A combination of the old G.I. bill and an existing state grant program has turned out to be a better deal for many veterans, putting the state in financial trouble.

NOTE from Larry Scott, VA Watchdog dot Org ... The state of Illinois is known for its excellent veterans' benefits programs.  Now, one of those programs is a little "too good" and in jeopardy due to the bad economy and state budget cuts.  For more about how the bad economy is impacting veterans, refer to our Sign of the Times page.

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GI Bill not likely to bail out ailing Ill. fund

By DAVID MERCER and ANDREA ZELINSKI
Associated Press Writers

CHAMPAIGN, Ill. -- The new, more generous federal GI Bill set to take effect Aug. 1 was supposed to draw Illinois veterans away from a poorly funded state program in droves, shifting the burden of funding their college education mostly to the federal government.

But in Illinois, a combination of the old GI bill and an existing state grant program has turned out to be a better deal for many veterans, putting the state in a bind as it tries to find ways to cut a budget that's already billions of dollars in the hole.

The Illinois Veterans Grant guarantees coverage of tuition and fees at state colleges, universities and community colleges for residents who have spent at least a year in active duty military service. The universities pick up the tab and the state is supposed to reimburse them.

State officials expected that many veterans would switch over to getting benefits from the Post-9/11 GI Bill for this school year. The federal bill, which guarantees coverage of tuition and fees at public universities, is the biggest expansion of the veterans benefit since its World War II-era creation. In Illinois, veterans have traditionally used the veterans' grant to cover tuition and fees and the old GI Bill for other expenses.

The belief was strong enough that the new bill would be a better deal that earlier this year Gov. Pat Quinn proposed cutting already inadequate funding for the Illinois Veterans Grant by almost half. The state budget that passed doesn't fund the grant at all.

But the new Post-9/11 GI Bill won't be a better option for more than half of Illinois' student veterans. That's because the new bill pays students living outside expensive areas like Chicago less.

Illinois students can choose to stick with a combination of the old Montgomery GI Bill -- which the federal government will continue to offer -- and the state grant. Officials expect more than half of the state's eligible veterans will do just that.

That means schools could be left holding the bag for years, according to an analysis of the new bill's benefits from the Illinois Student Assistance Commission, which oversees financial aid for higher education.

Illinois State University senior Sean Donnellan, an Iraq War veteran, says his decision to stick with the old GI Bill and the Illinois veterans grant was easy. The new GI Bill would pay the senior social work major $1,095 a month in living expenses, but with the state grant and old bill he's paid about $1,300 a month, which he supplements with a bartending job.

The 27-year-old former Army combat engineer understands that the university will have to foot part of the bill, but he says he and other vets can't afford to choose the new GI Bill.

"We're adults," he said, "and we have adult bills."

The Illinois grant has been used by increasing numbers of veterans since the wars in Afghanistan and Iraq began, with students relying on old GI Bill benefits to pay for their living expenses. In 2008, 4,336 student veterans used the money at four-year schools, and 7,126 more did at community colleges.

But starting in 2002, the state has covered smaller and smaller percentages of the promised grant money. State budgets have held funding steady as the cost of the grant increased from $19.6 million in 2002 to $38 million in 2008, according to the student assistance commission. The universities have to make up the difference themselves.

Most of the cost -- $26.9 million in 2008 -- is at the state's nine public universities.

In recent years, the Legislature has reimbursed community colleges for expenses the schools had to pick up. Not so the universities, which spent $13.3 million on veterans grant obligations in 2008. The state provided about the same amount, $13.6 million.

Illinois might look to its neighbor for a solution for next year. Wisconsin also offers veterans a generous state benefit. But this year, it limited eligibility for its Wisconsin GI Bill, requiring veterans to exhaust their federal benefits before they can tap state funds.

The University of Wisconsin System says it had to pay for $16.5 million shortfalls in the state GI Bill last year.

"We're looking at the Wisconsin model," said Quinn spokeswoman Elizabeth Austin. "We just want to make sure that Illinois veterans continue to access the full educational benefits that we have provided in the past."

The new GI Bill includes a housing allowance that varies depending on the cost of living in the area where the student is going to school, from $863 at Western Illinois in Macomb to $1,742 at the three Chicago public universities -- the University of Illinois campus, Northeastern Illinois and Chicago State.

The old benefit makes more sense at other state universities, including the University of Illinois campuses in Urbana-Champaign and Springfield, Southern Illinois in Carbondale, Eastern Illinois in Charleston and Illinois State University in Normal.

By mid-June, only five of Illinois State University's 400 student veterans had applied for the new GI Bill.

Universities, meanwhile, are resigning themselves to continuing the annual search for money to pay for what the state doesn't pick up.

Western Illinois University has spent $3.2 million since 2003 on Illinois Veterans Grant obligations that the state didn't cover. W. Gary Johnson, Western's vice president for student services, said veterans grant shortfalls are part of a long list of factors that lead the university to raise tuition every year.

"Unfunded mandates become huge drags on the institution," Johnson said.

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TOPICS: veterans, veterans' benefits, VA, Department of Veterans' Affairs, bad economy, Illinois, G.I. Bill