House votes to restore Medicaid cuts, pay old bills and fund construction projects

By Jamey Dunn

The Illinois House voted Wednesday to restore several cuts to Medicaid and to tack more than $1 billion in spending onto the current fiscal year’s budget.

Senate Bill 741 would rollback several Medicaid program reductions that were cut under sweeping Medicaid reforms approved in 2012. The bill would restore podiatry services and preventative dental care for adults. It would lift the four-prescription limit for people with “severe mental illness.” It would also remove the limit on the number of physical therapy sessions patients can access. The bill allows for more funding for programs that care for children with extensive medical needs, such as those on ventilators. “We are restoring this simply because we have found out from experience that these cuts actually did not save us money. They cost the people of the state of Illinois more money, and they brought suffering and hardship to families. They brought overutilization to our emergency departments and interfered with the delivery of health care to other patients in need,” said Chicago Democratic Rep. Greg Harris, who sponsored the bill. The restorations would cost $221 million upfront. However, the spending would bring in federal matching funds, so Harris said the net cost would be about $125 million in general revenue funding.

Opponents questioned rolling back changes to Medicaid that were put in place to ensure that the system remained sustainable at a time when the state was pushing billions of Medicaid bills from one fiscal year into the next. The reforms now bar the state from shoveling Medicaid bills into future fiscal years. “How are we going to pay for that, and how are we going to sustain the system for the people who need it most?” Rep. Patricia Bellock asked on the House floor.

Those who have advocated to restore the cuts argue that they do not save the state money in the long run because Medicaid patients are forced to skip preventative care but later call on the system once their health deteriorates into an emergency situation. Chicago Democratic Rep. Mary Flowers said that a lack of dental care means missed wages when Medicaid patients stay home from work with tooth pain and missed opportunities when dental problems, such as missing teeth, keep them from making a good first impression at job interviews. “Access to dental services—like filling, cavities, root canals, dentures—means that the most vulnerable in our state will not need to suffer from unnecessary pain,” she said. 

Harris also sponsored House Bill 6060, which would add $1.8 billion in spending during the current fiscal year. Around $1 billion would go toward paying down old bills, and $600 million of that would go to Medicaid, triggering federal matching funds. The backlog stands at about $4.7 billion now. The money comes from new revenue that came in this year above projections for Fiscal Year 2014.

The House also reapproved ongoing capital construction projects for next fiscal year and tacked some new spending on, while they were at it. The new spending includes:

• $13 million for sewage treatment and water projects. 
• $10 million grant to the Uptown Theatre in Chicago. 
• $40 million for school construction projects outside of Chicago. 
• $35 million to Chicago Public Schools for school construction projects. 
• $50 million for back pay to state employees in the departments of Public Health, Human Services, Corrections, Juvenile Justice and Natural Resources. The money would cover about half the cost of deferred raises that the state owes employees. 
• $50 million for the Chicago teachers pension fund. 

 Chicago Democratic Rep. Barbara Flynn Currie, who sponsored HB 3793, said that the money for the additional spending would come from revised revenue estimates for Fiscal Year 2015 and funds left from the sale of the state’s 10th casino license.

 The measure did not have a standard committee hearing and came to the floor just hours after the amendment that contains the spending was filed. “We need to pass this bill if we want to make good on the commitments and promises we have earlier made,” Currie said of the spending that was part of the ongoing capital program. Republicans called the vote on the more than 1,000-page-bill rushed and argued that they did not have time to know what the legislation contained “We’re making a substantive vote with very little time to vet this vote,” said Downers Grove Republican Rep. Ron Sandack. “We seem to continue to do the wrong thing the wrong way, so I guess that’s consistency if nothing else.” 

House Speaker Mike Madigan also released his hold on the House budget bills approved yesterday, and they have been read into the record in the Senate. That means that the Senate could technically pass the budget and—as many in the Statehouse have been speculating—the spring session could adjourn a day early on Friday. However, such rumors always run rampant at this time of year. And so far, that possibility falls into the rumor category.

Veto session is over, or is it?

By Jamey Dunn

Illinois lawmakers approved the spending to set up the state’s concealed carry of firearms permit today, but other issues such as pension reform, tax breaks for corporations and enhanced penalties for gun offenders will have to wait.

The House adjourned abruptly this morning after a procedural move blocked a bill to increase mandatory sentences for drug crimes. Senate Bill 1342 would increase the mandatory minimum sentence for felons or gang members caught carrying a gun without a Firearm Owners Identification (FOID) card to four years. The proposal would require those convicted of the crime to serve 85 percent of their sentence.

Sponsor Mike Zalewski, a Riverside Democrat, removed a provision that would have applied to first-time offenders and in doing so was able to get the support of the National Rifle Association. But members of the black legislative caucus opposed his bill. Chicago Democratic Rep. Kenneth Dunkin used a House rule to block the bill from being called for a vote because the budgetary impact of the measure was not made available to lawmakers through a formal process known as a note. “I filed the note on behalf of the Illinois legislative black caucus for those of us in the House and the Senate,” Dunkin said. We have expressed time and time again that we have some basic problems with this mandatory minimum — that it’s too all encompassing, it takes in way too many people unnecessarily. The collateral damage is going to be overwhelming, and it’s going to wrap up too many innocent citizens. All we simply wanted to do was to make sure that the bill went after the bad guys.”

After the notes were filed and the information was not immediately available, House Speaker Michael Madigan quickly adjourned the fall session. Harrisburg Democratic Rep. Brandon Phelps, who sponsored the state’s new concealed carry law, has been working on the bill with Zalewski. He said he was not exactly surprised that the bill did not move forward today because he said many Democrats told him they had reservations about it. “The speaker said that we’re not doing it today, more or less. ... We spent so many hours working on this and we had a deal. Now we’re not doing it today at all. So we’ve got to come back in December, hopefully we’ll call it then.” Several House members mentioned as they exited the chamber that they expect they might return in December to take up public pension legislation.

Zalewski, who has partnered with Chicago Mayor Rahm Emanuel to push for the proposal, blamed the Illinois Department of Corrections for not providing details of how the measure would affect its budget and prison population. The IDOC opposed the bill because officials said the department did not have the money or capacity to house the population in crease it would cause. “The Department of Corrections knows how much the bill costs. It’s their basis for their opposition of the bill. Yet they couldn’t walk down to the House clerk’s office and file it in time,” Zalewski said.

A spokesman for the department said the changes to the bill yesterday made it difficult for them to recalculate the impact quickly enough. “This is a very complex piece of legislation, and every time the sponsors file amendments changing provisions of the bill, there is substantial work and analysis that must be done to determine the impact of the changes,” Tom Shaer with IDOC said in an email. “Amendment 5 was just added to this bill yesterday afternoon. IDOC has had staff analyzing the impact of this amendment since that time. We have tremendous respect for everyone in this process and are obligated to furnish them with accurate information and thorough, well-researched projections.”

Members of the black caucus say they want to address the violence in a more holistic way that includes investments in education and rehabilitation programs. “There is a way to do both of these things. To make sure that the people that need to go into prison go into prison but that we also deal with the 40 percent of people who are there for nonviolent offenses, who need to be in cheaper alternative programs that give them a better chance and a shot at life. While also making sure that the folks who need to be there, and that’s felons and gang bangers, actually end up in prison — in a prison that has room for them to be there,” said Chicago Democratic Rep. Christian Mitchell. “I think that the mayor and Rep. Zalewski are trying to do the right thing, but the how really matters.” Some caucus members added that they were concerned that some of the previous felonies that would make offenders eligible for the mandatory minimum sentence were nonviolent offenses, such as shoplifting. They also said they would like to see a time limit, so that a crime that occurred a decade ago would not make someone eligible for a mandatory minimum sentence.

Zalewski said he has been working to negotiate the bill and that some who are opposed will never support the concept of mandatory minimum sentences. “I’ve negotiated on this bill for six weeks. ‘No’ is always going to be the answer for some people. You saw it today. You saw an unwillingness to have a debate about public policy and public safety. And [opponents] resorted to tricks because the votes were there. That’s what happens in this building sometimes.” But members of the black caucus disagree that the bill would have passed if called for a vote.

Meanwhile the Illinois Senate approved a supplemental spending bill worth about $50 million. The largest chunk of that, almost $34 million, is for implementation of the concealed carry licensing system. Only about $500,000 of the spending in the bill comes out of the General Revenue Fund. House Bill 209 does not include the $112 million that would be needed to give state workers back pay. In 2011, lawmakers did not appropriate the money for contractual raises for state employees, but a judge ordered the state to pay the increases with interest. House Speaker Michael Madigan has said that state agencies should work within their current budgets to find the money for the pay. Sen. Mike Jacobs, a Democrat from East Moline, voted in favor of the bill, which received broad bipartisan support. But he said that lawmakers would eventually need to approve the money for workers. “I just think it’s important that the Senate knows that we owe this money and at some point in our career, in our lives, we ought to pay it.”

With the House adjourning after less than an hour spent in session today, many issues were left without resolution. Supporters of tax break plans for Archer Daniels Midland Co. and the newly formed Office Max Inc. saw no urgency to call those measures for a vote in the Senate when it became clear that the House would not vote on them today. ADM is looking to move its headquarters from Decatur and is considering Chicago, among other options. Office Depot Inc., the product of a merger between Office Depot and Office Max, is choosing between Naperville, Office Max’s current headquarters, and Boca Raton, Fla., where Office Depot is based.

The House also did not take up a bill that passed in the Senate yesterday to restore Medicaid dental benefits to adults. Chicago Democratic Rep. Monique Davis said that she thinks that the House will likely approve that bill early next year. “I think it’s going to pass. I think it’s going to get a lot of support. We’ll get it when we first come back in January. We’ll be able to do that because that will be one of the first few days we can do that.” If lawmakers wait until January on some issues, they will need fewer votes to achieve an immediate effective date on legislation. “Don’t think because we’re not on that House floor that people aren’t working. People are working,” Davis said. Some issues may not have to wait until January. House Speaker Michael Madigan has said that he hopes lawmakers will hold a session to vote on changes to the state’s public pension systems. Legislative leaders met on the issue last week and say they feel progress was made. They sent components of a plan to the pension systems to get cost savings estimates. Those projections usually take about 10 days to produce.

Having another potential shot at a legislative session soon may give those who could not get their bills passed during veto session another bite at the apple. However, knowing that they could be back at the Statehouse in the near future, lawmakers may have deflated some issues by taking urgency out of the situation. Why take the controversial vote today that can be pushed off for another month? Still, with the historic passage of same-sex marriage, approval of a supplemental appropriation bill, and both chambers passing changes to the pension system for Chicago Park District employees, this veto session was more eventful than many in recent memory.

Quinn blows off committee that plans to blow his deadline

By Jamey Dunn

Members of a committee working to hammer out a pension reform compromise say Gov. Pat Quinn’s public threats about the deadline he set for them tomorrow are “counterproductive” to their work.

After the legislative conference committee on pension was formed at the governor’s request last month, Quinn gave the members three weeks to produce a pension bill. Tomorrow, their time is up. Committee members say they have no plans to present legislation tomorrow. The governor has not said what he will do if lawmakers blow the deadline, only that there will be “consequences.” Quinn told reporters in Chicago today: “It’s time for the General Assembly to put a pension reform bill on my desk. They have had one excuse after another for the last two years. It’s time for them to do their job. If they don’t do their job by tomorrow, there will be consequences.”

Both chambers of the legislature will be in session tomorrow to take up Quinn’s amendatory veto of concealed carry legislation. Despite the governor pushing the issue at several public events over the last few days, sponsors say they are confident they can find the votes to override Quinn’s changes.

Conference committee chair Sen. Kwame Raoul said the group has agreed to use a proposal from professors at the University of Illinois Institute of Government and Public Affairs at the University of Illinois as a framework for their proposal. The plan would swap the current 3 percent compounded annual COLA, which is the largest cost driver in the pension systems, for a COLA that is tied to inflation. Under SB 2591, which a Senate committee took testimony on this week, the COLA would be one-half of the adjusted Consumer Price Index from the previous year. That means that in times such as recent years, when inflation has been low, retirees would receive small COLAs or sometimes no COLA at all. But in years when inflation is high, retirees would get larger COLAs. Employees would also have to contribute 2 percent more of their salaries to their retirement benefits. However, Raoul said that the ideas the committee is considering are not identical to that plan.

Members of the committee say they are making progress, but they need estimates of cost savings, which are provided by actuaries working for the pension systems. “We have been working methodically to try to break from the process that has led to stalemate,” said Raoul, a Chicago Democrat. “What we dream of — of having bipartisanship and working in bicameral manner — we’re experiencing that on this conference committee, and that’s worthwhile in itself. But we have to solve the problem.” Without those numbers, they say they cannot have a clear picture of what the cost savings from a proposal might be. The group has agreed on several potential components of a plan, which they have sent to the systems for number crunching. Once they get the estimates back, they plan to choose from the list as a menu of options that can be pieced together. “You don’t want to do these things without having it actuarially scored. It would be irresponsible,” he said. “It would be irresponsible for us to just propose something by July 9th.” Raoul said the estimates are expected to be completed next week. He said the group might need to get another round of projections once they have a final plan together.

While Quinn talked tough in Chicago today, he declined an invitation from the committee to testify in Springfield. After a bill-signing event in Chicago, Quinn traveled to Springfield and was working in his office during the hearing. He sent instead Jerry Stermer, the director of his budget office. Stermer has been working with the committee as Quinn’s point man on pension changes. While members grilled Stermer about the deadline today, they said that they would have rather put the screws to Quinn. “What is more important for him today? ... He made a choice to send you instead of coming himself,” Raoul said. Raoul’s letter to Quinn gave him the option of sending someone to represent him. “I hate that you’re the person that has to be here instead of the governor himself.” Many of the members of the committee echoed Raoul’s statements, saying Stermer had worked well with the group so far.

Stermer would not get specific about what sort of plan the governor would like the see come out of the committee process. “The governor’s proposal has been and continues to be: We need a comprehensive solution that stabilizes these systems and enables the systems to actually pay the pensions of the people who have earned them, will erase the unfunded ability, get to 100 percent funding and end the squeeze on the major obligations of state government,” he said. He parroted these components as a response to questions from the committee so many times that his repetition eventually drew laughter from the public audience.

Sen. Matt Murphy, a Palatine Republican, noted that many members of the two chambers had very different ideas about what constituted comprehensive changes to the pension systems, and these differences lead to gridlock. Both the House and Senate approved their own pension plans during the spring session, but each failed to pass the plan that came over from the other chamber. Murphy said that if the governor does not get specific on components or at least the amount of savings he thinks are needed, “how do we know whether the plan solves the problem [in his eyes]?” Raoul agreed. “It is important to get a sense from the gentleman who is going to sign the final bill as to what he perceives as fixing the problem.”

Stermer would also not give specifics about what consequences lawmakers face after they miss tomorrow’s deadline. He only said that one of the consequences would be that they would have to explain it to their constituents. Quinn has yet to sign one budget bill, House Bill 214, which is the spending authority for several state programs and agencies. It also contains the funds for state  lawmakers' pay. There has been speculation that he will veto the funds for legislator’s paychecks. This would force them to either present a pension bill or override his veto. An override would make great campaign fodder for any potential opponents wanting to claim that lawmakers put their own interests ahead of taxpayers by returning to Springfield to approve their own pay without a pension agreement. A spokeswoman for the governor declined to comment on the rumors, saying only that the bill is “under review.”

Committee members argued that instead of pushing their work ahead, Quinn’s deadline and bluster could put a strain on the negotiations. “We all have that goal, and I think it would behoove all of us to behave in a fashion that would move us toward that goal,” said Rep. Elaine Nekritz, a Northbrook Democrat. Raoul said that Quinn’s prodding is not making the committee rush, but that members do understand that the situation is urgent. “The conference committee is working. We’re not going to finish our work by tomorrow. Whatever, the governor’s consequences [are], that’s fine. We’re going to continue to working whether or not there is a consequence tomorrow.”

But those working for Quinn point out that as lawmakers have failed to get the job done, the unfunded liability has grown to nearly $100 billion, and Illinois has paid the price through higher borrowing costs after being slapped with several credit downgrades. They say the governor is tired of hearing excuses from lawmakers about why pension reform cannot be passed. “He made it very clear to the members that they had three weeks to forge a compromise. It’s their responsibility to do so,” said Quinn spokeswoman Brooke Anderson. “What exactly is there to give taxpayers any assurance that lawmakers will enact comprehensive pensions reform and finally resolve this problem?”

Raoul said the group is getting two different messages from Quinn: the sound bites for the media and their own interactions with Stermer. Quinn’s office made some suggestions that actuaries are also working on. The estimates on Quinn’s proposals will not be complete until July 12. “The reason that I invited the governor was because there was a bit of an inconsistency as to what was being said from his office publicly and the work that Mr. Stermer, the representative of his office, was doing privately. So you want to know which is which. Am I wasting my time with Mr. Stermer and having these discussions? Should I be listening to ... Brooke Anderson? Who’s telling the truth here? The only person who could resolve that — you know, the buck stops at the governor.”

Illinois Senate approves more budget bills

By Jamey Dunn

Illinois Senate Republicans supported legislation today to spend unexpected tax revenue on the state’s old bills but rejected the rest of a budget plan crafted by Democrats of both legislative chambers.

Education spending, which the Senate approved Wednesday, passed without Republican support, and the vote totals for the rest of the about $35 billion Fiscal Year 2014 budget looked the same today. The one exception was that most of the Republicans in the chamber voted in favor of a measure that would put an unexpected income tax revenue windfall toward the state’s stack of unpaid bills. House Bill 206, the supplemental appropriation that would pay down bills this fiscal year, now heads the Gov. Pat Quinn. The education budget bills — Senate Bill 2555 and SB 2556 — await a vote in the House. The legislation also includes the payments to debt service, employee health benefits and pensions.  “I think it’s a responsible use of the additional billion dollars that came in from income tax,” said McHenry Republican Sen. Pamela Althoff.

House and Senate Democrats crafted the budget this year after cutting Republicans out of talks a few weeks ago. Here’s a breakdown of the bills:

HB 208 is the operational spending for state education agencies, as well as some higher education costs, including student aid.

HB 213 is human services funds and Medicaid spending.

HB 214 is general services spending, the General Assembly’s budget and the constitutional officers' budgets.

HB 215 is public safety and transportation spending, Illinois Department of Corrections budget, capital construction spending for the next fiscal year and the Illinois Department of Natural Resources budget.

The bills give some lump sums to state agencies to allow for flexibility in funding programs and personnel costs. Sponsors said the hope is that agencies can manage spending and meet the requirements of the new public employee union contract, which includes pay raises. However, the proposal does not include funding for previous raises still owed to state employees. Democratic Sen. Heather Steans of Chicago said $60 million is in an escrow account that can be used to start to pay down those wages. But she said she does not know of any immediate plans to pass a supplemental bill explicitly for the back pay. A representative from Quinn’s budget office said during a Senate budget committee hearing yesterday that the administration does not plan to provide all the back pay without a supplemental spending bill because it would likely require layoffs, something Quinn’s office says he wants to avoid.

Quinn and the American Federation of State, County and Municipal Employees are backing a spending bill to cover the back wages, but as of today, the bill is sitting in the House, still on second reading. It could not pass in its current from before tomorrow's adjournment deadline. However, the measure could be drafted into a different bill and still make it through by the end of the day tomorrow. “There is strong bipartisan support in the General Assembly for HB 212, the supplemental appropriation to pay wages owed to caregivers, correctional officers and other state employees dating back nearly two years,” said Anders Lindall, a spokesman for AFSCME Council 31. “Public servants shouldn’t have to wait a day longer for the wages they earned, and Illinois taxpayers shouldn’t have to pay another penny of interest or legal costs incurred by the state’s continued failure to fulfill its responsibility to its employees.” The raises were not paid to workers in 2011 because Quinn said that lawmakers did not approve the funding for them.

Sponsors of the budget plan said that paying off bills this fiscal year with the additional revenues would make next year’s budget less painful. They said the spending for next year fully funds programs and agencies and will keep them from having to budget from crisis to crisis, as has been the case during the past few years. “We should not have any providers getting notices next June that they’re not going to be getting payments,” Steans said. Such notices went out to childcare providers last year and providers of in-home care for the elderly this year. In both cases, lawmakers approved additional spending late in the fiscal year to keep the programs afloat. The budget would reduce many human services operations by 3 percent from Quinn’s proposed budget. Grants would be cut by 1 percent from the budget introduced by Quinn, but many areas, such as community mental health, would be shielded from the reduction. The Department of Corrections would see a $70 million increase that supporters say was needed to avoid further prison closures.

Republicans complained that the rest of the budget does not reflect their priorities and that funding went to programs without proven results. They hit on $1.5 million included for a program that is a perennial target for their criticisms: Grow Your Own Teachers. Republicans said the program, which works to encourage minority residents to become teachers in the state, is too expensive and pointed to historical statistics that show that the bulk of enrollees drop out before receiving teaching certificates.

Democratic Sen. Dan Kotowski of Park Ridge acknowledged the past problems with Grow Your Own Teachers, but noted that it has improved its stats. He said that after the program was unable to show lawmakers that its results justified its spending line, they program was cut and restructured. He said now the graduation and placement stats are better. “When we said to them last year, your data isn’t good enough they came back” with improvements, Kotowski said. “We’re seeing progress as a result of the policy decisions and the changes that we made here as a byproduct of the appropriations process.”

Republicans said the money would be better spent on K-12 education or restoring some of the Medicaid cuts made last year. “Including things like this in this budget undermines the credibility of the budget overall because they lead to the conclusion that the budget is more of a political document than it is an outcomes-based reflection of priority,” said Sen. Matt Murphy, a Palatine Republican.

Senate approves education budgets

By Meredith Colias 

Illinois Senate Democrats voted today to give education an extra boost by using unexpected income tax revenue to avoid further cuts next year.

Senate Bill 2555 and SB 2556, funding bills for K-12 and higher education, passed on a party line vote. About $155 million is being added to the K-12 education budget to keep the general state aid pro-rated at 89 percent, which is its current level. The House approved the other pieces of the budget yesterday. Democrats from both chambers reached a budget deal this year after cutting Republicans out of talks a few weeks ago.

Park Ridge Democratic Sen. Dan Kotowski, the sponsor of the legislation, called it a “true, accurate, transparent budget.” Bilingual education and early childhood education funds will remain the same. Transportation will also remain flat, although it has been severely underfunded because of cuts in recent years. At present, the state is only reimbursing schools for 64 percent of their student transportation costs. Under the proposal, the state would fail to meet the recommended per-student funding level for the third year in a row.

Republican lawmakers complained about about the K-12 budget during floor debate, saying their districts are struggling to make do. Currently, two thirds of districts are running deficits. “We’ve done everything we can, and all we do is get cut,” Lebanon Republican Sen. Kyle McCarter said. “We’ve made every cut we can make.” Democrats were criticized for introducing the bill in advance of the budget implementation bill, which is the final blueprint on how the money is going to be spent. “We haven’t seen the full picture, and yet we are voting here today,” Mahomet Republican Sen. Chapin Rose said.

Sen. Kimberly Lightford, a Democrat from Maywood, blasted Republican members on the floor who said they are concerned that their districts are missing funding after Republicans have called for budget cuts for years. “You have fought against” increasing education budgets for the last decade, she said. “All of a sudden, you realize you have poor kids in your districts. Now it is touching home.”

The higher education budget approved today lacked the 5 percent cut called for in Gov. Pat Quinn’s proposed budget. Quinn presented cuts to both K-12 and higher education because he said the growing pension costs were putting pressure on other areas. But a windfall of one-time only tax revenues spared both education budgets. “I'm not going to advocate for a budget that cuts for another year,” Kotowksi said.

Rose said that even though higher education is funded at essentially the same level as this fiscal year, universities would continue to struggle because the state is behind on its payments from the current fiscal year. “When you don’t pay people, it really doesn’t matter,” he said.

House and Senate Democrats see eye to eye on budget but not on pensions

By Jamey Dunn

House and Senate Democrats are working together on a state budget plan that they hope to have completed early next week.

“The fact that the House and the Senate Democrats actually worked together on the budget is a first in the last four years, so I’m encouraged by that,” Senate President John Cullerton said after the Senate adjourned this afternoon. “And we have an agreement on the amount of money that we have to spend and a general idea of where these categories of money should go — how much for higher ed, how much for elementary and secondary, that sort of thing. And we’re working through all the different line items over the weekend.” He said Democrats hoped to fund K-12 education at the same level as last year and to avoid the cuts proposed in Gov. Pat Quinn’s budget. Cullerton said that in the Senate, he planned to share budget information with Republicans when Democrats are done with the process, and Republicans would have time to look over the plan. “We will vote on it maybe two to three days later.” House Speaker Michael Madigan declined to discuss the budget or pension reform efforts today.

House Republicans had been meeting with Democrats on budget issues, but Sara Wojcicki, a Republican spokesperson, said those talks have been “canceled indefinitely” this week. As for Senate Republicans: “We have been excluded from the budget process, but when we see the Democrats' budget, we hope it puts Illinois on a path to end the 67 percent income tax they promised would be temporary,” Patty Schuh, a spokesperson for Senate Minority Leader Christine Radogno, said in an email. “We would also like to see it end the Road Fund diversions blasted by the auditor general and fix the school funding inequities that give Chicago a disproportionate share of state education funding.” A recent audit found that money from the road fund was being spent on other costs, including paying off bonds from past road construction projects.

Cullerton said both legislative chambers are still at an impasse on pension changes. The House and Senate both approved bills that would reduce benefits for public workers, but neither body has voted on the other's legislation. Madigan and Cullerton have different views on what strategy for reducing pension costs would be possible under the state’s Constitution. Cullerton’s proposal is supported by unions representing state workers and teachers. Cullerton noted that a bill that is sponsored by Sen. Daniel Biss and which is similar to the House plan, failed by seven votes in the Senate. “I’m sponsoring that bill,” he said of Senate Bill 1, which passed in the House. “It doesn’t have enough votes [in the Senate]. It has fewer votes than Sen. Biss’ bill because now the unions have gone out and they’ve actively worked against it. So I’m going to continue next week to see if I can reach some kind of a compromise.” Cullerton said he thinks his plan would pass by a wide margin if called for a vote in the House.

He indicated he would be open to returning to his original proposal, which would include the House measure. His proposal, then, would be considered as a plan B if the Supreme Court rejected the pension changes backed by Madigan. But such a proposal could lack support of the unions. “That would be up to them to decide. I suppose they probably would be against it. That’s why I’m having trouble passing Senate Bill 1. I just want to emphasize that I’m not holding us back from trying to advance a compromise.”

House considers early childhood education

By Meredith Colias

The Illinois House today considered legislation that could shape the early childhood education of some students in the state.

The chamber approved House Bill 2762, which would require children to start school if they are going to turn 7 any time during the school year. The bill’s sponsor, Rep. Sue Scherer, a Decatur Democrat, said clarifying the starting time for school-age children would help elementary schools enforce truancy laws in cases where parents take advantage of the fact that the state technically does not require their soon-to-be 7-year-old child to attend school. Scherer said parents sometimes tell truancy officers that  their children are not “really truant.”

Opponents of the bill said a parent should have the final say about when they believe their child is ready to attend school. “At this point in the child’s life, the parent can make a very wise decision based upon what they know on the maturity of the child,” said Rep. Mike Bost, a Murphysboro Republican. Bost said the measure is “forcing the situation where we, the state, feel that we are better than the parents themselves.” Scherer said the cost of the change would be difficult to estimate because it is uncertain how many affected children are not attending school. “There’s just no way of knowing until we actually we do it,” she said. Senate Bill 1307, which would move the school age from 7 to 5, could also soon come up for a vote in that chamber.

A House committee today considered the pros and cons of requiring kindergarten for all school-age children. House Bill 2405 would require all districts to provide kindergarten classes for the entire school day. More than 85 percent of school districts already offer full-day kindergarten classes to students, according to the Illinois Federation of Teachers. Paula Corrigan-Halpern from Voices for Illinois Children said that because the Common Core curriculum being introduced in Illinois schools will require children to show a broader array of learning as they progress, it is important for them to be better academically prepared early on. “There are going to be skills that kids have to master in kindergarten,” she said.

Low-income and disadvantaged children would potentially benefit the most from the proposal because they tend to be most affected academically if they do not start school at an early age. They can enter school less ready to begin subjects such as reading and math because they typically have lower vocabularies and less developed cognitive skills than their peers from higher-income homes. Better-educated parents are usually more prepared to know how to encourage their children’s early cognitive development, giving them an academic advantage when they actually enter school. The State Board of Education (ISBE) estimates that 49 percent of Illinois students live in poverty, according to a recent analysis.

 A main issue with the proposal for full-day kindergarten is the potential cost. An ISBE spokeswoman said the board does not have an estimate on the cost of extending full-time kindergarten statewide, although she said the money to implement it would potentially come from General State Aid. Laura Farr of Chicago Public Schools, which is beginning a similar initiative, estimated the citywide program would cost about $15 million and affect 30,700 children. Farr said providing early childhood education is “an essential part of getting kids a learning base.”

Mike Chamness of the Illinois Association of School Administrators said the decision to offer kindergarten classes should rest with local districts. Because the state is prorating General State Aid further from 89 percent in FY2013 to 82 percent in FY2014, he said districts could not afford to pick up the cost. “There are a lot of good ideas out there, and those good ideas cost money,” he said. Chamness said districts are already struggling with how to deal with budget cuts from the state, and many are in the process of cutting further programs and potentially laying off staff. “It’s like holding a dam: You plug a hole and another one bursts open,” he said. “That’s what local districts are facing right now.”

The committee chairwoman, Rep. Linda Chapa LaVia, an Aurora Democrat, said she supports the idea, but said lawmakers would have to resolve the money question. “It’s almost child abuse if we don’t do it,” she said. “It’s just a question of money.”

DHS bogged down by big caseloads

By Jamey Dunn

The Illinois Department of Human Services is struggling to provide services as some workers face caseloads of more than a thousand people.

Michelle Saddler, the agency's director, said that the department is understaffed. “Many of you have probably heard DHS is behind or DHS has a backlog,” she told a House human services budget committee today. “We at DHS overall need more realistic staffing.” The department is asking for $3.6 billion for fiscal year 2014, the same amount proposed under Gov. Pat Quinn’s budget. DHS is expected to spend more than $3.2 billion this fiscal year. The department was cut by almost $150 million under the current fiscal year’s budget.

Linda Saterfield, director of the division of family and community services at DHS, said some of her caseworkers have caseloads as big as 2,600. “If you calculate that out, that leaves that worker less than 45 minutes over the course of a year to serve that family.” The average caseload in the division, which administers such core safety net programs as Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance program, averages more than 900 cases per worker. That compares with the year 2000, when the average was just under 250 cases per worker. Saterfield said that one in four residents are served through one of the division’s programs. “Our caseload has grown dramatically, but our staffing levels have reduced so much that we are unable to adequately meet the needs for services,” she said.

Kevin Casey, director of the Division of Developmental Disabilities at DHS, said there are about 11,000 people with developmental disabilities waiting for services in Illinois. He said the wait time can be up to four years. “It really is a struggle to understand how they get from one day to another at times,” Casey told the committee. He said the department does have a plan to reduce the number of people on the wait list over the next few years. Casey told committee members that he would later calculate what it would cost to address the wait list immediately. “It’s a choker of a number. It would take a good deal of money to serve everyone on that waiting list.”

Theodora Binion, acting director of the Division of Mental Health at DHS, said that more than 80 percent of people in need of mental health services are not receiving them. “Eighty percent of the people who need mental health services aren’t getting them? Something fundamentally is wrong with that system,” said Rep. David Leitch, who serves on the committee. Leitch said that he thinks lawmakers should prioritize mental health funding over other requests the department might have. “To overlook this, to me, is quite a crisis. I think we should as a committee take a very hard look [at it] before we add a lot of new employees at DHS and do some of the other things.” Binion said steps are being taken to serve more people through managed care programs. “I think that there are plans afoot to increase the capacity.” (For more on the lack of funding for mental health care in the state, see Illinois Issues March 2013.

One factor in the department’s struggle to administer services to people in need is increased demand. “One in three people in Illinois are living in poverty or teetering on the edge of poverty,” said Samantha Tuttle, the director of policy for the Heartland Alliance for Human Needs and Human Rights. The alliance is an anti-poverty organization that tracks statistics across the state. Tuttle said the state is not doing enough to combat poverty growth. “Illinois has taken steps backwards in addressing poverty, and it shows.” She said recent cuts in virtually every area of human services have given the poor few places to turn. “Taken together, they’re really a dismantling of our safety net system that helps mitigate the experiences of people living in poverty and moves people out of poverty.”

While the DHS is asking for a funding increase, in part to pay for additional staffing, Saddler said she is aware that lawmakers are facing big budget issues. “We understand that we are all under the pressure of the large pension crisis and that that must be dealt with.” Saddler said the department is doing its best during a difficult time to care for Illinoisans. “If DHS cannot be run on a culture of caring, then who can? Every time that we find that we’ve done something that’s not caring, we pick ourselves up and try again.”

Suburban administrators say transportation cuts hit classrooms

By Meredith Colias

Suburban administrators struggling to cover transportation costs say they cannot bear deeper cuts next year.

Angela Smith, an assistant superintendent in the Plainfield Community Consolidated School District 202, told a House committee that reducing the money the state pays for regular school bus costs to her district will only force it to look for cuts in other parts of her budget, such as staffing and basic programs. She said cuts to the state transportation reimbursement should not give lawmakers a false sense that teachers and students would not be impacted. “It’s going to affect the classroom, there’s no way around it,” she said.

Gov. Pat Quinn proposed a cut to regular transportation funding that is almost as large as his proposed cut to General State Aid. Under his plan, aid would be cut by $150 million, while the money the state gives schools to transport kids would be reduced by about $145 million. Quinn’s cut would take transportation funding from $206 million in the current fiscal year to more than $60 million in Fiscal Year 2014. However, the House education budgeting committee has led the way on the state education budget in recent years, and its proposal could be different from what the governor has pitched. “There are going to be cuts. We are experiencing enormous challenges here,” said Rep. David McSweeney, a Barrington Hills Republican and a member of the committee.

At the same time the transportation budget is expected to decrease, more school districts statewide are struggling to cover costs. The state board of education is estimating two-thirds of school districts will run a deficit in the next fiscal year. Both Smith and Tom Leonard, superintendent of Barrington Community Unit School District 220, said they were concerned with safety issues and were straining to figure out how to transport students over larger areas in their districts as efficiently as possible. Districts are not able to charge parents to make up the difference for busing their children because it would also reduce their share of General State Aid. Districts have taken measures such as spreading bus stops out farther from each other in an attempt to streamline costs as much as possible. “We’re stretched that to the point where there’s not very much [more] that can be done,” Smith said.

“We are trying to be efficient. More cuts will lead to stranger things,” Leonard said. Smith said the “easy” and “hard” options have already been taken in many district’s budget. “All that’s left are the really hard things,” she said.

Rep. William Davis, who chairs the committee, said that he is sympathetic to the cuts. He said that he plans to advocate for new revenues as he has in past budget years. “We do understand what cuts do,” he said. Davis, a Homewood Democrat, suggested that administrators could lobby their own suburban representatives, most of whom are Republican.

ISBE: More than half of Illinois school districts face budget deficits this year

By Jamey Dunn

More than half of Illinois school districts will spend more money than they have this fiscal year ,according to analysis from the Illinois State Board of Education.

According ISBE report, more than 570, or about 67 percent, of schools will deficit spend this fiscal year, which ends in June. That number has increased from 425 districts, or about 48 percent last fiscal year. The analysis ranks schools on their fiscal stability based on factors such as how much cash a district has on hand and its debt load. More than 100 school districts have dropped out of its highest ranking category since last year and the number of districts in the lowest category, called financial watch, has doubled, going from 17 districts to 45. But 13 percent of Illinois districts fell in the bottom two rankings, up from about 6 percent last year. The number of districts on the financial watch list decreased each year from 2004 to 2009. The number went up in 2010, declined in 2011 and 2012 and spiked under the current analysis. (Financial rankings for all of the state’s school districts can be found at ISBE’s website.) This is the 11th year that ISBE has done such an analysis.

The rankings have been changed to account for slow payments from the state to schools districts. The state currently owes schools more than $630 million. According to ISBE, no schools are put on financial watch based solely on late payments.

ISBE officials attribute the decline in districts’ financial stability to cuts in state funding. They say that K-12 education has been cut by almost $900 million since 2009. “It is no surprise that our analysis shows the harmful effects of multiple cuts to education funding by the legislature. School districts have already eliminated thousands of teaching positions, increased class sizes, delayed facility repairs and so on, all in an effort to reduce expenses,” ISBE Chairman Gery Chico said in a prepared statement. “We cannot expect Illinois to remain competitive in a global economy if we continue to shirk our responsibility to children as our schools struggle to make ends meet.”

The board has requested $875 million in additional funding for Fiscal Year 2014. “The Illinois State Board of Education is simply asking for what is required by law in fully funding General State Aid,” Superintendent of Education Christopher Koch said in a prepared statement. “While we understand that difficult decisions must be made and that there is a great deal of pressure on the state budget, we are asking the legislature to meet its constitutional commitment. This recommendation is aggressive but desperately needed to provide much-needed financial relief to districts.”

Gov. Pat Quinn’s budget proposal would cut K-12 education by $275 million from current fiscal year levels. Quinn said growing pensions costs necessitate cuts in education. “Skyrocketing pension obligations leave our state with no choice but to continue reductions to our core priorities,” Quinn said when he presented his budget plan. He is calling for early childhood education to be spared further cuts.

ISBE: School districts struggling to keep their doors open

By Jamey Dunn

 Some Illinois schools are considering moving to four-day weeks to cope with budget cuts, according to the Illinois State Board of Education.

Only one school district, Meridian CUSD 101 in Mounds, has taken the steps to officially pursue a waiver to move to a four-day school week. But state officials say that the idea and other seemingly drastic options are on the table in many districts that are struggling with recent cuts and trying to plan for possible future ones. Christopher Koch, state superintendent, said that suburban districts have been calling the Illinois State Board of Education and inquiring about shortening their school weeks. “I think the problem is they’re without options, and they’re looking at what can [they] do to keep the doors open. And how quickly can they do it. These are real discussions that districts and boards are having across the state. ... It’s astonishing to be getting these requests, but that’s demonstrating what’s happening now,” said Koch. “It’s not only four-day school weeks, it’s high class size ratios, so you have a lot more students per teacher. You have all kinds of personnel being laid off across the state. [School] board after [school] board are approving that. It’s a number of things that are occurring that are no doubt going to erode the quality of instruction taking place.”

In its Fiscal Year 2014 proposed budget, the state board is requesting an increase of $874 million from the current fiscal year. According to the ISBE, pre-K through 12 education has been cut by $861 million since FY 2009. The board says general state aid to schools has been reduced by 7 percent, more than $320 million, since FY 2009.

Under Gov. Pat Quinn’s budget proposal for next fiscal year, K-12 education would be cut by more than $275 million from current fiscal year levels. Quinn has called for early childhood education to be spared from cuts. Quinn says the reductions are needed because of the growing costs associated with the state’s underfunded pension system. The state’s required pension contribution this year was nearly $6 billion. “Skyrocketing pension obligations leave our state with no choice but to continue reductions to our core priorities,” Quinn said in his budget speech last week.

Gery Chico, chair of the ISBE, said leaders in the state “have got to challenge the premise” that education must be cut under the next state budget. “That’s not the discussion. That shouldn’t be the discussion. That’s not what a great state’s about,” he said. “There’s not just one way to raise additional money, through pension [benefits] reduction. There’s other ways to raise money. And we need to have all those things on the table so that we don’t talk about four-day school weeks, we don’t talk about 40-plus-kid class sizes or more, we don’t talk about eliminating fundamental programs in schools.”

Quinn pushes pension changes in somber budget speech

By Jamey Dunn

Gov. Pat Quinn laid out some concepts for changes to the state's underfunded pension systems in a budget that he says is the “most difficult” he has presented to lawmakers. However, the House has already decided that when a final budget is enacted, it will contain less spending than Quinn’s plan.

“This is the most difficult budget that I have ever submitted to you,” Quinn said in his budget address today. “But this is also an honest budget that reflects our fiscal challenges, pays down the backlog of bills and addresses funds that have been under-appropriated for too long, There are no gimmicks or fake numbers in this budget,”  He said the difficulty was a product of the legislature’s “inaction on pension reform.”

Pension Changes
Quinn took a stern tone when calling on lawmakers to pass a pension proposal that would change benefits for state workers, teachers outside of Chicago and university and community college employees. “Today, our budget is being squeezed more than ever, and that will continue until we put a stop to it. The most important thing we can do to repair Illinois finances right now is to reform our public pension systems,” Quinn said. “ We all know that we must reform the Illinois public pension systems. So, members of the General Assembly, what are you waiting for?”

Quinn said he was willing to work with lawmakers, but he emphasized that there is only so much he can do. “I stand ready to sign comprehensive pension reform immediately. Today. But I cannot sign what I do not have on my desk. The people of Illinois need your immediate action.”

“I thought he was pretty firm in his tone,” said House Minority Leader Tom Cross. He likened Quinn’s address to a parent giving a lecture. “His tone was fairly strong, and I think he focused on where he need to on the need to reform the pensions system. It is the issue of the day. ... I think he was right in making that the focus of his speech. I agree with him.” Senate Minority Leader Christine Radogno said that she “agreed with the governor” that it is “time to vote” on changes to the pension system. However, she said it was unfair of Quinn to lay the blame on lawmakers. “Most of the work that has been done on pensions has come out of the General Assembly, and not out of the governor’s office,” she said.

Union leaders said that creating an impression that the only choices out there are deep education cuts or reductions to retiree benefits is dishonest. “It is unfair for Gov. Quinn to present this false choice between pensions or pencils. Springfield lawmakers created the massive pension debt by skipping payments and borrowing more. To call that debt an education expense is not only a gimmick, but an insult to teachers everywhere. We are not to blame, and our students shouldn't suffer,” Illinois Federation of Teachers President Dan Montgomery said in a prepared statement.

Quinn laid out some concepts that he said should be part of a pension reform plan. He said he wants a funding guarantee that would require the state to make the annual contribution to the pension systems. He also wants money that is currently being used to pay off pension bonds, which were issued to make past payments, to go toward the unfunded liability once the bonds have been paid off. Such a move would direct almost $1 billion annually to the liability once the bonds expire in 2020. He said the plan should include an increased pension contribution from employees, but he did not give a specific figure on the increase. He also called for a freeze on cost of living adjustments for “those with higher pensions.” He called the current 3 percent compounded COLAs “unsustainable for taxpayers.”

Quinn also said lawmakers should “consider additional solutions to break the gridlock.” He said he would support a gaming bill with “tough ethical standards” and a ban on campaign contributions from casino operators. He has vetoed two gaming bills that he said did not have strong enough protections against corruption. Quinn has demanded for some time now that any money from gambling expansion be spent on education, but for the first time, today he brought up the idea of using gaming revenues on pension costs. “Any enhancement that we enact to gaming revenues this year should be dedicated to education, which could include teachers' pensions.”

Senate President John Cullerton said he plans to push members of his chamber to present pension reform proposals. “This reality reinforces why pension reform remains my top priority this session. For that reason. I have notified all pension reform Senate sponsors to present their bills before the Senate Executive Committee within a week,” Cullerton said in a prepared statement. “I am also working to identify new revenue sources for education and priority programs. I believe that a gaming plan that is structured to address the ethical and regulatory concerns of Governor Quinn can be part of a new revenue mix. I look forward to working with each caucus to advance more solutions for our funding shortfall.” A Senate committee approved a gaming bill after Quinn’s speech. According estimates from Senate Democrats, the proposal could bring in $200 million to $400 million in revenue for schools, more than $50 million each year for pension costs and almost more than $300 million in upfront licensing fees that could be spent on overdue bills. The plan calls for a ban on campaign contributions from gaming licensees. The proposal is also a massive expansion that would create five new casinos, allow slot machines at horse racing tracks and airports and create an online gambling system under the Illinois Lottery. Under the so-called i-gaming proposal, residents could bet online. In the past, Quinn has recoiled at large expansions. A spokesperson said that he is “reviewing” the proposal.

Northbrook Democratic Rep. Elaine Nekrtiz, who has been spearheading the pension issue in her chamber, said: “There’s a lot of finger pointing and blame game going on in this whole discussion, and we just need to stop all that and just get about the business of solving it.” She said she thinks that has happened in the House, where she and Cross have presented legislation. She noted that the changes Quinn said he would like to see in the pensions systems are in that plan. “Those are the pieces that are in the Cross-Nekritz bill. By no means are they in every proposal out there. I was very pleased to see that.”

Cuts
Quinn is proposing a $400 million cut to education, which includes K-12 and higher education. Under the proposal, K-12 spending would be cut by more than $275 million. The bulk of the reduction would fall on general state aid to schools, which would be reduced by $150 million. General aid was cut by $161 million under the current state budget. Higher education would take an $83 million hit. In his speech, Quinn did not focus on the details of what the reductions would mean for schools.

Children’s advocates were disappointed with the proposal. “Gov. Quinn’s budget proposal demonstrates that Illinois’ fiscal crisis is far from over and that children, families and communities continue to pay the price for a history of unwise fiscal decisions made by our elected officials. Nearly every area of the budget that impacts children has been subject to deep cuts over the past few years,” Gaylord Gieseke, president of Voices for Illinois Children, said in a prepared statement.

Quinn's plan would not cut early childhood education or Monetary Assistance Program (MAP) grants for low-income college students.

But the cuts may be even deeper in the plan that is ultimately approved by lawmakers because Quinn and the House started their budget planning from two different points. The governor’s budget office estimated the state would have $35.6 billion to spend, but the House yesterday approved a resolution intended to cap spending at $35.08 billion. Quinn’s plan also calls for lawmakers to reassess automatic transfers out of the General Revenue Fund “Our revenue estimates are based on real numbers. ... They’re based on facts. They’re based on evidence. They’re cautious numbers. They take a pragmatic and reasonable approach, and I don’t know where the governor’s numbers come from,” said Marion Democratic Rep. John Bradley, who chairs the committee that produced the House’s estimate.

Quinn’s budget staff said he plans to call on lawmakers to scrutinize money that is automatically transferred out of the General Revenue Fund before the budgeting battle begins. The largest transfer distributes income-tax revenues to local governments. Other transfers are spent on mass transit or are the result of budget deals made in past years. “We haven’t even considered that,” Bradley said. “When you talk about the transfers out, what you’re really talking about is the local government distributive fund. Fifty percent of the transfers out go to local governments, and the other [large] percentage of that goes to mass transit, both upstate and downstate. So that’s going to be a fight between him and the city of Chicago, and Cook County and all the local municipalities throughout the state.”

The idea has been floated in the past by Senate Democrats, and some support it again this year. “Nobody wants to see a $400 million reduction in education. ... We can’t let that happen,” said Park Ridge Democratic Sen. Dan Kotowski, who chairs a Senate budgeting committee. “People come to our state for a number of reasons, not just because we have good roads, because we have great schools. No business in their right mind will want to come to the state of Illinois if we don’t fund education at the level it should be funded. If we were to tell people out there in the general public that there’s $1 billion that’s out there that’s automatically spent, and it's not reviewed, and it doesn’t face the same kind of scrutiny as education, health care, human services and public safety, people would say, ‘That’s crazy.’ Well it is. And it needs to be fixed. It’s wrong. It’s broken.”

Quinn: Close tax loopholes to pay old bills

By Meredith Colias

Gov. Pat Quinn’s proposed state budget would continue to chip away at Illinois' overdue bills, but he hopes lawmakers will agree to eliminate corporate tax breaks and use the proceeds to pay down some of the state’s current backlog.

Quinn said that under his plan, $2 billion in late bills would be paid down during the current fiscal year and the next. His budget projections estimate that the backlog, which is now more than $8 billion, would be $6.8 billion by the end of Fiscal Year 2014. He proposed further measures to make a larger dent in the backlog.

Quinn called on lawmakers to close corporate loopholes, which he estimated would bring the state $455 million per year in revenue, and place the money into a special fund to be used only to pay past obligations. “Suspending corporate loopholes like these until the bills are paid will be good for our vendors and good for our economy,” he said in his budget address. “Why should we give costly, ineffective loopholes to some of the biggest and most profitable corporations on Earth when he have bills to pay?”

Doug Whitley, of the Illinois Chamber of Commerce, opposes Quinn’s proposal. “I find it troubling that on one hand, the governor wants to improve the business climate ... [and then tells business], ‘Oh, and by the way, how about turning around and kicking in [more taxes],’” he said.

Members of the House seemed equally unreceptive. Rep. John Bradley, a Marion Democrat who chairs the House Revenue Committee, said it would be a nonstarter in the chamber. Those working on the budget in the House hope to pay down a portion of the bills in the same gradual way they have over the last two years. “We dedicated about $1.5 billion toward old bills last year, and we’re prepared and anticipate trying to do something similar to that this year. And we have to make that one of our spending priorities. But we’re living within reality.”

Republican leaders said they support making cuts and using the savings to chip away at the backlog over several years. “The only way to do this is to spend less money then we have coming in and begin to pay the bills off,” said Sen. Christine Radogno, a Lemont Republican and Senate minority leader . As far as closing loopholes, House Minority Leader Rep. Tom Cross, an Oswego Republican, said, “That’s not going to be on our table, but other ways to pay it, we’re clearly open to that.”

Rep. Ester Golar, a Chicago Democrat, said the focus should be on those who are waiting on payments from the state. “We have to pay the individuals who have not been paid,” she said. Golar said she plans to introduce a bill calling for the state to borrow money to pay down the backlog. She proposed $4 billion in borrowing at the end of the last legislative session. Quinn has backed such plans in the past but has since moved away from them after they failed to gain traction with lawmakers.

Illinois Comptroller Judy Baar Topinka’s office manages payments to vendors, and documents in quarterly financial reports how the backlog is being paid. “It’s our office’s job to patch. We use baling wire and bubblegum to hold the whole place together, and I’m now looking at the possibility of Silly Putty,” she said. Topinka said the bills needed to be prioritized. “Legally we can’t declare bankruptcy, so we’ve got to make something happen. As long as this goes on, we’re going to keep taking bad credit ratings, the costs [of borrowing] are going to go up. It has to get done now.”

 Topinka said another Quinn proposal to cut 5 percent from the budget of the General Assembly and constitutional officers and redirect it to the backlog is not feasible. “We’ve already cut 10 [percent] out of our [office]. We’re at 1997 operations in our office. So it can’t be done. It can’t be done.”

Quinn to propose education cuts and pension changes

By Jamey Dunn with Meredith Colias contributing

In his budget proposal tomorrow, Gov. Pat Quinn is expected to lay out substantial cuts to education and press lawmakers for changes to public employee pensions.

“This is a difficult budget. It holds the line on spending and reflects the state’s fiscal challenges. This budget doesn’t propose any new taxes fees or programs. It’s an honest budget that’s based on actual costs, and continues to eliminate gimmicks. This budget is a direct result of the inaction on stabilizing the pensions,” Jack Lavin, Quinn’s chief of staff, said at a briefing for reporters this evening. Quinn plans to propose a nearly $400 million cut education. CORRECTION: Quinn's budget staff gave this figure as a cut to K-12. They later revised that statement to cover all education, including higher ed.)  General State Aid to schools would be reduced by $150 million. Quinn also plans to call for cuts to transportation funding. Funding for higher education would be reduced by almost 5 percent. Early childhood education and Monetary Awards Program (MAP) grants for low-income college students would be safe from cuts. “Here we have a series of reductions that the governor does not want to do. These are outside of his vision of where we ought to be as a society. These reductions are a direct result of no action on pension reform,” said Jerry Stermer, director of Quinn’s budget office.

Quinn’s general revenue estimate of $35.6 billion comes in higher than the $35.08 billion that the House approved today. The House's number is based on analysis from the bipartisan legislative Commission on Government Forecasting and Accountability. Quinn's budget calls for a total of $62.4 billion, including federal revenue and spending from other funds, but the bulk of the appropriation process focuses on general revenue. Quinn’s budget is predicated on the idea that lawmakers would get on board with taking some money that is typically automatically transferred out of the General Revenue Fund (GRF) before the budget battle each year and instead toss it into the appropriations process. Quinn’s representatives at a budget briefing this evening said he does not intend to make specific suggestions about which transfers to tap into but will instead call upon lawmakers to assess all of the transfers out on an annual basis. “It is an autopilot kind of an appropriation. It just goes by itself without an annual review by the General Assembly. … It just goes out the door,” Stermer said. “All of those dollars in FY 13 are on autopilot, according to existing statutes. The only way you can make a change is to change the statute.”

The largest transfer, more than $1 billion, is of income tax revenues that are funneled to local governments based on their populations. In 2011, Quinn proposed delaying payments to local governments as part of a plan to cut some of the backlog of unpaid bills. That plan was met with vocal opposition and lobbying from local mayors and was quickly dropped. A budget plan that Senate Republicans proposed that same year called for a $300 million cut to revenues shared with local governments.

 Stermer said one fund at the Department of Revenue has a surplus that will be automatically dumped into the GRF at the start of the next fiscal year. “So that’s $150 million that COGFA did not account for.”

The budget calls for reducing the backlog by $2 billion over the current fiscal year and Fiscal Year 2014. The governor’s budget projection estimates the backlog, which is now more than $8 billion, will be $6.8 billion by the end of FY 14.
Quinn spokeswoman Brooke Anderson said the governor does not plan to propose billions in borrowing to pay down the backlog, an idea he has advocated in the past. However, she said, “He will propose a way to pay down the bills faster,” although she declined to share details. “We’ll leave that” for tomorrow’s budget address, she said. 

Pension reform plan could cut next year's payment by nearly $2 billion

By Jamey Dunn

Supporters of a new pension reform proposal say it would shave almost $2 billion off the pension payments required by the state next year.

Northbrook Democratic Rep.Elaine Nekritz and Rep. Daniel Biss, an Evanston Democrat, released an analysis of actuarial numbers provided from the state’s pension funds on their proposal, House Bill 6258. The bill would cap the amount of retirement income eligible for cost of living adjustments and delay COLAs until retirees turn 67 or have been retired for five years, whichever happens first. It would also increase the retirement age for employees younger than 46 and increase employee contributions by 2 percentage points. Nekritz and Biss said the measure grew out of talks among rank-and-file House members after negotiations among legislative leaders stalled.

According to the figures released today, the plan would immediately reduce the state’s unfunded pension liability from an estimated $95 billion to $67 billion. Several components of the bill would contribute to shrinking the liability, but Biss said that the changes to the COLAs would be the most significant upfront savings.

The report also said that if school districts had to pick up the costs of retirement benefits that are currently covered by the state, the cost would represent an estimated .52 percent of their overall payroll. HB 6258 contains a cost shift to schools outside of Chicago, as well as to universities and community colleges. The so-called cost shift was the main area of disagreement that held up previous plans. Biss said he was a bit surprised that the cost would be so low. However, those opposed to the cost shift have voiced concern over the idea, no matter what how little it might cost schools or how gradually it would be phased in. They say it would mean an increase in property taxes, and they are worried about unexpected spikes in retirement costs if the pension systems’ investments fail to perform as predicted. The price to universities under the plan would be a larger portion of their total payroll, but Biss said it would never grow to more than 4 percent.

Public employee unions released a report earlier this week that illustrates the flip-side to those estimated cost savings, which amount to reductions in pension income for current and future retirees. According an analysis from the union coalition We Are One, the proposed changes in COLAs and the retirement age would mean that employees younger than 35 would see their retirement benefits reduced by 40 percent by the age of 80. Employees between the ages of 40 and 45 would see the value of their benefits by age 80 reduced by nearly a quarter.

“We have yet to see the governor or legislators produce a pensions proposal that meets the basic standard of being constitutional, much less a plan that is any way fair to the hundreds of thousands of Illinoisans who are either currently receiving a pension or those who are paying into a pension that they expect to receive in the future,” said Illinois Education Association President Cinda Klickna. She said unions believe HB 6258 is unconstitutional.

But Biss argued that no one could predict how judges will interpret the provision in the state’s Constitution that protects pension benefits. “There’s a wide variety of diverging views on the subject,” he said. “There are as many different constitutional theories on this issue as there are [reform] proposals.” Biss said the best lawmakers can do is pass a plan that they think is solid public policy and has the greatest chance of holding up in court.

The unions pitched their own plan, which would raise billions in new revenues by eliminating corporate tax breaks and asking employees to increase their contributions by 2 percentage points. “You cannot solve this problem with less money, period. You just simply can’t. You can’t cut your way out of it,” said Toby Trimmer, director of political activity for the Illinois Federation of Teachers. “And the only thing that has at this stage of the game been presented to us over the course of the last year or so has been an approach to try to cut their way out of it through our members’ benefits, and you just can’t do it.” Trimmer said plans that rely only on benefit reductions that would be made without the approval of unions are “unconstitutional” and “morally unfair.”

Biss said that he is open to the idea of looking for new revenues and wants to work with the unions on the proposal. “That’s an almost $100 billion hole. Yes, you have to go wherever you can to fill it.” He said the only options for lawmakers are raising new revenue, cutting retiree benefits or cutting other spending in the state budget. “I’m a big believer in balance, and I think we have to do all three.” However, Biss noted that much of the revenue from the income tax increase is being spent on pension payments, and legislators have made recent budget cuts. “So it seems to me that the next rational step to take is on benefit reform.”