Universities seek additional state funds

By Ashley Griffin

State university officials asked Wednesday for more money than Gov. Pat Quinn has proposed in his Fiscal Year 2013 budget.

Testifying before an Illinois Senate committee, officials from Illinois State University, Eastern Illinois University and Western Illinois University sought more money to offer more need-based scholarships to students who come from families with modest incomes, to make basic repairs on their campuses or just to maintain university buildings.

“We are requesting an excess of a $10 million increase in our state appropriations, primarily because the dollars the university is receiving today are less than they were in 1999,” said Illinois State University president Al Bowman. “We’ve got significant deferred maintenance issues, and we need a way to cover our cost increases that doesn’t continue to put these cost on the backs of students and their families.”

In Quinn’s proposed budget, ISU would receive $78.9 million in operating funds from the state. If the proposed $10 million were approved, ISU would see a 13 percent increase. If the funds are not provided, students there could see a “modest” tuition increase, according to Bowman.

“Well, I guess I would be surprised if the request did go through,” Bowman said. “The aggressive proposal that we put on the table was really designed to sort of demonstrate to the state what the real needs are. We recognize that the potential for a significant increase in state funding is simply not there. That’s the reality; that doesn’t change what the need is.”

Eastern Illinois University sought a 1.5 percent increase for inflation and for academic programs in clean energy and alternative energy.

“We know that it is a constrained environment, so we made a realistic request for some increases that we think will uphold the quality at what we do at Eastern,” said president William Perry. ““I’m expecting something like level funding. We will work with that, and we’ll do a great job for our students.”

Despite Quinn’s recommended $46 million operating appropriation, the university has decided to make a recommendation to increase tuition, pending an approval from the board of trustees on Friday. “We are making our tuition increase recommendation to our board kind of independent of what the state appropriation will be. I’m working under a general assumption that’s it’s not going to change too much either up or down,” Perry said.

Western Illinois University asked for a $14 million increase in addition to the $58 million in operating funds recommended by Quinn. Some of the funds would go to the engineering program and the nursing program on campus. Students there also could see a slight hike in their tuition if the increase is not approved.
Some lawmakers said they are unsure about the possible outcomes even if some of the universities receive the additional funds.

“We are evaluating everything line item by line item, we have a very limited amount of money, and we need to make sure we live within our means” said Sen. Dan Kotowski, a Democrat from Park Ridge. “Everything needs to be looked at right now the same way a family looks at it, the same way a business looks at it. How much money is actual available to spend on programs that are making a difference?”

State could fail to reach the foundation funding level for education for the second year in a row

By Jamey Dunn

Under the current budget, schools will miss a general state aid payment in June. Under Gov. Pat Quinn’s budget for next year, they can expect a similar outcome.

General state aid for education in the Fiscal Year 2012 budget fell 5 percent short of covering the foundation level of $6,119 per student paid to many schools. Lawmakers chose to hold off the reduction so it would kick in at the end of the current fiscal year.

State Superintendent Christopher Koch says that means most school districts will see a reduction in their first June payment, and no schools will get a second payment in June. But Koch said that districts should not be caught by surprise when the check doesn’t come. “The have known it for a long time. In fact, districts requested that we hold it off until the last month,” Koch said. “They’re trying to get through the school year as much as possible on what they can, and then they’re going to shoulder June’s payments to be less. But they’re quite aware of it.”

Overall, payments for general state aid, which is the largest area of state education spending, are being sent out on time. “They’ve been on time consistently, which is really good. Even through the worst of the recession, we’ve kept those payments coming. Now other payments, that’s not the case.” Payments for mandated categorical grants, for such programs as special education and student transportation -- which are the second largest area of state funding for education -- are lagging behind. “Those have gotten a little better though, and we’re not as far back as we were a year ago. I look at incremental progress, but we’re still not in great shape,” Koch said. Some mandated categorical payments are only caught up through the first quarter of the current fiscal year, which ends June 30.

Quinn is proposing to hold general state aid flat next fiscal year. Koch said the state would not be able to maintain the foundation level of $6,119 per student under the governor’s budget. Koch said that instead of simply reducing the level, lawmakers chose to take an action the state board is describing at prorating general state aid. So the foundation level did not change, but the actual payments were cut. That way wealthier schools, who receive a flat grant, would also see their aid cut. “It’s a fairness issue of everyone taking a hit versus just districts that are under general state aid taking the hit.” Under Quinn’s proposal general state aid would fall 8 percent short of meeting the foundation level.

 Koch said that the recession has put a squeeze on state dollars because local districts have less money, so that state must pay more to maintain the funding levels determined by the general state aid formula. The state board is asking for an additional $201 million above Quinn’s proposed spending level for general state aid. Under the board’s proposal, general state aid payments would fall 4 percent short of the foundation level. “Asking for an increase in this climate is not an easy thing to do, but it takes a lot of money in the GSA formula to make it work. It’s working. It’s compensating for the increased poverty and the property values [that] have not rebounded yet in this state, the home values for example. So when those do, it will take less money. But right now, the recession has been hard on the formula.” Koch said it would take about $400 million more than Quinn’s proposed spending to fully fund the foundation level.

Rep. Daniel Biss, an Evanston Democrat, said that instead of using complicated accounting tactics to make sure that cuts are spread out evenly among the spectrum of wealthy to impoverished school districts, the state should rethink the formula it uses to determine funding. “This is just the latest in a long series of very clear evidence that we, the General Assembly, ought to look under the hood of the funding formula a lot more comprehensively,” Biss said. Koch said in response that he would support a funding plan where money follows children in the system.

The state board also asked for additional dollars, $64 million total, for programs such as advanced placement classes and bilingual education. State Rep. Roger Eddy, a Hutsonville Republican, questioned proposed spending in other areas if the state cannot afford to make its general state aid payments. “The documents I’ve read from the State Board of Education in the past … in order of priorities the general state aid foundation level is number one,” says Eddy, who is also a Hutsonville superintendent. “I’m tying to figure out how, if that is the priority [and] we have available funds, why is it not going into that if it’s not funded at the level promised?”

Koch said the increases the board is asking for outside of general state aid are needed to implement programs that are mandated by law, including the recent education reforms approved by the General Assembly. “There’s other mandates. The General Assembly passed additional requirements for preschool bilingual programs. Well, that’s a lot more kids,” he said. “We are not asking for anything that is not a requirement. There’s not fluff in our budget. Everything there has a statute in behind it or some requirement on schools districts or on us to deliver on. We’ve been prioritizing among priorities for a long time now.”

UPDATE:  Quinn said he is looking for ways get schools their full general state aid payments in June. “I’m not giving up on that,” Quinn told reporters at a news conference in Berwyn.

He said sales tax revenues are better than expected this year, and some of that money could help stave off cuts. “We’ve got some revenue that we were happy to get because our sales tax this year, this fiscal year, performed better than expected,” Quinn said. “It seems to me we ought to take a look at investing that money in learning and education this fiscal year and definitely next fiscal year.”

Closing mental health facilities could cause other problems, opponents say

By Ashley Griffin

Opponents of Gov. Pat Quinn's plan to close two state mental health centers say the money-saving move could lead to other problems.

In an effort to reduce state spending, Quinn announced during Wednesday’s budget address his plan to close the Tinley Park Mental Health Center and the Singer Mental Health Center in Rockford. The announcement to close the two facilities is part of a larger plan that includes cutting or consolidating about 60 other state facilities in hopes of saving $425 million and eliminating 1,160 jobs.

 The governor’s office cited numerous factors in determining which facilities to close, included the age of the facility, the level of quality care and the economic impact on the areas. No plan has been released on what will happen to patients at the centers.

 Some lawmakers are not happy with the proposed cuts.

 “It will have a devastating affect on Rockford. At this point if it closes there is no place for them to go,” said Sen. Dave Syverson, a Republican from Rockford whose district contains the Singer center.

 “You are taking a hatchet approach to human service. It's not the appropriate way. It ends up disturbing families, disturbing communities, and instead of that we need to be looking at doing a complete review of the services in Illinois.

 According to Svyerson, he believes instead of closing the Singer center, a partnership should be formed with the private sector to help lessen the costs at Singer.

 Several other lawmakers said they do no support the closings without a plan of action.

 “He’s [Quinn] got to realize that he creates some obstacle for us when he attacks state employees the way he did in today’s budget, by forcing surprise closures of these facilities that no one knows how we are going to manage. That will create some obstacles for us,” said Sen. Bill Brady, a Republican from Bloomington  who also serves on Quinn’s working group on employee pension reform.

 Illinois is not the only state making significant cuts from their mental health programs. According to a report released last March by the National Alliance on Mental Illness (NAMI), Illinois ranked fourth in the most cuts in general funds from their mental health budget between 2009-2011, trimming $113.7 million.

 A November report from NAMI states: “In Illinois, a state that has cut $187 million from its mental health budget in recent years, three of the state’s nine psychiatric hospitals are slated to close. Up to 5,000 children and adults with serious mental illness could be cut off from needed services. The situation has gotten so bad that Cook County Sheriff Tom Dart announced in May 2011 that he was considering filing a lawsuit against the state, “accusing it of allowing the jail to essentially become a dumping ground for people with serious mental health problems.”

 Both reports found that massive cuts to health services could have a negative impact on public safety  because some people with serious mental illnesses can be more violent than the rest of the population.

 Greg Sullivan, executive director for the Illinois Sheriff’s Association, also agrees that  losing the mental health facilities is not a good idea. People with mental illnesses should receive the proper treatment, he said, and if they don’t, there could be negative consequences.

 “These people are not criminals. They need treatment. … It's going to be a huge problem if these facilities close,” Sullivan said. “If we did this to a heart patient who needed treatment, we would be sued.”

Both centers found themselves on the chopping block a year ago, but in a dramatic last-minute save from the legislature's bipartisan Commission on Government Forecasting and Accountability that heard testimony from various interest groups, funds were provided to keep the facilities open for the reminder of the current fiscal year.


The Tinley Park center, which operates as an acute care center that usually admits patients for 21 days, has a 75-bed capacity and 195 staff. The cost to operate it is $19.8 million, and the closure date is set for July 2.

 At the Singer center, the operating cost is $14 million. Its bed capacity is 76, with a staff of 176. The closure date is set for October 31.

Governor's budget proposal was specific on spending but not on reforms

By Jamey Dunn 

Gov. Pat Quinn set a dour tone as he kicked off the budgeting process today but shared few details on what he cites as his two biggest goals for the year.

“This budget contains truths that may not be what you want to hear, but these are truths that you need to know,” Quinn said in the opening lines of his budget address. “And I believe you can handle the truth.”

Quinn said he plans to close two developmental disability centers, two mental health centers and either close or consolidate 59 other state facilities. Fourteen of the proposed closures include developmental centers, mental health centers and corrections facilities. ( For a list of these institutions, see yesterday's blog.) The rest are consolidations within state agencies. Quinn said that overall, he is calling for $425 million less in spending by state agencies than the current fiscal year.

“I think he did a very good job of setting out what the problems of the state budget are. He delivered a very strong message,” House Speaker Michael Madigan told Illinois Lawmakers after Quinn’s speech. “He topped it all off by saying to them, ‘Don’t expect to go home until we get our job done,’ which was a legitimate request from a governor to the legislature.”

Quinn laid out the need for pension and Medicaid reform in no uncertain terms. He called for a $2.7 billion reduction in Medicaid spending and set a deadline for a bipartisan pension working group to make its recommendation by April 17. He told lawmakers, “Don’t plan on going home for the summer” if Medicaid spending is not addressed. Another group of legislators is working to hammer out recommendations for Medicaid reform.

House Minority Leader Tom Cross said there is enough time in the spring legislative session to tackle the two difficult issues. “We don’t have a choice.”

“The first step is to educate the public on how tough these decisions are. And I think he did that today. That makes it easier for the legislators to end up voting for some of these tough issues,” Senate President John Cullerton told Illinois Lawmakers.

Cullerton said that Quinn is letting the working groups negotiate behind the scenes. “The governor can’t propose a solution yet because we’ve got to wait and see what everybody wants to do collaboratively,” he said.

The House led the budgeting process last year, but Madigan said he wants Quinn to be involved this year. “The governor must sign that bill in order for it to be effective, and so the sooner that he joins the group, the better.”

But some Republicans we’re disappointed that Quinn didn’t give specifics today. “He’s the governor. He’s the leader,” Cross said. He said he wants more specifics on what pension reforms Quinn would support. “Are you for having the employees pay a little more? Are you for cost shifting [to local school districts and universities?] Are you for addressing the [cost of living increases?] He’s said they're all on the table, but what does he want? I mean this is not new stuff.”

Quinn was specific about some new spending he would like to see included in the budget. He proposed a $50 million bump to the Monetary Assistance Program (MAP) grants for college students and $20 million in additional spending for early childhood education.

“We cannot increase spending. Period. The end. Right now, we just can’t do it. So those things ought to be off the table, and we can focus on the big issues at hand,” said Senate Minority Leader Christine Radogno.

Quinn also called for closing tax loopholes to help pay down the state’s backlog of overdue bills to vendors, social services providers and schools.

Unlike past years, the governor did not pitch a borrowing plan to pay off the state’s bills. Sen. John Sullivan, a Rushville Democrat, said he hopes that once Medicaid and pension reforms are addressed, Republicans may be more receptive to borrowing or some other solution to pay down the bills. He said when he has tried to find support across the aisle for borrowing proposals he has sponsored in the past, Republican senators say that pension and Medicaid reform have to be part of the negotiations.

Quinn proposed closing tax loopholes to help pay down the state’s backlog of overdue bills to vendors, social services providers and schools. However, if the lawmakers choose not to do that, or no other plan is approved to pay off the bills, Quinn’s proposal calls for $163 million in unspent revenue to go toward a backlog that is about $8 billion. “It’s kind of a drop in the bucket as far as what it’s really going to do to address the issue,” Sullivan said.

The governor called for lawmakers to do a comprehensive assessment of tax breaks — a suggestion that came up on both sides of the aisle while lawmakers debated a tax breaks package passed in December that focused on appeasing a few businesses that were threatening to leave the state. “For too long, we’ve had a revenue code that looks like Swiss cheese, with plenty of loopholes for the powerful. Many of these loopholes are passed on politics, not economics,” Quinn said in his address.

Quinn pointed to a specific tax exemption for oil companies that drill in the ocean and sit on the intercontinental shelf. There is a federal exclusion for such companies, and since Illinois’ tax code mirrors the federal code in most instances, there is a state exemption as well. Quinn said that eliminating this exemption and requiring oil companies that make profits in Illinois to pay a state income tax would bring in about $75 million a year. Quinn said revenues brought in from ending such exemptions could also be used to give tax credits to families.

“I’m absolutely exhausted after a decade … of every governor talking about closing corporate loopholes,” said Doug Whitley, president of the Illinois Chamber of Commerce. “I think it’s kind of a fool's errand. … If those oil rigs were in southern Illinois, I would say: ‘Fine. Tax them.’”

Whitley said there are not may corporate tax breaks left to close. He said besides the net operating loss, which lawmakers put back in place under the tax breaks deal reached late last year, there are about $400 million in exemptions to the corporate income tax. “The real loopholes in the tax code are individual loopholes. Loopholes for citizens,” he said. Whitley pointed to the property tax and the fact that the state exempts some foods and medicines from sales taxes.

Whitley was positive about Quinn’s speech overall. “Generally speaking, I thought the governor had a good talk today. … I don’t think that he needed to show all of his cards in this speech. He simply said, 'Let's play the game.'” He said now the question is, “Can legislators spend hundreds of hours together and end up with a [budget] that they can agree on that does in fact save hundreds of million of dollars?”

Aside from facility closings, Quinn's budget proposal is expected to be short on details

By Jamey Dunn

Gov. Pat Quinn’s budget proposal  on Wednesday will call for the closure of more than a dozen state facilities, but will likely run short on specifics about reforming the state’s costly Medicaid and pension systems.

Top members of Quinn’s staff said in a budget briefing this evening that the governor plans to propose closing14 state facilities, including prisons, youth prisons, mental health centers, centers for the developmentally disabled and adult transition centers, which work to get newly released inmates back on their feet. The list includes:

• Tamms "super-max" prison
• Dwight Correctional Center 
• Singer Mental Health Center in Rockford
• Murray Developmental Center in Centralia
• Jacksonville Developmental Center 
• Tinley Park Mental Health Center 
• Joliet Juvenile Justice Center 
• Murphysboro Juvenile Justice Center 

Quinn also plans to propose closing two adult transition centers in Chicago, as well as centers in Peoria, Decatur, Aurora and Carbondale. According to budget documents provided by Quinn’s office, the closures will result in 1,112 layoffs.

Lawmakers and advocates alike balked at Quinn’s long list of proposed closures. “This is an absolute nightmare. I was afraid Governor Quinn’s budget would put the Murray Center in its sights. Does the administration have an idea what this will do to the patients, families and the city of Centralia? I have met with the administration officials and thought that they would have some legitimate long-term strategy on this issue – but they do not,” Sen. John Jones, a Mt. Vernon Republican, said in a prepared statement. “Since they initially floated this idea last year, the economy in Centralia has slumped. Well, now that these plans are at least laid out, it’s time to dig in, and I vow to oppose the closure plans.”

Quinn has said he plans to transition residents and patients in mental health and developmental care into community based setting that would be less costly and provide a better quality of care. A budget document from Quinn’s office said that his Fiscal Year 2013 budget will include money to transition people from institutions to community care.

The plan calls for moving about half of the fewer than 400 Tamms inmates to the maximum-security wing of the Pontiac Correctional Center. Tamms holds especially violent or disruptive prisoners who have been deemed too dangerous to house in the general prison population. According to budget documents from Quinn's office, the other half would be “relocated accordingly.” The about 1,000 inmates currently locked up at the Dwight prison, which is a women’s facility, would be moved to the Logan Correctional Center in Lincoln, which would be converted to an all female prison. Male prisoners from Logan would be moved to the Lincoln Correctional Center, which would be converted to an all male center.

Dwight is currently the state’s only level-one maximum security lockup for female prisoners. It is the processing center for female prisoners and also houses lower security inmates. “Dwight not a perfect place, but compared to other facilities in the DOC, there’s a lot going right with Dwight,” said John Maki, executive director of the prison watchdog group John Howard Association. Maki said that he does not envision any workable scenario for closing Dwight. “This would be impossible. This is not a serious proposal.”

 Quinn’s budget staff said former inmates would still receive the services, such as vocational training and addiction treatment, provided by the adult transition centers. “Instead of doing that from these adult transition centers located all over the state…they’re going to do it on electronic detention,” said David Vaught, Quinn’s budget director.”

Quinn’s budget proposal will also call for elimination of 24 out of the 90 Department of Human Services offices through consolidation. The plan also calls for the elimination of four Department of Child and Family Services offices from which Vaught said employees would be transferred. “They’re not going to reduce employees. They’re not going to reduce services," Vaught said of the consolidations. The proposal calls for the elimination of one of the state’s two agriculture laboratories, as well. A lab in Centralia would close, and a lab in Galesburg would remain open. “Everybody in the state is going to be affected by this downsizing of state government and this closing of state facilities,” Vaught said.

 Jack Lavin, Quinn’s chief of staff said, “Every year, we say, ‘This is the toughest budget,’ and I’m saying again this year, ‘This is the toughest budget we’ve ever faced.’”

However, Quinn also plans to call for some new spending. The governor wants a $20 million increase for early childhood education and a $50 million increase for the Monetary Award Program (MAP) grants for college students. Both areas have been cut in recent budget years. The governor also plans to revisit tax cut proposals pitched in his State of the State address as ways to spur economic growth in the state. Quinn also plans to propose new capital spending on schools, water systems and deferred maintenance at state facilities. His budget staff said that he does not have a specific estimate for how much new capital borrowing would be needed for such projects. They said new revenues would be needed to fund the projects but did not point to any one source. “We need to make sure that it’s not just about cutting. It’s about building and growing,” Lavin said of Quinn’s proposal.

What Quinn likely won’t give many details on are the two biggest budget issues he is looking to tackle this year: reforms to the Medicaid and public employee pension systems.

Quinn wants to hold Medicaid spending flat, which would mean staving off an estimated $2.7 billion in costs for FY 13. Stermer said that Quinn wants to work with legislators so see what changes can be made to state laws. He pointed to the list of services provided and said the governor wants to partner with legislators and reevaluate all services that are not required by the federal government. He said the state needs to step up implementation of managed care programs and focus on providing the consistent medical care people need to stay healthy. “We need to convert this whole thing to a wellness program,” he said. “We’re not just going to wait for people to go from provider to provider to provider and just pay the bills.” He called pushing Medicaid costs into future budget years — as lawmakers did with about $2 billion Medicaid bills that will carry over into next fiscal year — “a recipe for collapse of the Medicaid program.”

As for pension reform, Stermer said the working group he is heading is trying to tackle the issue, and any reforms they propose would be vetted by the standard legislative process. So it is unlikely Quinn will pitch anything too specific Wednesday. “We’re doing something very very akin to formal negotiations with stakeholders,” Stermer said.

Quinn is scheduled to present his budget Wednesday at noon.

Republicans: Pension shift would be a cut to education

By Ashley Griffin

While Gov. Pat Quinn says he plans to increase education spending under his budget proposal, some Republicans leaders say an idea he has pitched to reform the state employee pension systems would result in a potential $1 billion cut for downstate schools.

Quinn, Speaker of the House, Michael Madigan and Senate President John Cullerton have all publicly tossed around the idea of having school districts outside of Chicago pick up some of the cost of their teachers' pensions.

While Quinn plans to propose about a 1 percent increase in education spending during his budget address Wednesday, Republicans say his pension idea could lead to higher property taxes or possible layoffs. Quinn has said that schools should pay some of the pension obligation but hasn’t released any details about the idea.

“At this point, its an idea. We are not sure what and how they want to do this, but at the end of the day we are talking about shifting a $1 billion to local school districts. … So you are going to lose teachers or have a massive property tax hike,” said Sen. Ed Sullivan, a Republican from Mundelein.

With little details on the portion of costs school districts might have to pick up under such a plan and no tangible legislation in sight, some Republican leaders fear the worst for local districts.

“My school district, Wauconda, which is in the northern part of the legislative district, I am told it would take a hit of about $2.24 million [that] would be shifted onto that school district and that does mean massive layoffs or much higher property taxes,” said Rep. Kent Gaffney, a Republican from Lake Barrington.

During a Tuesday night budget briefing, Quinn’s budget officials did not give specifics on his plans for revamping the pension system; but they did emphasize how much teacher’s pensions make up the overall pension cost to the state.

Jerry Stermer, senior advisor to the governor, said that the Teachers' Retirement System (TRS) accounts for 51 percent for the overall pension cost, or $2.7 billion of the more than $5 billion the state has to pay pensions in Fiscal Year 2013.

“It’s been clearer and clearer to people that some employers are not directly responsible for the cost of paying retiree benefits,” said Jerry Stermer, who also heads a working group that he says is trying to negotiate changes to the system.

Stermer’s says his group is meeting with stakeholders on pension reform, and any ideas would have to go through the legislative process. So don’t expect specifics on pension changes during the governor’s budget speech scheduled for Wednesday at noon.

CapitolView

Charlie Wheeler (Public Affairs Reporting Program, UIS) and Andrew Thomason (Illinois Statehouse News), join moderator Jamey Dunn (Illinois Issues Magazine) to review the week in Illinois politics and government. A production of WSEC-TV/PBS Springfield

Lottery retailers say online sales will be bad for business

 By Jamey Dunn

Convenience store owners and other Illinois retailers are worried that a plan to sell lottery tickets online would cut into their profits and possibly lead to layoffs.

Following a decision by the U.S. Justice Department that allows for Internet lottery ticket sales, the state is moving forward with a pilot program to sell tickets for the Lotto and Mega Millions games online. The General Assembly approved the plan in 2009 as a founding source for the state’s capital construction program. Michael Jones, the superintendent of the lottery, said he expects Internet ticket sales to begin this spring, and he hopes to add Powerball ticket to online sales.

But retailers who sell such tickets are concerned that online sales will hurt their businesses. Bill Fleischli of the Illinois Petroleum Marketers Association and the Illinois Association of Convenience Stores said during a news conference today that lottery ticket sales bring customers into gasoline stations and convenience stores, and that prompts sales of other products, such as food and beverages. Since those other sales, and not gasoline sales, typically drive profits for gas stations — sometimes accounting for up to 90 percent of profits — Fleischli said anything that might reduce customer traffic into stores could be particularly damaging to businesses and potentially lead to layoffs. He said online lottery sales could result in 4,000 to 8,000 lost jobs. “And that would affect every county and every city in the state of Illinois,” Fleischli said. He added that lost jobs would mean a reduction in income tax revenues, and lost sales would cut into sales tax revenues.

Jones said that the online program would reach 300,000 to 500,000 Illinois residents who do not play the lottery now. “Our research suggested that it would attract a significant number of new players. ... There’s substantial revenue to be made for the state.” Those representing retailers said they do not want to block online sales, but they do want the implementation of the plan to be slowed down so their interests can be considered. “It can be a complementary and mutually beneficial relationship. It should not be one that pits main street retail against Internet [sales],” said Rob Carr, senior vice president of the Illinois Retail Merchants Association.

Retailers are backing House Bill 5676, which would lock in a 5 percent commission on sales for stores that sell lottery tickets. It also has provisions geared at driving online customers into stores. The bill, sponsored by Rep. Jim Watson, would also create a card, similar to a debit card, that would be required to buy online lottery tickets. The cards could only be purchased with cash, so they would likely have to be bought in stores, which would receive the commission on the sale, but they could be used to buy tickets in stores and online. Store clerks would also verify that purchasers are 18 or older. Fleischli raised concerns about the state being able to confirm the age of online buyers. “Our trained associates have been the gatekeepers for the lottery at preventing youth access because the lottery is an adult product. And we want to continue to be that partner and the gatekeeper,” he said. Prizes under $600 would also have to be collected at a licensed lottery retailer.

Fleischli said he and others representing retailers plan to met with Jones next week to discuss their concerns. The Illinois Lottery did not respond to a request for comment on HB 5676.

Sears tax break allows for layoffs

By Jamey Dunn 

One company that will benefit from a tax break brokered to keep jobs in the state announced layoffs today.

Sears told Crain’s Chicago Business that the company plans to lay off 100 people today from various departments at the company’s headquarters in Hoffman Estates. This comes just months after the General Assembly approved a tax break geared toward keeping the company in the state. The tax credit given to Sears is worth $150 million over 10 years. The company is required to maintain jobs and make a $300,000 million capital investment. Under the legislation, the company must have at least 4,250 employees at the corporate headquarters when the tax benefits go into effect next fiscal year and must keep employment numbers at that level. However, Sears currently employs about 6,100 people at the headquarters, which leaves the door open to more potential layoffs.

“Regarding the legislation passed last fall, this has no impact whatsoever on that measure. We are well above the minimum headcount requirements for … the new legislation — 4,250 — which takes effect in 2013. We have about 6,100 people currently working in our HQ. It’s important to know that under the legislation, if we don’t meet our obligations, we receive no benefits. We’re focused on improving our business and continuing to be a strong, contributing member of the Illinois business community,” Kimberly Freely, a spokeswoman for Sears Holdings Corp., said in a prepared statement. Freely confirmed today’s layoffs but did not comment on whether the company plans additional job cuts in the future.

“Obviously we’re not happy with this news. We’re not happy when any corporation cuts jobs,” said Brooke Anderson, a spokeswoman for Gov. Pat Quinn. But, Anderson said, without the tax cut, Sears might have left the state taking all of its more than 6,000 jobs with it. “The only thing surprising about [the layoff] announcement is that anyone is surprised,” said Rep. Jack Franks, a Marengo Democrat. Franks warned that the legislation allowed for layoffs when it was up for debate late last year.

Today, he pointed to the companies recent troubles, including disappointing holiday sales that the company said would lead to the closure of up to 120 stores. Sears announced 79 store closures at the end of last year, but none of the stores were located in Illinois. “We’re going to give [Sears] money to fire tax-paying Illinoisans,” Franks said. “If you’re going to help job creators, you ought to actually help job creators. Sears is not a job creator. Sears is the great terminator.”

While Franks said he opposed the Sears provision, he did vote in favor of Senate Bill 400, which contained the break for Sears as well as one for the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade. During floor debate, Franks requested that the Sears provisions be put into a separate bill, but he said he voted in favor of the measure because he supported a cut to the estate tax that was also included in the package. “I thought that the other things in the bill were by and large pretty good,” he said. The bill included several tax breaks for businesses, including an extension of a research and development tax credit and a credit for smaller businesses that had net operating losses.

Franks is sponsoring HB 3934, which would create a panel comprising business experts within the Department of Revenue that would approve future tax incentives like the one given to Sears. Franks said the group would look at the overall business performance of those seeking tax help to make sure that they are good investments for the state. He also said he plans to support a bill that would require businesses receiving tax breaks to maintain employee levels based on the headcount when lawmakers approve the tax breaks.

Rikeesha Phelon, spokeswoman for Senate President John Cullerton, echoed Anderson’s claim that the tax deal may have prevented a much larger job loss that would have occurred if Sears had left the state. However, Phelon said: “Sears hasn't violated the agreement, but their recent decision doesn't encourage good faith. If they do not fulfill their obligations in the future, the tax benefit will become void.”

Quinn's staff expects more revenue for upcoming budget

By Jamey Dunn

Gov. Pat Quinn’s budget team indicated today that he would likely have more money to work with in his upcoming budget than initially thought.

Budget Director David Vaught told a Senate budget committee in Chicago today that there would be “some revision” in the revenue estimate that was part of a three-year budget projection released in January. That document called for about $33.1 billion in total revenues. Vaught did not give specifics on how the numbers would change before Quinn's budget speech, which is scheduled to take place in a week, but he said revenues are “trending up.”

Vaught told the committee that Quinn does not intend to make the 9 percent cuts to all areas of spending that the January projection called for. Vaught said Quinn is not planning “across the board reductions of this size and scope in all areas.” But he added, “We will have them in some areas.” Quinn has said that he does not want to reduce spending on education and health care. Vaught reiterated Quinn’s desire to reform the Medicaid and pension systems this year, calling the growing costs of both “the squeeze” on other spending. Vaught said another goal for the year is to bring down the cost of health care to the state for retired public employees. He said a previous proposal to charge premiums to some retirees over a set income level would likely be up for consideration again. He also emphasized the need to address the backlog of bills but did not share details on what, if any, new ideas Quinn may present in his speech. Quinn has supported borrowing to pay down the backlog, but so far, that plan has found a chilly reception from many lawmakers.

Vaught added that Quinn plans to look at health care and human services as two separate areas of the budget this year because advocates complained that lumping them together led to human services being cut to keep up with growing Medicaid costs.

 Steve Schnorf, a member of the Budgeting for Results Commission and a former director of the Bureau of the Budget under former Gov. George Ryan, warned against a repeat of the fight over revenue estimates that happened last spring as lawmakers started the budgeting process for the current fiscal year. The House created a smaller estimate that the Senate and Quinn disagreed with, but that was what the budget was ultimately based upon. “Starting with an agreed upon revenue number … creates buy-in from all the players,” Schnorf said. “I think that buy-in is important.”

Vaught said that the three-year projection created last year was done hastily and that his office was “a little uncertain” about the revenues that the then newly passed income tax increase would bring in. He said the estimate this year is much more certain.

Today’s hearing was held to discuss the implementation of a new budgeting system, which would focus on the desired goals of programs and allocate money based on the success of programs toward reaching those goals. The system, known as Budgeting for Results, was signed into law by Quinn last year shortly after he presented his budget plan. This will be the first budget proposed under the new law, which requires the governor to create his plan based only from existing revenue. That means that — unlike last year — Quinn cannot pitch new revenue sources and tie spending to them.

Schnorf said that plans like Budgeting for Results aren’t new. “Most administrations have an initiative of some sort like this,” he said. “You go back through the last 30 years of press clippings and you would find initiatives like this announced by administrations.” But Schnorf said he thinks Quinn and lawmakers are committed to make the program work, and he predicted it would not become “sizzle rather than steak.”

 However, Schnorf warned lawmakers that if they focus only on tangible goals when making decisions and have an eye for programs that are measured as successful, they might not like the budgeting outcomes. He said that public schools, for example, may not rate as high performers and asked lawmakers: “Does that mean we should take the money away from them and invest the money somewhere else that has a better return on investment?"

He said that promoting successful programs during tight budget times would come at the cost of other programs that may not seem successful under Budgeting for Results measures but are nonetheless important to the state. “In a time of scarcity, the only way you can reward someone for performing well is by punishing someone else,” Schnorf said. “Every dollar you spend is a dollar you don’t have. You have to take it from somewhere else.”

Study: Chicago and Illinois among most corrupt places in U.S.

By Ashley Griffin 

If you thought Chicago and Illinois were among the most corrupt locales in the nation, you weren’t wrong, according to a  report released Wednesday.

According to the report “Chicago and Illinois, Leading the Pack in Corruption,” the Northern District of Illinois, which primarily consists of the Chicago metropolitan area, is the most corrupt federal district in the country, and Illinois ranks as the “third most corrupt” state. The report, released by the University of Illinois Chicago and the University of Illinois’ Institute of Government and Public Affairs, is based on data from the U.S. Department of Justice's Public Integrity Section that dates back from 1976.

“For a long time — going back to at least the Al Capone era — Chicago and Illinois have been known for high levels of public corruption,” Dick Simpson, head of the political science department at the University of Illinois Chicago and an author of the report, said in a prepared statement. “But now, we have the statistics to confirm their dishonorable and notorious reputations.”

In all, the Northern District has had more than 1,500 federal corruption convictions since 1976 and averaged 51 federal corruptions convictions per year. The report states: “The Illinois Northern District, which contains the entire Chicago metropolitan area, accounts for 1,531 of the 1,828 public corruption convictions in Illinois. Therefore, almost 84 percent of the state’s federal public corruption convictions took place in the Northern District. This makes it the federal district with the most public corruption convictions in the nation since 1976.”

New York and California ranked higher than Illinois for total corruption convictions by state. When corruption convictions were looked at on a per capita basis, the District of Columbia and Louisiana held the top spots, and Illinois again came in third.

James Nowlan, a senior fellow at the University of Illinois Institute of Government and Public Affairs, said of the rest of Illinois: “The other districts are much smaller in population, and they have significantly fewer, often very few, convictions for public corruption. A cursory look would suggest that Central and Southern districts are less corrupt than the Northern District.” However, Nowlan said such statistics could be misleading because prominent cases, such as the recent corruption trial of Springfield political insider William Cellini, are often tried in the Northern District, regardless of where they took place.

“We hope this report, imperfect as it is, does have some legs because I think most people in Illinois are distressed by the perception of Illinois,” said Nowlan, who is also one of the authors of the report. “Since the 1880s, Chicago has been known as a place in which people who enter public life often try to do well rather than do good, and so, the Chicago nexus of corruption has been with us more than a century, and it is rooted in machine politics, in which politics is a career for many who enter it.”

Despite such gloomy news, the report does make suggestions on how to address the problem. “Attacking corruption starts with a comprehensive programs of mutually reinforcing reforms. These should include a mix of corruption prevention and enforcement measure, along with public involvement and education,” states the report. It gives six recommendations that include amending the city’s ethic ordinance to cover aldermen and their staff and banning all gifts to all elected officials and public employees, except from family members. The report also supports Gov. Pat Quinn’s recently proposed constitutional amendment that would allow Illinois citizens to adopt ethics reforms by referendum.

“I haven’t seen it [the referendum] in detail, but Illinois has an ethics deficit, and anything we can do to improve our ethical behavior would be good for the state. So it sounds like it gives the citizens an opportunity to provide some input on ethical behavior, codes of ethics or other kinds of ethical programs,” Nowlan said. However, similar proposals from Quinn in the past have gone nowhere in the legislature.

Nowlan said public perception of the most corrupt states was spot on with the report’s findings. He said a yet unpublished national public opinion poll he conducted found Illinois ranked third among states most perceived as corrupt. New York and California also took the  top spots in that poll.

Nowlan said the report will be presented today to Chicago Mayor Rahm Emanuel’s ethics commission, but so far, there are no plans to present it to any statewide ethics panels.

Professors pitch SURS pension reform ideas

By Jamey Dunn 

As Gov. Pat Quinn and lawmakers say they want to reform the state’s pension systems, two university professors have presented a proposal to revamp the retirement system for the state’s higher education employees.

Jeffrey Brown, a finance professor at the University of Illinois Urbana-Champaign, and Robert Rich, director of the University of Illinois' Institute of Government and Public Affairs, created a proposal to reform the State University Retirement System (SURS). The plan was released by the Institute of Government and Public Affairs, with which Brown, a pension expert, also is affiliated. The authors said the proposal does not indicate any support from the university. The paper came with the disclaimer, “Any opinions expressed in this paper, as well as any errors, are those of the authors alone.” A call to the university for comment on the plan was not returned.

Rich and Brown looked at retirement plans in other states, as well as the private sector. Brown said they also consulted experts, academic studies, administrators and faculty when crafting their paper. When asked why he chose to tackle such a controversial topic, especially as a university employee who stands to collect SURS benefits someday, Brown said: “Why not? It’s an important issue. We’ve certainly never shied away from these kinds of things before in other contexts.”

The report contends that concerns over the state’s underfunded pension system threaten recruitment efforts at the state’s largest public university system. “Uncertainty about the viability of our public pension system is hurting the ability of public institutions to attract and retain employees. Universities  —  including our employer, the University of Illinois  —  compete in a global labor market in an effort to attract and retain many of the world’s leading scholars. The U of I’s ability to maintain its status as a world-class university hinges critically on its ability to make credible promises about employee compensation,” the paper says.

Rich said that he thinks it was important to present an alternative proposal to address what is shaping up to be one of the dominant debates of the spring legislative session. “The pension issue is one of the two most important budget issues facing Illinois; the other is Medicaid, of course. We felt that the debate in the last session of the General Assembly was dominated by Senate Bill 512, and there weren’t really alternatives on the table.” SB 512, sponsored by House Minority Leader Tom Cross, would require state employees to choose between paying substantially more for their current benefits, switching to the reduced Tier 2 benefit system that was approved for employees hired in 2011 and beyond or moving to a defined contributions plan much like a 401(k) account.

The report is critical of the Tier 2 pension plan, saying it is “widely viewed as inadequate.” The authors' plan proposes a so-called hybrid system for new employees, with the option for current employees to join voluntarily. They predict that many in Tier 2 would opt to move to such a hybrid plan.

Under the proposal, new employees could continue to receive defined benefits, but they would be reduced by about one-third. Those employees would also pay into a defined contribution plan, and employers would match contributions up to a capped percentage of employees’ salaries. The author’s say the hybrid plan would not cost more to the state than the current Tier 2 plan.

Brown said that while many argue that private sector employers have moved to defined contribution 401(k) plans, private sector employees still receive defined benefits through the Social Security system. “The SURS system is meant as a replacement for two different systems — the U.S. Social Security system and an employer-based retirement program. The dominant form of retirement plan in the private sector in the U.S. today is a [defined contribution] system plan (such as the 401(k)), but, importantly, it is a [defined contribution] system that is layered on top of a public-provided [defined benefits] system (Social Security). This mix of systems helps to balance the pros and cons of each system individually,” the paper says. The report says that a defined benefits plan allows for certainty because retirees would receive a set benefit that would continue until the end of their lives. However, it says including a defined contribution component  “ensures full funding, provides participants with more control and allows individuals to tailor their investment options to match their lifestyle and risk preferences.”

The proposal calls for current employees to pay more for their benefits but recommends that the increase be phased in over time and total no more than an additional 3 percent of pay. University employees currently pay 8 percent of their salaries into SURS. “SB 512 would result in an immediate near-doubling of the contributions required by current [university] employees, a fact that would have substantial negative effects on our ability to attract and retain talented employees,” the plan says. The two professors agree with Quinn and House Speaker Michael Madigan that the university also should contribute to the retirement costs of its employees, but the authors said  costs also should be phased in so they are not devastating to university budgets. The report said that the state should not be able to hand off the full costs of the pension system because lawmakers make decisions about pension benefits. It stressed that the state would be solely responsible for the existing pension liabilities.

“We realize that the extent of constitutional protection is controversial and open to some degree of interpretation. However, we believe that this very strong constitutional protection is important to take into account. Thus, we focus on reforms that change the system in ways that we believe may be constitutionally permissible,” the paper said. However, labor leaders and some lawmakers say that the constitution bars the state from requiring workers to pay more for their benefits, and Brown and Rich’s report acknowledged that it may be a problem. “We recognize that there is some debate about the constitutionality of requiring additional pension contributions: On February 3, 2012, a lower court in Arizona (a state with a pension non-impairment clause like Illinois) published an opinion that public employees cannot be required to contribute more without additional benefits. Were a similar ruling to hold in Illinois, these costs would need to be reallocated among the state and the employers.”

The authors say they chose to focus on SURS and not the other state retirement systems because it was the one they know the best. However, Rich and Brown agree that their plan could be tweaked and applied to other retirement systems. Brown said he wanted to highlight the differences between SURS and the other systems. “I thought it was important to establish the fact that higher education in Illinois does have some unique needs. The university system competes in a much more globally competitive labor market than a lot of the other public pension systems do,” Brown said. He said that universities, unlike school districts, have no potential for raising tax revenues to handle the burden if the state decides to shift all or most of the SURS costs to them.

Both authors cautioned against lawmakers pulling pieces of their plan, which they say is a holistic approach, and discarding others. Brown said that any pension reform needs to address several goals, such as reducing costs, sharing funding burden and making sure that the benefits are attractive enough to recruit needed talent. “You’ve got to be careful not to treat this like a menu where you can take one little piece of it. On the other hand, we don’t expect that it’s all or nothing,” He adds, “If you only did one piece of it without addressing the other issues, you could create all kinds of problems.”

Rich said he hopes that some version of the plan will eventually be drafted into legislation and become part of the debate that is likely to occur soon in the General Assembly this session. But so far, there is little feedback from legislative leaders and Quinn.

Cross is still reviewing the plan. According to a prepared statement from Sara Wojcicki Jimenez, his spokeswoman, Cross “is open to looking more in depth at any ideas to reform our systems and is thankful when people and organizations bring them forward. Analyzing them just takes a little time.”

Senate President John Cullerton, who has maintained that any changes to benefits for current workers are unconstitutional, has yet to read the plan. But Ronald Holmes, his spokesman, said in a written statement: “The Senate president is encouraged that the education community has stepped forward and offered ideas to begin tackling pension costs. He's looking forward to reading the report and hearing from other interested parties on how we can achieve a fair and constitutional remedy in the weeks ahead.”

Quinn spokeswoman Brooke Anderson said in a prepared statement, "everything is on the table to strengthen and stabilize our pension system." 

For a look at pension reforms in other states, see our three-part Illinois Issues blog series here, here and here.

Illinois to get $1 billion in foreclosure settlement

By Jamey Dunn

Under a national settlement reached by states and five of the nation’s largest banks, Illinois would get $1 billion in relief for borrowers whose homes are in danger of foreclosure.

The $26 billion settlement announced today came in response to the nation’s largest lenders engaging in sloppy and sometimes fraudulent foreclosure practices, such as signing off on documents without verifying information, a practice known as robo-signing. Sketchy and sometimes nonexistent paperwork led to errors, miscommunication and cases of mistaken identity. It created a bureaucratic nightmare for those trying to work with banks to find a way to stay in their homes. (For more on robo-signing and the issues that led up to today’s settlement, see Illinois Issues March 2011.)

“Many companies that handled these foreclosures didn’t give people a fighting chance to hold onto their homes,” President Barack Obama said at a Washington, D.C., news conference today. “In many cases, they didn’t even verify that these foreclosures were actually legit. Some of the people they hired to process foreclosures used fake signatures on fake documents to speed up the foreclosure process. Some of them didn’t read what they were signing at all.”

The settlement was reached between federal regulators, many of the states' attorneys general and Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Bank, formerly GMAC. Illinois Attorney General Lisa Madigan was a key player in the negotiations. “After many months of investigation and negotiation, I’ve concluded that this settlement accomplishes two major goals: It provides timely help for struggling homeowners, and it establishes new rules for mortgage servicing that will protect homeowners in the future,” Madigan said in a prepared statement.

Most of the money will go toward efforts to keep borrowers in their homes. Those who cannot make their payments may be eligible to refinance their homes at better interest rates than their original loans. Homeowners whose houses are “under water,” which means a home is worth less than what the homeowner owes on it, could be eligible to have the amount they owe reduced. Borrowers who lost their homes between 2008 and last year could be eligible for up to $2,000 if they were victims of shoddy foreclosure practices. According to the Chicago-based Woodstock Institute, 400,000 homes are under water in the Chicago area alone, and about 800,000 are in danger of becoming under water if the housing market takes another downward turn. The average Chicago-area homeowner in an under-water house owes about $61,000 more than the home is worth. Banks have three years to dole out benefits from the settlement and face further penalties if they do not.

The deal also sets out new rules for banks and mortgage servicers. They will be required to consider making a deal known as a loan modification with borrowers in danger of losing their homes instead of dismissing such requests outright. Borrowers will be able to appeal if a bank refuses to work with them. While a bank is considering a modification, it cannot foreclose on a home. Previously, homeowners faced such conflicting signals as having a bank agree to a modification, only to turn around and foreclose shortly after. “It’s been a very real concern for borrowers and for housing volunteers, and there’s been a lot of frustration with this [practice],” said Tom Feltner, vice president of the Woodstock Institute. Feltner said that while the settlement will not make all of those touched by the banks negligent practices whole, it is a positive step toward changing the system. Previous efforts, including a federal program to get banks to modify loans, have come up short, but Feltner said the settlement would require banks to “build loan modifications into their business practices.”

Dawn Dannenbring, an organizer for the Bloomington-based community advocacy group Illinois People’s Action, said that although the settlement comes with what seems like a large price tag, it does not make a dent in all the damage caused by the banks. “The $25 billion is just a drop in the bucket.” Some important details of the plan remain unclear, she said. “Who decides who gets the money?”  Dannenbring said her group opposes allowing the banks to make such choices. “The banks have already had the opportunity to do right,” she said. One bright spot of the settlement, she said, is that it does not grant banks immunity from investigation and litigation going forward, something that was discussed during negotiations. “We think that is the best part of this settlement deal.”

Obama has created a special task force to investigate the issues surrounding the housing crisis. “We’re going to keep at it until we hold those who broke the law fully accountable,” he said. He emphasized that today’s settlement does not close the book on the housing market collapse. “No compensation, no amount of money, no measure of justice is enough to make it right for a family who has had their piece of the American dream wrongly taken from them. And no action, no matter how meaningful, is going to by itself entirely heal the housing market, but this settlement is a start.”

Madigan echoed his statement. “While the settlement is a big step forward in our efforts, it is not the end. In Illinois, we will continue to take strong legal action against lenders, banks, servicers and others who contributed to the housing and economic collapse,” she said.

Feltner said that Illinoisans who think they might qualify for help through the settlement should talk to a counselor who is certified by the U.S. Department of Housing and Urban Development. “The best advice is free advice. You don’t need to go to an agency offering to help with your foreclosure issues for a fee.” Madigan urged those who have questions or are interested in seeking relief from the settlement to call a toll-free hotline: (866) 544-7151; visit her website,  www.illinoisattorneygeneral.gov/consumers/bankforeclosuresettlement.html, or the federal site,  www.nationalforeclosuresettlement.com.

Community groups wait for details on Quinn's infrastructure plans

By Ashley Griffin

Gov. Pat Quinn announced new infrastructure projects during his State of State address last week, but so far his plans are short on details.

One plan that Quinn announced was a $6 million competition to build ultra-high speed broadband networks across Illinois neighborhoods.  According to a statement from the governor’s office, the $6 million is actually not new spending. The money would come from funding included in the 2009 capital construction bill for information technology and broadband infrastructure. The fund is managed by the Department Of Commerce & Economic Opportunity.

 However, House Speaker Michael Madigan warned during an appearance at Elmhurst College in January that there will not be enough money for all the spending laid out in the capital bill because the revenue projections the bill was based on have not proved true. Madigan said the slow implementation of a plan to allow video poker at some bars and restaurants is partially to blame. He said he would like to support new infrastructure projects but asked, "Where do you find the money to pay for it?”

 Although Quinn’s office would not release its plans for the competition, Quinn said during his address it would help communities all over the state. “Through this challenge, we want our neighborhoods to become gigabit communities with Internet connections more than 100 times faster than today,” Quinn said. “Our goal is to build smart communities that will foster the job engines of the future.”

John Kersh, visiting urban project planner for the Urbana-Champaign Big Broadband project, also known as UC2B, said: “In the most general terms, there are many individuals who represent organizations that would love to have funds available to provide low- or no-cost computer equipment or other digital devices, while others would love funding for youth and adult training to increase digital literacy. Others would appreciate funds for publicly accessible computer labs.”

 UC2B has the goal of installing 293 miles of fiber-optic cables in the Urbana-Champaign area. The group was able to establish an open-access broadband network throughout the area from a $3.5 million grant in 2010 from the state of Illinois and a $22.5 million grant from the U.S Department of Commerce’s National Telecommunications and Information Administration.

 “I’m sure we’ll all be waiting anxiously to see how, when, if this program takes shape,” Kersh said of Quinn’s proposed competition.

 In his State of the State address, Quinn also called for water infrastructure investments, such as replacing broken water mains, upgrading sewers and building sewage treatment plants though his Illinois Jobs Agenda for 2012.

 “Clean Water is the lifeblood of our people and our communities,”  Quinn said. “Illinois is blessed with abundant water from Lake Michigan, to the Illinois River, to the mighty Mississippi. But many Illinois residents are living with aging water mains that are nearly 100 years old.”

He added, “Working with mayors from Chicago and the suburbs to every part of downstate, we must invest in our Clean Water Initiative.”

A spokesperson from the Illinois Municipal League declined to comment about the need for such improvements or Quinn’s proposal until the governor’s office provides more details. Lawmakers have expressed concerns about whether there is money in the state’s tight budget for the projects.

 “At a minimum — as we just went through the numbers very quickly — he has advocated spending an additional $500 million dollars. We don’t have any money. All these things sound good, but we can't afford them. I think that’s what disturbing,” said House Minority Leader Tom Cross.

 But despite Illinois’ budget situation, some support such investments.

“Water systems run under the ground. For most people, it’s out of sight, out of mind, but in fact, those systems do need to have added investment,” said Doug Whitley, president of the Illinois Chamber of Commerce. “The Illinois Chamber is willing to step up and be a partner on many of the themes that were in the State of the State message.”

For more on the business community reaction to Quinn's State of the State speech, see Illinois Issue Blog Feb. 1, 2012.

Bill to allow recording of police clears House committee

By Jamey Dunn 

Illinoisans who record police officers on the job can face felony charges with a penalty of more than a decade in prison, but that could change under a bill approved by a House committee today.

Currently, making an audio recording of a police officer at work without his or her permission violates the state’s eavesdropping law. House Bill 3944 would create an exemption allowing people to tape law enforcement officers on duty on public property. “Right now, if a citizen does that, it’s a Class 1 felony carrying the potential for a 15-year penalty,”  said Rep. Elaine Nekritz, a Democrat from Northbrook who sponsored the bill. “And citizens are being charged under the current law for doing nothing more than what thousands of citizens do every day in Illinois and what we all do, which is to pull out our cell phone, open up our camera and start recording.”

Nekritz called her bill “a very narrow exemption designed to deal with a very specific concern.” She hopes to pass the legislation, which would become effective immediately after being signed into law, before the upcoming NATO and G8 summits, which are scheduled to be held in Chicago this May. Thousands of protesters and journalists are expected to visit the city for the conference, and Nekritz said the concern is that people will be slapped with felony charges for taping police action that could potentially take place at protests or elsewhere. She said many people are unaware that making such recordings are against the law.

Proponents of the bill say it brings the law up to date with new technology. “This is a good policy because of the reality of the world that we live in. The law was originally passed decades ago when we had very little means of communication, compared to today when we carry cell phones with cameras, cell phones with video cameras with sound capability,”said Robert Loeb, a criminal defense attorney speaking on behalf of the Illinois State Bar Association.

While the bill passed easily through the House Civil Law Committee on a 9 to 2 vote, lawmakers who voted in favor of it said they were concerned about the definition of a public place in the measure. Under Nekritz’s proposal, the definition would be drawn from existing laws. Nekritz gave the example that the lobby of a policy station would be a public place while an interrogation room would not be. Under the measure, people in their own homes would not be allowed to record police.

Patrick Coughlin, deputy chief of the Cook County state’s attorney’s narcotics bureau, said that it would be difficult for citizens to know which places are considered public and which aren’t. Her said the bill could actually lead to more arrests because it might give people the false sense that they can record police anywhere. Coughlin said that the state’s eavesdropping statute is facing multiple court challenges, and he urged lawmakers to wait until judges rule on the underlying law. “You’re simply adding to the maze, which is the Illinois eavesdropping exemption law … rather than fixing the problem,” he said. Coughlin said the law should be changed to single party consent, meaning that one person in a conversation can record it without permission from the other person. However, when asked by lawmakers if the state’s attorney’s office would put a hold on charging and prosecuting violators until the courts rule, Coughlin said no. “Right now, the law is presumed to be valid,”  he said.

Coughlin said that Nekritz's bill would allow bystanders to record police conversations with witnesses and victims without consent and could interfere with police actions. Peter Baroni, a lawyer and public policy consultant for the Illinois Fraternal Order of Police Labor Council, agreed. “It would have a suppressive affect on anonymous witnesses who wish to give information.” Baroni called the proposal “overly burdensome” to police and said that it “singles out” law enforcement. He added that ignorance of the law is no excuse for breaking it. “The fact that people don’t know that this is illegal rings a little less than straight,’ he said. “The fact that people may not be aware of this is not a valid point in terms of its enforcement.”

However, some lawmakers said they weren’t aware of the law. “I was astounded to know that we’ve had such a law on the books. I really was,” said Rep. Dwight Kay, a Glen Carbon Republican, who voted in favor of the bill.

Legislative panel critical of Quinn's plan to close two facilities

By Ashley Griffin 

Leaders in Gov. Pat Quinn’s administration appeared before the General Assembly's Commission on Government Forecasting and Accountability on Tuesday to update legislators on a plan to close two state institutions. 

COGFA members took Quinn’s representatives to task over the lack of details in the administration's plan to close Tinley Park Mental Health Center and Jacksonville Developmental Center. After receiving a new120-page proposal just hours before the hearing, some lawmakers were left puzzled.

“It’s hard for us to comment on anything when we just received a 120-page document,” said Rep. Patti Bellock, a Republican from Hinsdale and co-chair of COGFA. Members said they did not get the plan until last night, and some said they had not seen it before this morning’s hearing.

 “I voted in the fall in favor of the closure, but I have to say I don’t feel comfortable on the details you provided, we only receive them at the end of the business day yesterday. Everybody would like to see it to ask better questions,” Sen. Jeffery Schoenberg, a Democrat from Evanston, said during today’s hearing. 

Committee members also called for more information from the working group that helped Quinn choose the facilities that are scheduled for closure and urged the governor to hand over a more comprehensive report from the group's meetings.

 Rep. Al Riley, a Democrat from Hazel Crest, said that the original closure plan was done hastily. “You are much like an advocate. I’m a state rep and my responsibilities are broad,” Riley said to representatives from the Department of Human Services (DHS). “Your policies are affecting a lot of people and a lot of different entities and it is my responsibility to find that [information] out.”

But the biggest concern for some lawmakers was how much would the plan actually cost.

Schoenberg said the proposal to transition patients from institutions to community care settings contained no information on what the move would cost and how it would be paid for. Without the info, he said it “has the potential to be a false promise” to patients and families. For more on the plan to transition from institutional to community care, See Illinois Issues February 2012. 

 “One issues is this: cost. The administration will say that cost is but one factor, that they are really looking for patients' care, but cost is a factor. Cost is a factor, and we can’t really agree on what the numbers are because to implement their plan, it's going to cost money,” Riley said..

 But according to those working on the proposed closures, the plan is progressing well.

 “Our goal is to help make sure that the General Assembly is as informed and aware of what we are doing at all of these levels as possible,” said Michael Gelder, a senior health policy adviser to Quinn. “We are proud of the effort that we are taking to implement our plan.”

DHS is reaching out to mental health providers in the Chicago area to find treatment for those who would have gone to the Tinley Park Facility, said Debra Ferguson, senior deputy in chief of clinical operations for the Division of Mental Health at the department. She said many who end up at Tinley Park also need addiction treatment services, which are available in community settings.

 Kevin Casey, director of the Division of Developmental Disabilities at DHS, says a comprehensive plan must be made for every resident at the Jacksonville Facility to address specific needs before it closes. He said when people are shoehorned into existing openings in the community, the placements often fail.

 Despite the reservations of some lawmakers, others continue to support of the plan.

 “To me, it still continues to make great sense to move folks into the community … and to redirect that money into community based services,” said Rep. Elaine Nekritz, a Democrat from Des Plaines who also voted in favor of closing both facilities last fall.

 “From a policy-maker’s perspective, I personally am less concerned about the details and more concerned about the fact that if we don’t make this choice, then we have to make other hard choices. And this to me should be one of the choices we’re making.”

 According to Bellock, COGFA hearings near both facilities will be scheduled in the coming weeks. “This will give us some time to review, and we’ll set a date within the next few days.”

Director says prepaid tuition program 'lost its way'

By Jamey Dunn 

The state's prepaid tuition program, College Illinois, is no longer fulfilling its mission, according to the director of the commission that administers the program.

The Legislative Audit Commission today reviewed an audit of the Illinois Student Assistance Commission (ISAC) that has caused ISAC and College Illinois to come under scrutiny. The program is being investigated by the legislature, the secretary of state, the auditor general, the inspector general and the attorney general. Gov. Pat Quinn replaced the majority of ISAC commissioners in the fallout. For more on the audit, see Illinois Issues May 2011.

ISAC has cut off sales of new prepaid tuition contracts until problems with the program can be resolved.

The audit found problems with the way ISAC got investment advice. After ISAC took the questionable advice, the program lost a $12.78 million investment in a bank that went under. “We will make sure that these findings do not repeat,” said John Sinsheimer, the interim executive director of ISAC. He said while he did work as ISAC's chief financial officer when the $12.78 million in investment was made, he was not involved in the decision. Sinsheimer served as director of capital markets for the state before he returned to ISAC. “We will no longer do direct investments of this nature. Period.”

Critics say many of the investments made by ISAC for the program are too risky. “This whole world of alternative investments, which over the last three years the past board embarked on, I think it’s too risky. It’s not what parents signed up for,” said Rep. Jim Durkin, a Republican from Western Springs.

College Illinois is underfunded by about 30 percent. Sinsheimer said that the program is in no immediate danger of running out of money, but it could have problems paying out by 2020. “We can’t solve this problem by ourselves, and the stock market won’t fix the problem, either. It’s going to require working with the university systems and working with the General Assembly and stakeholders to develop a solution that works for everybody.”

Sinsheimer said among the 10 other states that offer similar programs, some have had to rework their plans, and Illinois has many options to consider. College Illinois currently sells tuition by the semester. He said that one option might be requiring people to instead buy credit hours, which can vary greatly by semester. “There are a number of potential solutions out there that we believe should be discussed openly with the stakeholders.” The most extreme option Sinsheimer mentioned was permanently cutting off sales of new contracts and asking the General Assembly to find the money — in addition to College Illinois’ $1.1 billion fund — needed to pay off all outstanding contracts. However, Sinsheimer said he thinks Illinois should have a program like College Illinois. “But I think it’s lost its way, and it has become far too expensive for the average Illinoisans too afford.”

Sinsheimer said the program is no longer doing what it was created to do. “We need to fix College Illinois,” he said. “In essence, it has drifted from its policy goal, which was to help make college affordable for all Illinoisans.” He said that contracts are “predominantly” held by residents of the northern suburbs of Chicago and the collar counties because contracts were “sold very aggressively” to state workers in the 1990s. Sinsheimer said that there is also “kind of a blip around Springfield.”

He said that increasing tuition costs are outpacing investments. “There is no way College Illinois could invest to meet that kind of growth. This is a problem that was destined to happen no matter what College Illinois invested in.” Sinsheimer said that discounts from universities could help get the program get back on its feet. “College Illinois pays full sticker price to all of the universities.”

Sen, Bill Brady, a Bloomington Republican, said that ISAC must have set prices too low for contracts, mismanaged investments or both. Sinsheimer acknowledged that the contracts were priced too cheaply in the “early years of the program.” Brady said that if universities were to give ISAC a break on tuition costs, it would mean that they were being asked to “subsidize” costs for a select group of students who bought contracts.

But Sinsheimer said it is something colleges already do for many students.

“When my daughter went to college, before we even accepted, she got a letter offering her a 5 percent discount encouraging her to go. So did my son,” he said. “The schools are already offering discounts and subsidies — if you will — to students to attract them, and there’s nothing you can do about that. We just need to have that in this program in order to make it more viable because it can’t keep up with tuition growth. There’s just no way that it can do that.”

Pilot project aims to help neighborhoods blighted by foreclosures

By Ashley Griffin

During his State of the State address on Wednesday, Gov. Pat Quinn proposed a new initiative to restore vacant foreclosed properties in the Chicago area. On Friday, he was joined by Cook County Board President Toni Preckwinkle and six Cook County mayors to announce the Illinois Building Blocks Pilot Program.

The program aims to stabilize neighborhoods, protect property values, preserve the existing local tax base and increase affordable housing stock in six communities in Cook County: Berwyn, Chicago Heights, Maywood, Park Forest, Riverdale and South Holland.

“The Illinois Building Blocks Pilot Program is a strategic effort to help stabilize communities struggling with the foreclosure crisis,” Quinn said in a prepared statement. “By turning vacant properties into affordable housing, we’re assisting existing homeowners, strengthening hard-hit neighborhoods and boosting affordable homeownership options for working families.”

According the latest report from Realty Trac, a California-based company that monitors housing sales, Chicago leads the United States in the number of foreclosed homes.

 “With the highest inventory of foreclosed homes in the nation, the Chicago region requires a focused foreclosure response like the Illinois Building Blocks Pilot Program,” Mary Kenney, executive director of the Illinois Housing Development Authority, said in a written statement. “This program represents a multifaceted approach and is an important part of Gov. Quinn’s overall housing strategy to address the economic, public safety and quality-of-life issues caused by abandoned and foreclosed properties.”

“Abandoned properties burden communities by creating blight, attracting crime and reducing the local tax rolls,” the statement from Quinn’s office said. “On average, homes located the same block as a foreclosed property can drop $8,000 to $10,000 in value.”

With $40 million allocated from the 2009 Illinois Jobs Now! program and $10 million from Cook County, the pilot project  aims to help 500 current homeowners in the area avoid foreclosure. It includes a second component that provides $5 million in assistance for homeowners to purchase vacant properties, along with grants of $10,000 for 500 homebuyers to help with down payments and closing costs.

“I am excited to partner with Gov. Quinn and the state of Illinois in this joint effort to stem the tide of the foreclosure crisis in our underserved communities and revitalize Cook County’s neighborhoods,” Preckwinkle said. “We must continue to focus on a regional economic development strategy that more effectively leverages our resources to spur economic growth, and the Building Blocks program is a step in the right direction.”

Although the program has received some support, some lawmakers wonder if the state can afford such a program in cash-stricken times.

“Every one of these probably sound good … they all look and sound good, but to come in and say, “I want you to spend another $500 million dollars …’” House Minority leader, Tom Cross said Wednesday during a news conference to criticize Quinn's proposals to spend money on new initiatives. “In about two or three weeks, he’s going to come in and say, “I want you to borrow four or five billion dollars to pay bills. How does that jibe? It doesn’t jibe. So they all sound good and they look good and they are appealing, but can we afford them? And I think we all know the answer to that.”

Quinn pitches tax cuts to spur economy

By Ashley Griffin 

As Gov. Pat Quinn presented his take on the status of the state today, lawmakers and business leaders said they were listening specifically for the governor’s plan to grow Illinois’ economy.

Quinn gave them the Illinois Jobs Agenda for 2012, which includes three-targeted tax cuts for the state’s working families, employers and veterans.

“We owe it to the next generation to continue our progress of the past three years,” Quinn said in his speech. “To create jobs and grow our economy, we must continue to invest in Illinois and help everyday people.”

The plan aims to permanently abolish the natural gas utility tax in Illinois; establish a child tax credit for parents, which would provide a $100 direct tax credit for the average family of four; and create a tax credit for companies that hire unemployed veterans.

The governor’s budget office estimates that abolishing the natural gas utility tax will provide $164 million in savings for families, the child tax credit will provide $130 million in savings for parents raising children and the tax credit to hire veterans will provide $5 million to $10 million in savings for employers. The total cost would be about $300 million. Quinn’s budget spokesperson, Kelly Kraft, said the governor would lay out how he plans to pay for the agenda when he delivers his budget address later this month.

“The governor and the General Assembly have been good in the past couple of sessions in giving us the kind of tools we need, but we have to be able to put more disposable income into the hands of our working families, and we have to put our veterans back to work. They’re good incentives that will help both business and families and create jobs,” said Warren Ribley, director of the Illinois Department of Commerce and Economic Opportunity.

But some lawmakers are skeptical of the plan.

“We don’t have any money. All these sound good, but we can't afford them,” said House Minority Leader Tom Cross. “That’s what is disturbing … the failure to acknowledge the gravity of the situation.”

“He imposes a 67 percent tax increase, extracting one week’s pay out of every family and business, and yet he turns around and tries to pretend to provide some sort of relief without having any meaningful reform,” said Sen. Bill Brady, a Republican from Bloomington. “I am sure I can support all of them because they are needed, but he’s not hitting the core of what we need to hit, and that is eliminating the deficit and the debt in order to bring jobs back to Illinois,”

Members of the business community supported some of Quinn’s ideas. “He touched on some new areas that we were surprised by, most particularly the idea of reducing the cost of doing business in Illinois by repealing the utility tax. … That should be a real job benefit to a lot of companies that are heavy users of natural gas,” said Doug Whitley, president of the Illinois Chamber of Commerce. “All in all, the Illinois Chamber was very pleased.”

However, some said they did not hear everything they were hoping for. “Certainly he set a tone that was positive. Talking about jobs is always a good thing,” said Todd Maisch, vice president of government affairs for the state Chamber of Commerce. He said he was disappointed that Quinn did not bring up reforms to the way the state judicial system handles medical malpractice suits, something that has long been on the wish list of many business organizations.

Maisch added that that some of the reforms Quinn counted as victories still need work. “I would say probably the most troubling was the notion that workers comp and unemployment insurance are reforms that are done. We have not scratched the surface. Those need to get back on the agenda and in a hurry.”

Quinn proposes new spending in upbeat State of the State address

By Jamey Dunn

 Gov. Pat Quinn focused on the positive as he gave his State of the State address today.

He highlighted recently passed legislation such as education reform and the Illinois Dream Act.

He touched on some of his favorite stories of Illinois success, such as job growth at a Chicago Ford plant and the state’s large volume of agriculture exports.

“We have invested in our state, making it a better place to do business. And we have invested in the people of Illinois, helping our working families and improving education. The results are in from major export growth and the largest public works construction program in state history to solid gains in education. We’re back on course. Illinois is moving forward,” Quinn said in his speech.

“I felt like I was listening to the story of the Emperor’s New Clothes, and he was walking down the street saying, ‘Boy, my clothes are beautiful,’”  said Senate Minority Leader Christine Radogno.  “And the rest of the state — the citizens — are saying, ‘He’s naked!’ It’s like he totally doesn’t get it that the focus here needs to be on the problem we all agree is out there.”

But Senate President John Cullerton said Tuesday that the state has made progress in the last few years, and Quinn should celebrate it in his speech.  “I commend the governor for highlighting the many accomplishments that we have made over the last few years,” Cullerton said in a written statement released today.

“I think he did the right thing by stating the real positives that we have here in Illinois, and we have many positives,” said Comptroller Judy Baar Topinka.  “But we also have a big tab right now that we have to pay.”

Quinn pitched several initiatives, but the response from lawmakers and other Illinois officials was “show me the money” that will pay for new programs.

“I’m sure they’re all excellent proposals. … It all boils down to revenue, money, balanced budget. Where is that going to come from?” said Sen. John Sullivan, a Rushville Democrat. “We want to work with the governor. If he has some ideas on how we can come up with that revenue, we’re willing to take a look at it, but you know it’s just going to be extremely difficult in this situation.”

Palatine Republican Sen. Matt Murphy said: “He spent a significant amount of time in his speech talking about new spending. It’s just detached from reality.”

Quinn proposed a series of tax cuts that he said would help to spur economic growth and create new jobs. He said he wants to make "major investments" in classroom resources, such as new technology, early education and the Monetary Assistance Program. Both preschool funding and MAP grants have been cut in recent years. He said he wants to make investments in the state’s water systems, such as new water mains and sewage treatment plants. Quinn solidified the goals of doubling Illinois exports by 2014 and having 60 percent of residents holding a certificate of post high school education by 2025.

Quinn’s budget office estimates that the tax cut plan would cost about $300 million. The budget office did not supply cost estimates for other parts of Quinn’s plan. “Today, our focus is on the vision for our state. …The governor looks forward to working with legislators on these investments, as well as investments in college scholarships, early childhood education, affordable housing, clean water for communities, and 21st century schools that will continue moving Illinois forward,” Kelly Kraft, Quinn’s budget spokesperson, said in a written statement.

Republicans gave a figure of $500 million as a ballpark cost of all the proposals Quinn made. They complained that Quinn did not address the state’s growing backlog of unpaid bills, which a recent report says would reach $35 billion in five years if no action were taken. “He didn’t refer to the backlog at all, really. It’s there. I see it everyday,” Topinka said. “You certainly don’t solve this problem by creating new programs, even though they do generate a lot of feel-goods. … If I had a calculator in my hand, it would have blown up. There’s no way to pay for all these things.”

Quinn has proposed borrowing to pay down the backlog, and Cullerton said Tuesday that he would support a bipartisan borrowing plan. But Murphy said, “The borrowing is dead on arrival.”

Warren Ribley, director of the Department of Economic Opportunity said Quinn’s proposals would help spur job growth. “I think the goal of having 60 percent of our population with an accredited degree by 2025 will certainly provide a strong foundation for growing jobs and moving the economy forward. … We have to continue to invest in infrastructure. I work with business every single day, and the two things that they tell me that we need are strong investments in your infrastructure and strong investments in your education. So it’s very consistent with what I hear.”

Rilbey said that today’s speech was an “opportunity to lay out a vision,” and Quinn would address how he proposes to pay for his proposals when he presents his budget later this month. Cullerton said he was willing to wait for the budget address to get the details on spending. “As he advances new initiatives to create jobs and improve the economy, I look forward to hearing how we can fund these important priorities within a balanced budget,” Cullerton said in a prepared statement.

However, Republicans were less patient. “He’s had three years,” House Minority Leader Tom Cross said. “And these issues just get worse and worse and worse.”

Lawmakers on both sides of the aisle said they were pleased that Quinn called for Medicaid and pension reform this year. “Fixing the pension problem will not be easy, but we have no choice,” Quinn said. “I was encouraged to hear him about pension reform and Medicaid reform. I hope he will show the courage he talked about in tackling those issues in the coming weeks,” Murphy said. “They are the two 800-pound gorillas that are sitting in two different corners of the room that we have to address,” said Sullivan. “It’s not going to be an easy task. Is the will here to do it? I don’t know.”