This document contains fiscal year 2004 budget recommendations for Illinois higher education operations, grants, and capital improvements. These recommendations have been developed with a focus on the programs and activities necessary to continue the implementation of "The Illinois Commitment" while being cognizant of the state's current funding outlook and economic environment. The recommendations call for the state to invest $2,665 million in general funds for higher education operations and grants in fiscal year 2004, an increase of $123.8 million, or 4.9% over the previous fiscal year. When all appropriated funds and income funds are included, the budget recommendation totals $3,824.2 million, an increase of $150.8 million, or 4.1% over the current fiscal year. The fiscal year 2004 recommendations for capital improvements total $341.8 million. Chapter 1 contains an executive summary, and chapter 2 discusses priorities in a challenging time. Chapters 3 through 8 outline the appropriations for operations and grants, and chapters 9 through 11 discuss capital improvements. An appendix contains related higher education data. (Contains 3 figures and 45 tables.) (SLD)