Illinois is having a tough time meeting its obligations to its students attending college right now.
As we enter our second year without passing a state budget, our institutions of higher education are suffering greatly. Chicago State University laid off half of its staff in response to the state budget crisis, MAP grants are not being funded, and some students are even being discouraged from attending Illinois colleges and universities due to the lack of stability. Listening to the governor and remarks from local legislators, no end is in sight to this fight.
As the chairman of the education committee in Chicago’s City Council, I am intently focused on how our K-12 students continue their achievement. That’s why I’m encouraging people to leave politics out of a very important tool colleges and universities have to promote higher learning.
There is a national movement focused on removing any fossil fuel company holdings from pension funds, university endowments and family foundations. This divestment push is based on moral or ethical stances, not the fiduciary responsibility the fund has to its beneficiaries.
Although I agree we must transition to 21st century energy, this evolution should be well thought out and planned as to not irreparably damage those precious resources necessary to fund our colleges and universities. Our students should not be pawns in a political movement that has not fully thought through the consequences. Forcing adoption of this vague measure could be harmful according to several studies. University of Chicago Law Professor Daniel Fischel found in a 2015 study that portfolios divested of energy equities produced a significantly lower rate of return, resulting in a billion dollar loss for some college institutions.
Further, an academic at the W.P. Carey School of Business Arizona State University by Professor Hendrik Bessembinder said endowments could lose between 2 percent to 12 percent of their value due to the costs of trading securities, management fees, and ongoing monitoring of this specific directive.
So, due to lower returns on their investments and excessive Wall Street management and trading fees, these endowment funds are at risk of significantly lower returns. That could mean less programming, fewer facility upgrades, and diminished capacity to provide scholarships and financial aid to students.
I am especially concerned about what this means for minority students. They are often more dependent on financial aid to achieve their educational dreams and any less funding available would disproportionally affect them.
Our political institutions have all the tools they need to make this energy transition and to keep the costs from overburdening middle class families who have been struggling to recover. The proper venue to address this issue is in Washington, Springfield, and the City Council.
In these trying times in Illinois, let’s leave Chicago State, the University of Illinois at Chicago, Loyola, DePaul, and many, many others out of this. Let’s let their trustees exercise their fiduciary responsibilities and derive the best return on investment they can to provide educational opportunities for our children.
College students in Illinois are already suffering enough right now because of our broken political system. We should not subject their individual schools to even more politics.
Ald. Howard Brookins represents the 21st Ward of Chicago and chairs the City Council’s Education Committee.
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