With three days remaining for state legislatures to approve a state budget for the 2009 fiscal year, Eastern is still set for a 2.8 percent increase in state appropriations, said Rep. Chapin Rose, R- Mahomet.

“The good news is that both versions of the (budget) still include a 2.8 percent increase to Eastern and most of higher education, which is more than the past seven years or so,” Rose said.

The first wave of talks in the Senate and the House involved “necessities” such as consistent expenditures, Rose said. The next few waves consist of projects and Rose said “the House Democrats promised everything in the world to every constituency group,” and that is why the House budget has a larger deficit than the Senate budget.

A possible solution that Rose said has been discussed during the past few days involves selling pension bonds. The current bonds used to pay pensions of state employees accrue 8.5 percent interest.

Refinancing with new bonds that would only have 5 percent interest would save the state enough money to significantly reduce the current deficit, Rose said.

The total state cost for employee pensions consists of 62 percent toward the actual pensions and 38 percent toward interest. Selling the pension bonds would reduce the interest cost by approximately two percent, Rose said.

However, Rose said the two percent cost reduction would be possible only if the state invests the immediate savings into future pension plan costs over the next few years. Many legislatures are in favor of using the savings to clear much of the current deficit and moving on but Rose said he is opposed to that plan because the same problem will occur next year unless the money is invested and other spending solutions are found for the deficit.

Rose said the saved money should not be used to fund new projects that become long-term commitments but should instead help the current long-term obligation – pensions for state employees.

“We certainly didn’t get into this problem overnight and we’re not getting out of it overnight either,” Rose said. “We’re in this for the long-haul and we can’t create new expenses before old ones can be paid.”

A decision has not yet been made about selling the pension bonds, but if it happens and the savings are used for the one-time deficit reduction, Rose said Eastern could be closer to keeping its 2.8 percent increase.

Rose is still concerned that a budget cut to higher education could happen once the fiscal year begins.

Legislatures have until 11:59 p.m. Saturday to approve a budget and Rose said the Illinois constitution prohibits a budget with a deficit from being approved, but he doesn’t think enough state officials care.

Rick Kambic can be reached at 581-7942 or at rwkambic@eiu.edu.