standoff.
Chicago State University, a 5,200-student institution founded in 1867, is considering drawing up a financial exigency plan, equivalent to college bankruptcy, as soon as next month, according to Tom Wogan, a spokesman. The move would be a first step to keep the school afloat as it hemorrhages cash to cover the loss of state funds. All options are on the table to get through the current semester, including missing payments on $12 million of outstanding tax-exempt bonds, he said.
The school, with a 70 percent black student body, would become the most visible casualty of the stalemate between Republican Governor Bruce Rauner, a former private-equity executive, and legislative Democrats, with leaders from Chicago, over a spending plan for the year that began July 1. While other public universities can draw on endowments or raise funds from alumni as the impasse persists, that’s not the case at Chicago State, whose students count on federal and state grants.
“A place like Chicago State University doesn’t have the same political clout of other institutions,” said Howard Cure, head of municipal research in New York at Evercore Wealth Management, which oversees $5.9 billion. “They serve a segment of the market that’s often overlooked, and some of the people who can benefit the most from a higher education degree. It’s a completely different -- and completely vulnerable -- business model.” . . .