Tuesday, November 18, 2008

Nervous energy and four-point plans

The national economic doom and gloom is starting to cast ominous clouds on existing state budget problems, leading Gov. Rod Blagojevich and other state officials to propose some ways to adjust. So far, it seems as though the state is running in place. There’s no indication that the General Assembly and the governor are going to start getting along any time soon to follow through on some of these proposals. The legislature returns for its annual fall session Wednesday and Thursday. Friday is still up in the air.

The governor's proposal foreshadows this month's closure of numerous state parks and historic sites, as well as reduced human services, that resulted from $1.4 billion in budget cuts. While the first two rounds of money already have been transferred from special dedicated funds to help restore some of the funding, the governor hasn’t yet signed legislation authorizing the spending. He has until December 5 before it automatically becomes law.

In the meantime, Blagojevich released a four-point plan that includes borrowing money, asking the feds for some bailout money and withholding more state money. Announced through a news release, part of the plan would create a new law for emergency budget management. He seeks authority to hold as much as 8 percent of general revenue funds in reserves for state agencies, education, higher education, state pension funds and local government funding. That would be on top of the 3 percent reserves he already requested. Another portion of his new plan seeks as much as $3 billion in federal aid during the next three years.

Part of his proposal also relates to Comptroller Dan Hynes’ idea announced last week. It would allow the state to borrow money, which is nothing new. But instead of having to pay back the loan by the end of the state’s fiscal year (June 30), the state would have 12 calendar months to repay the loan. The premise is that because the comptroller would have more time to repay the loan, his office would have more flexibility in cash flow.

The proposal would need legislative approval by a three-fifths majority of each chamber so it could immediately take effect.

Right now, cash flow is a huge problem because the state can’t pay about $4 billion of its bills, including Medicaid payments to medical providers. The comptroller wrote in a letter to state officials to announce that the backlog could top $5 billion and inflict 20-week delays for payments by March. “To characterize this as an imminent crisis risks understatement,” he wrote.

Hynes’ spokeswoman, Carol Knowles, says the comptroller’s office is getting continuous complaints that unpaid bills threaten everything from police officers being unable to fill their gas tanks to prisons being unable to pay their vendors for food deliveries. Bills are paid as cash flows in, but the comptroller’s office also has to have enough money on hand to pay such long-term obligations as employee payroll and general state aid for schools. “It’s a very delicate balancing act,” she says, “and the larger the bill backlog is, the more difficult it is to answer the emergencies when they arise because it gets to the point where everything is an emergency.”

Senate Republicans describe the governor’s four-point plan as “begging and borrowing.” Sen. Christine Radogno, deputy minority leader from Lemont, says while she could support further belt tightening for state agencies or regular short-term borrowing as legitimate cash-management tools, she wants specifics that aren't available from the governor's press release. And she says she has concerns about short-term borrowing that crosses over into the next fiscal year, as proposed by Hynes. “I’m certainly willing to look at any proposal of the comptroller or the governor, but we just need to be careful not to fool ourselves and the taxpayers,” which, she says, are the same taxpayers who are footing the bill for the federal government’s $700 billion bailout package approved last month.

Cindy Davidsmeyer, spokeswoman for Senate President Emil Jones Jr., says he acknowledges that the state is facing a huge crunch, and he looks forward to hearing more details as they come out. House Speaker Michael Madigan’s spokesman, Steve Brown, says only that the plan is under review.

Education re-reform
Also Tuesday, a new diverse, well-funded education policy group announced efforts to issue comprehensive reforms by this spring, although it’s unlikely that the group’s recommendations would be ready to go by the time the legislature is supposed to enact a state budget for fiscal year 2010.

Founders of Advance Illinois, a nonprofit based in Chicago, plan to travel around this state and others to gather evidence during the next six months. The goal is to take a broad and long-term view of ways to reverse some of Illinois’ worst academic trends that hamstring its students and workforce.

“The bottom line is … that Illinois schools are performing, despite the fact that we’re the fifth largest economy in the country, at an average to below-average level,” says Robin Steans, executive director of Advance Illinois and sister of state Sen. Heather Steans of Chicago. “On any academic measure or any attainment measure you might care to look at, we’re trailing the nation. At all grade levels in all subject areas.”

Ellen Alberding, president of the Joyce Foundation, serves on the board and says the Chicago-based foundation funds educational policy efforts throughout the Midwest. Illinois’ condition sticks out, she said after the news conference, because a large gap exists between educational attainment of low-income minority students and higher-income white students. According to information released by the group Tuesday, Illinois ranks 6th in the nation for having one of the largest achievement gaps between African-American and white students. Alberding also said she was struck by a study of Chicago students that shows only 10 percent of eighth graders who score well on the Illinois Standards Achievement Test later score 20 or above on the ACT, which indicates that most students in the study were ill prepared for higher education.

“It’s outrageous that the state has its expectations so low,” she said.

The Joyce Foundation supports the new effort along with the Bill & Melinda Gates Foundation, the Chicago Community Trust, the Grand Victoria Foundation, the John D. and Catherine T. MacArthur Foundation, the McCormick Foundation and the New York-based Wallace Foundation.

Board members include a vast political mix, starting with co-chair and former Gov. Jim Edgar. The Republican unsuccessfully pitched a plan in the 1990s to reduce local property taxes and increase state income taxes as a way to reform education funding. He said Tuesday that he still believes the state relies too heavily on local property taxes to fund education, but the group would not focus on funding reforms. It only would announce recommendations for funding reforms as part of a more comprehensive plan, he said.

Deflecting the focus away from the question of whether taxes would increase, however, will be a challenge.

The other co-chair is former U.S. Commerce Secretary Bill Daley, the Democratic brother of Chicago Mayor Richard Daley and a rumored candidate for governor in 2010. Also among the board members is former U.S. House Speaker Dennis Hastert, a Republican who helped lead negotiations between Blagojevich and legislative leaders to draft a capital program for road and school construction projects. That plan stalled. Former state Sen. Miguel del Valle, a Democrat and current city clerk of Chicago, used to chair the Illinois Senate Education Committee. Del Valle said Tuesday that Advance Illinois “is the most promising” of all the efforts he’s seen to reform public education.

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