"The campus is back and students are back at class and going to school. And, now it's time to look to the future. And Memorial Hall is part of the future of this campus," said Gov. Blagojevich.
University officials had already identified the 40-year-old building for renovations and capital plans, but the shooting accelerated the plans.
Students on campus are torn over the idea.
"Some people can't stand to look at it, and others see it as a memorial as it is," 19-year-old freshman Cassie Dodd said of Cole Hall. "Personally, I think it should stay. It's a part of us now."
"A lot of money going toward it. I don't know if it needs to be demolished. And I don't understand where they're going to put the rest of the students in the between time," said Stephanie Zarr-Berg, junior.
"Now, the mention of the $40 million, it might be too quick," said David Zurad, freshman.
But 21-year-old junior Jessica Burnside disagreed.
"It's a trophy of a tragic, destructive event," she said. "Nobody wants to be reminded of it."
On Valentine's Day, 27-year-old Steven Kazmierczak, a former NIU student, opened fire on a classroom in Cole Hall, killing five and injuring 16 others. He then killed himself.
Demolition on Cole Hall could begin in the spring. Construction on the new building, which could be in use as soon as December 2010, would begin next summer.
Legislators still need to OK Blagojevich's plan to use the emergency money. Blagojevich pledged assistance to the Pilgrim Baptist Church when it went up in flames two years ago. He has been accused of not delivering on those promises.
"I was in a position where I could provide a $1 million grant without the Legislature and I did it. And when I can act on my own I do it. And, when I need the actions of the Legislature, I rely on pros like Senator Burzynski and Representative Pritchard to help me pass those things," said Gov. Blagojevich.
"It won't be easy. We know we have financial problems in the state of Illinois. But this is an emergency. This is a priority. This is where the community pulls together," said State Rep. Bob Pritchard, (R) 70th District
"The selling point is it is the correct thing to do. It is the appropriate thing to do. For us to go in and have to really redo that building, there's an expense of cost there. It's an older building and that has to be weighed against the cost of a new building," said State Sen. Brad Burzynski, (R) 35th District.
At Virginia Tech, the site of another campus shooting, officials turned the site into a learning space and peace center.
The Associated Press contributed to this report.