Comptroller: State's stack of unpaid bills isn't growing smaller

By Jamey Dunn

Even after a tax increase, Illinois has not made much progress on the total of overdue payments it still owes to vendors, medical providers and others.

According to Comptroller Judy Baar Topinka’s quarterly report, the comptroller’s office had almost $4.3 billion in late bills as of December. Topinka said that number, combined with approximately $2 billion in Medicaid bills being held at state agencies and other late payments such as corporate tax refunds, brings the total backlog to about $8.5 billion.

“Even if current revenue projections hold, the backlog at [the comptroller's office] is not expected to change much from last year,” the report said. Topinka said that the bulk of new revenues from the tax increase is not being used to pay down old bills. “It think everybody assumes that if we’re going to have the largest tax increase in the state of Illinois, that this was going to apply to unpaid bills,” Topinka said.

Kelly Kraft, spokesperson for Gov. Pat Quinn’s budget office, said growing demand for programs is sucking up revenues. “It is important to talk about program growth and need. People will see the increase in spending, but it is not because a new program or something of that nature has been created. It is because of growth in demand. For instance Medicaid costs are growing at 6 percent a year. Growth rates like these are unsustainable that is why further reforms are a must.”

Topinka agreed that growing Medicaid spending is a concern. She said that the economic crash has caused more people to be eligible for the program, and so-called baby boomers will likely need more medical care as they age. “You’ve seen the Medicaid rolls blossom,” she said. 

The state has also seen federal funds dip as stimulus dollars have stopped coming in.  According to the report, Illinois has gotten $1.6 billion less  — about a 55 percent drop — in federal funds this fiscal year.

As part of the state budget plan approved in the spring, Illinois is slated to push billions in Medicaid spending into next fiscal year. “The [General Assembly] significantly under-budgeted Medicaid [appropriations] for [Fiscal Year 20]12, so processing has been slowed down so cash is available throughout the [current fiscal year], right through June 30th. If the entire Medicaid [appropriation] is spent by, say, April 1st, then health care providers would not receive any payments until the new [fiscal year] starts,” Kelly Kraft, spokesperson for Gov. Pat Quinn’s budget office, explained in a written statement.

Topinka said she is concerned about the state being able to pay those bills once they are sent to her office. She said that if all of the $2 billion is sent at once, “I don’t know how [we will pay it.]”

Perhaps the one bright spot in the comptroller's report was that Illinois has paid off all of its bills from FY 2011. However, $5.15 billion in FY 2012 revenues was used to pay down the FY 2011 bills. Topinka said this practice of kicking such a large chunk of obligations into the next fiscal year, once seen as a move to be made only during a fiscal emergency, has recently become a standard budgeting tactic. “Now it is perpetual emergency, and literally, the nonpayment of vendors is almost like a line item in the budget,” Topinka said. “We almost work on the basis that the private sector is going to carry the load for the state.”

She said that if a substantial effort is not made to address the backlog, Illinois will likely see a similar stack of unpaid bills next fiscal year. “So here we sit — same time, same channel, different year, but it’s the same problem.”

Quinn floats new borrowing

By Jamey Dunn

Gov. Pat Quinn has pitched more short-term borrowing to help Illinois bring in federal dollars, but the plan is still being formed.

Quinn told reporters in Chicago yesterday that he wants to borrow about $2 billion to capture a temporarily higher rate of federal matching dollars for the Medicaid program. The state must reimburse certain Medicaid providers on a set schedule, so Quinn wants to borrow, in part to help the state keep up with its Medicaid bills.

According to Kelly Kraft, spokeswoman for Quinn’s budget office, the governor actually wants to borrow $1.75 billion. The larger portion of the money, $1 billion, would go to the state’s employee health insurance. According to Quinn’s budgeteers, the state only made about half of the needed payment for employee health care this fiscal year. The rest of the money, $750 million, would be used to pay Medicaid providers in a more timely fashion. Kraft said some federal reimbursement would also be available for money spent on employee health insurance. Quinn said without this plan, the state could potentially lose out on $175 million in federal matching funds. Kraft said revenues from the recent income tax increase would be used to pay off the borrowing. As for when the money would need to be repaid, Kraft said in a written statement that the budget office is still “working on details for that.”

According to Kraft, the borrowing will require legislative approval. Quinn, state Treasurer Dan Rutherford and Comptroller Judy Baar Topinka can approve short-term borrowing if the state fails to capture expected revenues or needs to borrow to supplement cash flow. However, Quinn’s budget office says this borrowing doesn’t fit either of those scenarios, and Kraft said the legislature would need to change the rules for this type of short-term borrowing. Yesterday, Quinn goaded legislators to act quickly. “I think the people of Illinois would be sorely disappointed in a bunch of politicians in Springfield playing political games instead of getting maximum federal money from Washington. We pay a lot of taxes from our state to the federal government. We’re entitled to money back. And if we don’t meet the deadline, we won’t get it,” he said at a Chicago news conference.

Legislative leaders are reviewing the plan. “We will take a look at the governor’s recent proposal — and take it to our caucus. In the short term, it is our understanding that the governor is working with the comptroller and treasurer to pay down $600 million in Medicaid bills through March to capture some of those federal funds. … We remain committed to paying the bills that we owe, as well as remaining committed to making cuts, efficiencies and structural reforms to stabilize our state budget,” Sarah Wojcicki, spokesperson for House Minority Leader Tom Cross, said in a written statement.

Quinn emphasized that he continues to support a proposal to pay down the state’s backlog of bills, which his budget office tallies at more than $8.75 billion — including the insurance payment, overdue corporate tax refunds and other costs. That borrowing would be paid back over 14 years and would also be funded by the recent income tax increase. “It’s not like we’re borrowing new money. Our state owes money already to many small businesses — to Metra that runs the trains [in the Chicago area,] to universities like the University of Illinois. We already owe the money. … We think it’s better that the state of Illinois bear that burden rather than have all these small business that employ people have to wait six [to] eight months to have their bills paid,” Quinn said.

Senate Republicans say, however, that the state can pay down its bills without borrowing if lawmakers would cut about $5 billion from Quinn’s budget proposal for the next fiscal year.

Quinn backs off human services cuts

By Jamey Dunn

As Gov. Pat Quinn pulls back on proposed budget reductions for this fiscal year, Senate Republicans say an additional $4 billion to $6 billion in cuts to next year’s budget are needed to avoid future deficits.

Quinn backtracked on proposed cuts to human services for the current fiscal year. Addiction treatment providers began to publicly push back in late February after they say they received word that Quinn planned to cut human services by $208 million in Fiscal Year 2011 — with substance abuse programs bearing the brunt of the cut. After addiction treatment providers across the state said they would have to stop taking patients, the governor’s office rolled the number of potential cuts back to about $100 million. Today, Quinn’s budget office confirmed that the governor plans to use $43 million from a lump-sum line item, which has yet to be allocated, to bring the number to about $57 million in cuts to human services. (Corrected with info from Quinn's budget office. Sara Moscato Howe, chief executive officer of the Illinois Alcohol and Drug and Dependence Association says Quinn is looking to save about $7 million on medicaid backed addiction services through a program known as "utilization managment." )

“This was one hurdle that we needed to get through to survive,”Moscato Howe said She said treatment providers would likely be able to start taking in new patients soon. The governor’s budget proposal for next fiscal year calls for deep cuts to substance abuse programs. However, Mascato Howe said her organization has been told that Quinn’s administration is reviewing the budget and looking for ways to prevent the “decimation” of addiction services. “Which is certainly good news,” she said.

Meanwhile, Senate Republicans are calling for billions more in cuts from Quinn's proposed budget for the next fiscal year but so far have suggested few specific areas that could be trimmed. While Quinn says his budget for fiscal year 2012 would make about $1 billion in cuts from the current fiscal year, Republicans say it will take much more to get Illinois’ budget in line. Without the additional $4 billion to $6 billion reduction, they say the annual deficit could be as much as $8 billion in five years. To come to that figure, Republicans are assuming Quinn will propose to spend as much as he can under the spending caps put in place as part of the recent income tax increase. Quinn proposed spending less than the cap in his plan for FY 2012. “Let’s be honest, he may say he’s spending under the cap this year, but his track record doesn’t suggest he spends less than he can,” Sen. Matt Murphy, a Republican from Palatine, said of Quinn.

Senate Minority Leader Christine Radogno of Lemont said the recent income tax increase alone will not solve Illinois’ budget crisis. Although she said she is still open to some form of borrowing to pay down the state’s backlog of overdue bills, she is not willing to support any plan until substantial cuts are considered. Radogno said Senate Republicans would present their ideas for budget reductions next week. She added that members of her party would be willing to cast votes for unpopular cuts today to prevent future fiscal disaster. “It’s not all fat and waste. It’s not easy. Some of it’s fat and waste. Some of it’s going to hurt a little bit. … If you do something hard today, there is a reward that far outweighs the short-term pain,” Murphy said.

Quinn’s office responded to the Republicans claims with a written statement: “The time for Senate Republicans to begin looking for cuts has long since passed. …. Governor Quinn has been asking Republicans for input and specific suggestions on ways we can reduce government spending for more than two years. And when cuts have been made in Republican districts, we have heard loud complaints about even the most common sense cutbacks.”

Addiction treatment cuts could mean closed doors

By Jamey Dunn

UPDATE February 24: Gov. Pat Quinn took questions from reporters in Chicago yesterday on the cuts. See below. Providers of addiction treatment in Illinois say they have stopped taking new patients, and some plan to end programs, such as residential care and detox, as early as Friday.

Eric Foster, chief operating officer for the Illinois Alcoholism and Drug Dependence Association (IADDA), said members of the Quinn administration told treatment providers Friday that the governor plans to cut all state funds for substance abuse treatment and prevention programs not backed by federal Medicaid dollars. According to IADDA, the budget reductions, which they say would come by March 15, would cut off treatment to 55,000 of the 69,000 people currently in the system and result in the layoffs of more than 5,000 workers. Quinn is also proposed substantial cuts to drug and alcohol dependency treatment and prevention programs in his budget for next fiscal year.

Foster said Michelle Saddler, secretary of the Illinois Department of Human Services, confirmed the plan to cut and said that providers would get new contracts spelling out the cuts last Tuesday, but he said the department never followed up with the information.

“Secretary Saddler’s verbal notification immediately triggered a shutdown of intakes, closing the doors to new clients, closures of other addiction prevention and treatment services across the state, and shutdowns of programs serving Illinois’ neediest citizens,” Foster said.

Foster accused Quinn of playing politics with funding to human services — referring to Quinn’s 2009 push for an income tax increase, which at the time he said could prevent draconian cuts to social service providers. “Gov. Quinn promised to save human services if the state passed an income tax increase. We think the governor’s pledge to protect the most vulnerable in Illinois has been a cruel hoax.”

Foster added that addiction treatment and prevention programs have already taken cuts in recent years. He said that in fiscal year 2007, the state served 98,000 people under such programs.

Bruce Suardini, chief operating officer of Prairie Center Health Systems, which has facilities in Urbana, Champaign and Danville, said that organization is “in the midst” of closing its Champaign and Urbana operations, which include a detox center for those dealing with the symptoms of withdrawal. He said that after the facility closes, “there will be no medical detox for any citizens in central Illinois.” He added that the center would lay off 51 of 85 staff members on Friday.

Suardini said his clients walked out of treatment this week because of their frustration over the budget cuts. “Our people walked out of detox and walked out of residential yesterday. We are closing our operations in those services by Friday.”

He added: “We are still awaiting our letters [from the Department of Human Services.] This is the second time that we have disproportionately taken a cut in the budget. … We don’t have much left ... to be able to offer hope to the people that are trying to seek services.”

Bruce Carter, executive director of the Wells Center in Jacksonville, said his treatment center has also stopped admitting new clients and has told people on its waiting list that they would not accept them. Carter said the center plans to close its residential treatment and detox programs by March 22. He said he would have to lay off 40 of his 47-member staff by the end of March.

Kent Holsopple, administrator of the Springfield office for Treatment Alternatives for Safe Communities, which provides addiction treatment for people who are in the state’s criminal justice system or corrections system, said he has clients who have been sentenced to treatment that are waiting in jail because TASC cannot take them. “We talk about it being a cut. It would essentially eliminate community-based treatment centers.”

Allen Sandusky, president and chief executive officer of the South Suburban Council on Alcohol and Substance Abuse, said overdue payments from the state leave his organization little wiggle room in its budget. “Since the state currently owes us $1.9 million of our $3.2 million contract, we do not have the financial resources nor the cash resources to really handle any short-term emergencies.” He said he would have to lay off 90 of his 105-person staff to make up for the cuts.

Foster said because providers have not yet received new contracts from the Department of Human Services, he hopes there is still room for negotiation.

Chicago Democratic Rep. Sara Feigenholtz and Jacksonville Republican Rep. Jim Watson have introduced a nonbinding resolution urging the governor not to make the cuts. “Instead of coming after human services dollars all the time — this is a fire drill that this sector of government is consistently being run through all the time — we need to take a look at balancing our systems for a more cost-effective way of delivering services. Putting people in prison is clearly not the answer. We should be doing just the opposite.”

Lawmakers can do little more than pass a resolution because they signed over budgeting powers to Quinn when they passed him a lump sum budget for the current fiscal year, leaving it up to the governor to make cuts. The General Assembly approved extending Quinn’s special budgeting powers until the current fiscal year ends in June.

Feigenholtz said she was unsure if extending those powers, a move that she voted to support, was allowing Quinn to make the cuts to addiction treatment and prevention. She said she thinks Quinn simply “ran out of money.” She said she hopes legislators will never pass a lump sum budget again.

Inquires to Quinn’s budgeting office and the Department of Human Services about the cuts and Quinn’s budgeting powers were not returned.

UPDATE: “We have to have an ongoing dialogue about how to get through this fiscal year,” Quinn said at a Chicago news conference.

Quinn said the General Assembly left the difficult budgeting decisions up to him when they passed the lump-sum budget. “I really believe in dialogue and listening to all of those who have points of view on this. We’ll get through this fiscal year and on to the next one.”

He added that some human service providers could see cuts, but he would not confirm the reports of drastic reductions planned for next month. “Some of them may have economies that we have to make. This is hard and difficult. … I don’t want to harm one area of important life in Illinois, like human services. But at the same time, I[‘ve] got to maintain education and public safety.”

Illinois may crack down on Medicaid eligiblity

By Jamey Dunn

In its ongoing quest to find savings in the state’s Medicaid system, a House committee today took up the issue of making sure those who receive benefits are eligible for them.

Legislators in both houses are looking for ways to trim the Medicaid budget and make the system more efficient. However, today’s hearing did not produce many options. The one change most agreed with was working to make records electronic and shareable between state agencies.

John Bouman, president of the Sargent Shriver National Center on Policy Law, said the state should take advantage of federal funding associated with the health care reform law. “For example, if we are going to save $200 million in managed care ideas, save $190 million, take $10 million and turn that it into $100 million pot for information technology upgrades, which adds that much money to the state budget to do tasks we should be doing anyhow.”

Legislators on the committee painted a grim picture of the administrative oversight and technological systems Medicaid operates under.

“Everything is still in paper files. Computer systems crash. The whole office is shut down. Nothing works and it’s not only undignified for recipients of our human …services but also ridiculous when it comes to being able to efficiently manage this,” said Rep. Sarah Feigenholtz, a Chicago Democrat.

“In my local office … each one of the case management people have 2,500 cases. ... This is what one of them told us: They’re just told not to answer the phone because they can’t handle it,” said Rep. Patricia Bellock, a Hinsdale Republican.

Bouman said if legislators want to crack down on verifying whether patients are eligible for Medicaid assistance, new technology is needed. He said a “staff-heavy, paper-heavy” verification system is slow, costly and has more potential for mistakes.

However, Bouman cautioned against kicking people off of Medicaid coverage — even if their eligibility lapses — if the committee’s overall goal is to provide preventative health care rather than expensive treatment for chronic medical problems. “This is not traditional cash welfare assistance where we have a stern gatekeeping function. This is health policy. And we have to pay attention to connection to care, and not interrupting care and getting the cheap sensible prevention going on and continuing.”

Members of Gov. Pat Quinn’s administration were not receptive to the idea of knocking such people out of the program as undocumented children and people whose coverage is paid for solely by the state.

“We see the issue of serving undocumented children as a policy issue, one that we’re proud of and this governor supports. So we are not proposing changes in reducing eligibility for undocumented children,” said Julie Hamos, director of the Illinois Department of Healthcare and Family Services.

Hamos said the pool of single adults that Illinois covers with no help from the feds costs the state around $16.9 million. “This is a relatively small amount of money, relatively, but it’s still money … If we don’t provide for some kind of payment for these very low-income people either they’re going to get very sick and end up in emergency rooms, and then the hospitals will be eating the cost one way or another, or they won’t even get primary health care, and they’ll by default get sicker.”

Hamos said her agency would present plans for new technology and information sharing to the General Assembly in the spring. She also said she would support stricter enforcement of eligibility standards; however, the federal government may not allow such changes. To receive federal matching dollars, Illinois cannot change the standards used to determine who is eligible for Medicaid assistance. “We will try to make the best case for why verification is different than [changes in] eligibility. …But we don’t know how [the federal government] will react.”

The committee is scheduled to meet again tomorrow. A Senate committee is also taking up the issue of Medicaid reform.

State will pay off FY2010 bills by end of December - updated

By Jamey Dunn
UPDATE: Gov Pat Quinn confirmed Thursday that the state will pay off its fiscal year 2010 bills by the end of the month, largely through the sale of bonds against the state's tobacco settlement money.

Quinn said the backlog for FY2010 is about $1.4 billion and that service providers and vendors should expect payments soon. “They’ll get their money by the end of this year. Probably in the next week or so," he told reporters in Chicago.

Quinn also emphasized the importance of working on budget solutions when the legislature returns in January. “We also have to pay [FY2011] and beyond — [FY2012], [FY2013] and you name it. So we have to have a plan in Illinois that gets us back on sure footing when it comes to our finances, and that’s what I’m working on now with legislators of both parties.”

Illinois will make the deadline for paying off its bills by the end of this month. A new survey indicates, however, that the slow payment schedule, coupled with budget cuts, has hurt social service providers.

According to Alan Henry, director of communications for Comptroller Dan Hynes, the state will pay off all of its overdue bills from fiscal year 2010 — which ended June 30 — by the end of this month. Legislators moved the cutoff date for payments from August 31 to December as part of the budget plan passed in May.

The state prioritized paying off last year’s bills before paying for costs incurred in FY 2011. Illinois also sold $1.5 billion in bonds against the state’s money from a court settlement with tobacco companies and brought in $546 million from the tax amnesty period. Hynes warned in his quarterly report released in October that the state would have to get at least $1.2 billion from the tobacco money and $200 million from deadbeat taxpayers to make the end-of-the-year deadline.

But the results of a survey from the Illinois Partners for Human Services, a lobbying coalition that represents social service providers throughout Illinois, show that the state’s financial crisis has already taken a toll.

The group surveyed more than 200 Illinois social service providers. More than 70 percent of respondents said their efforts were affected by the late payments, with more than half cutting hours of operation or levels of services. More than 40 percent saw increased waiting lists, and more than one quarter turned clients away and/or closed programs. More than a quarter saw no changes to their services.

More than half of the organizations upped their fundraising efforts. Nearly half sought credit, and nearly half cut staff.

The report describes the compounded problem of staff cuts and an increased need for remaining staff to try to find money where they can:

Sixty percent of responding organizations sought additional funding sources, often requiring program staff to refocus efforts away from service provision. Combined with the 49% that laid off employees, these organizations are severely hampered by both direct cuts and service reductions, as well as reallocating staff to non-service specific functions.

Public wants officials to act on budget crises

By Jamey Dunn

A study of five states facing dire budget and economic problems found that most residents would tolerate a tax increase to fund certain services, but in many cases, their expectations and understanding of states' budgets were unrealistic.

The Pew Center on the States and the Public Policy Institute of California asked residents in Arizona, California, Florida, Illinois and New York about their states’ budgets. Each state had at least 1,000 respondents to the survey. The margin of error was plus or minus 4 percent.

The study found some common themes across all states. People are beginning to feel a sense of urgency and would like to see their state governments change they way they craft budgets — Illinois more so than any other state. Eighty-six percent of Illinois respondents felt change is needed immediately.

From the report: “Majorities in all locations believe major changes are needed in their state’s budget process — and they overwhelmingly think their elected leaders should take action now, rather than wait until the economy improves.” Respondents were more concerned with the effectiveness and efficiency of government than its size.

While taxes were not the preferred means to close budget gaps, the majority of those surveyed said they would tolerate a tax increase to protect K-12 education, health care and human services from cuts. However, they would prefer targeted tax increases instead of an across-the-board income tax hike. People favored increased taxes on cigarettes, alcohol, gambling, corporations and the incomes of the wealthy.

Participants in all five states were averse to borrowing, seeing it as pushing problems further into the future. They also expressed distrust in government and a desire to see a better return on their tax dollars.

Some of the results were contradictory: “By hefty margins, respondents across the five states say they are very or somewhat concerned about the effects of state spending reductions on government services. Yet they also name spending cuts as their first choice to balance state budgets. Solid majorities believe that a good portion of their state’s budget squeeze can be solved relatively painlessly by reducing waste and inefficiency in government without affecting services.”

Those who said "relatively painless" cuts could be made believed they could amount to 10 to 20 percent reductions in overall spending.

However the authors of the study said states may not be able to bear such cuts without services taking a hit:

“It is a strikingly consistent view, but experts who work closely with state budgets say it may not be realistic, especially given the steep spending reductions many states already have made since the recession started — both fiscal years 2009 and 2010—the first decline in general fund spending for two consecutive years on record. Forty states decreased their general fund expenditures in fiscal year 2010.” The study sites a 6.8 percent decrease in state spending nationwide during fiscal years 2009 and 2010.

According to the study, such contradictions are evident in Illinois: “One of the difficulties for Illinois lawmakers who want to follow public sentiment — such as avoiding debt — is that the public sends mixed signals.

Almost 90 percent of Illinoisans who participated in the survey are concerned about the effect cuts could have on state services. Yet more than 70 percent said their first choice for balancing the budget would be cuts. Almost 20 percent would raise taxes and fees, while only 6 percent would borrow.

However, 70 percent said they would support a tax increase to avoid cuts in K-12 and higher education. Nearly 60 percent would support a tax increase for health care and human services.

More than 60 percent of Illinoisans would support an increase in alcohol, cigarette taxes and corporate taxes, and more than 50 percent would support gambling expansions. Only 26 percent — the highest numbers out of all five states surveyed — said they would support an income tax increase.

The authors of the study point out that those revenue options may not be enough to maintain the services respondents say they value. “These are not major sources of revenue for the state, so even if they were increased, they would not bridge the gap. And there are other obstacles to these options: For instance, increasing income taxes on businesses is complicated.”

Part of the issue may be that respondents did not fully understand the major sources of revenue and spending in the budget. Nearly one fifth of those surveyed thought that transportation makes up the largest area of spending in the state budget, when in reality the three areas they most want to protect — education, health care and human services — are by far the biggest demands on the general revenue fund.

Transportation was the category respondents were least inclined to protect from cuts, perhaps mistakenly believing cuts to that area could lead to large general revenue fund savings.

Mark Baldassare, president and chief executive officer of the Public Policy Institute of California, said respondents might be too quick to discount borrowing because it is a valuable tool for states when economic conditions take an unexpected turn. “Borrowing is a very common part of the way state and local governments operate,” he said. He added that states need to take care not to rack up so much debt during the current crisis that debt service payments eat up large portions of future budgets. Baldassare cited Illinois’ $9.4 billion in borrowing for fiscal year 2010.

The public opposition to borrowing my be due, in part, to participants from all five states wanting to see their elected officials take action and respond to the economic crisis. “[They are saying:] ‘We shouldn’t be waiting for the economy to get better. We should be taking action now,’” Baldassare said.

He added that respondents seem open to being part of the solution when it comes to budget shortfalls. “I think it also shows that people are willing to do their part. … The public would rather not have tax increases, but for the right thing — in this case, education and human services — they are willing to pay and out of their own pockets.”

Delving deeper into budget cuts: Part 4

By Jamey Dunn

The Illinois Department of Healthcare and Family Services — which administers Medicaid, one of the biggest demands on the state funds — is trimming $216 million according to Gov. Quinn’s budget plan.

According to Quinn’s proposal, the department will be able to maintain the federal requirements for the state to get matching funds for the program. The following is a breakdown of Quinn’s proposals for the agency. (Italics are pulled directly from Quinn’s budget.)

Unified budgeting allows state agencies to work together to meet the long-term care needs of Illinois residents on Medicaid in the most appropriate, community-integrated setting and maximize federal matching funds.

Unified budgeting involves a multi-agency approach to long-term care, instead of each agency trying to tackle the issue independently. “The goal of this unified budgeting approach is to allow a more systemic view of available resources and planned expenditures, specifically as they relate to supporting the transition of individuals currently residing in nursing facilities or other institutional settings to the community.

The budget supports a pilot managed care program that will save the state $200 million over five years by providing 40,000 older adults and people with disabilities in Medicaid with care from integrated delivery systems.

The department chose managed care groups Aetna and Centene-IlliniCare to begin providing services in 2011 for seniors and people with disabilities in Cook, DuPage, Kane, Kankakee, Lake and Will counties. Participants sign on for the program, and some services will be phased in over several years.

Critics of the managed care pilot program have voiced concerns about making cost savings the priority over the care of two vulnerable populations. However, DHFS officials say improved communication among patients’ various health care providers will lead to better care. “The system will link primary, specialty and institutional services and will improve care for Illinois’ most vulnerable residents while saving taxpayer dollars,” Stacey Solano, a spokesperson for DHFS said in a written statement.

The budget allows implementation of recently passed, landmark reforms to ensure the safety of every nursing home resident in the state.

DHFS is working to determine appropriate reimbursement rates, so the money the state gives nursing homes for services would ensure that they provide adequate care and meet new staffing requirements.

The department is strengthening documentation requirements to ensure that only eligible individuals receive Medicaid benefits.

Solano said the department is doing a “full top-to-bottom review of eligibility and enrollment procedures.” The process is still in a preliminary stage, and no cost saving projections have been made.

• $207.8 million decrease in Medicaid lines and Group Insurance. The department plans to enact various quality and efficiency initiatives.

Solano said medical programs and group health insurance will get less money from the revenue fund, but there are no plans to cut programs or eligibility.

A total of $70 million in savings comes from renegotiating a deal with AFSCME on health benefits for state workers.

The state is participating in federal Early Retirement Reinsurance Program, which is part of the health care reform package passed in March. Employers that continue to cover early retirees under their insurance programs will be eligible for subsidies, and Illinois businesses could get between $42 million and $112 million. Solano said the program would help cushion the blow of some of the state cuts.

The department is also emphasizing preventative care to help people avoid serious and costly health problems. “Healthier people, mean fewer re-hospitalizations and services needed, which translates into cost savings for the state,” Solano said.

• $8.0 million in operations reductions

DHFS plans to reduce travel spending by 13 percent, equipment spending by 23 percent and telecommunications costs by 7 percent. With respect to equipment purchases, Solano said, “Purchases will be limited to only replacing equipment necessary for purposes of life safety, client service and continued agency operations.” The agency is not planning any layoffs, but 71 positions that are currently open will not be filled.

Solano added that because Quinn was counting on Congress extending the elevated Medicaid match that was set to expire in December, enough money was set aside to keep up the 30-day payment cycle the federal government requires on certain services for more matching funds.

(For information on cuts to the Department of Children and Family Services, Department of Agriculture and the Department of Natural Resources, see the first, second and third installments of "Delving deeper into the budget cuts" in earlier blog items.)

Budget deficit could reach $15 billion

By Jamey Dunn

Illinois could be facing an even larger stack of unpaid bills next fiscal year, as well as a $15 billion deficit, according to the quarterly report on the state’s finances by Comptroller Dan Hynes.

The state rolled an unprecedented $6.4 billion in unpaid bills over from fiscal year 2010 to the new fiscal year, which started in July. Legislators extended the cut off for paying those bills from August to December, and Gov. Pat Quinn has vowed to have the backlog paid down by the new deadline.

According to Hynes, 23 percent of FY 2011 revenues will be needed to pay off obligations from last year. A short-term loan the state took out in July for $1.3 billion, which will come due next spring, already went toward payments to vendors and service providers.

Hynes said in order for Illinois to pay down the backlog by December, the estimated $1.2 billion would have to come in from the plan to sell bonds against money the state received in a tobacco settlement. The state would have to shift $1 billion from other funds into the general revenue fund, and the tax amnesty plan would have to successfully bring in revenues. While the report does not specify how much the state has to bring in during the tax amnesty period — which started on October 1 and ends November 8 — Hynes says the plan is not likely to bring in the original estimate of $200 million.

However, Kelly Kraft, a spokesperson for Quinn’s Office of Management and Budget, said an analysis by the legislature estimated the amnesty would bring in $250 million. She said in a written statement that it is too soon to predict the exact number, but added: “The hundreds of millions of dollars in expected revenue will be significant to help the state pay its bills and keep people employed.”

Hynes estimates that $8 billion in overdue payments could carry over from the current fiscal year to FY 2012 because so much of this year’s money will be needed to pay down last year’s bills. A total of $3.5 billion in unpaid bills from this fiscal year have already piled up. From the report: “Absent any other changes, payment delays will be extended from the historic levels seen recently. This will lead to more providers facing financial hardship and further threaten both the level and quality of services provided to Illinois citizens.”

While income tax revenues saw a small increase, sales taxes where down. According to the report, Illinois cannot count on an economic rebound to bail out the budget in the near future.

Hynes’ report says all this bleak budget news — along with the loss of federal stimulus money and the state’s low credit rating leading to larger interest payments on borrowing — could culminate in deficit of at least $15 billion by the time lawmakers are hammering out a new budget early next year. If that happens, the state’s debt would represent more than half of the money currently in the general revenue fund.

Delving deeper into budget cuts: Part 3

By Jamey Dunn

The Illinois Department of Natural Resources has been the target of controversial budget cuts in the past, when former Gov. Rod Blagojevich closed state parks in what he said was an effort to save money. However, many legislators said parks in their districts had been targeted because of their political sparring with the disgraced former governor.

One of Gov. Pat Quinn's first major actions after he took over for Blagojevich was reopening the closed parks. He made the announcement in Springfield and was cheered by hundreds of DNR employees. But now, it is Quinn's turn to cut the budget. And according to DNR spokesman Chris McCloud, the agency is trying to pull off $8.5 million in cuts without any layoffs or park closures. (Italics are pulled from Quinn's proposal.)

($6.1 million) Operations.
Reduce vacant positions.
Shift funds from General Revenue to Other State Funds.
Defer non-critical maintenance at parks.
Implement administrative efficiencies.

The agency will not fill some open positions, and McCloud said employees may be shifted to other positions or trained to handle more duties. He gave the example of encouraging people to apply for licenses and permits, such as fishing and hunting licenses, online. Then, the department could shift some people who work in licensing to other positions.

DNR plans to tap into dedicated state funds and federal funds to avoid using as much money as it can from the state general revenue fund. Examples include: taking money from the Coal Development Fund under an agreement with the Department of Commerce and Economic Opportunity to help pay for mining safety efforts; and using federal dollars from the Great Lakes Initiative to combat the spread of the invasive species Asian carp.

McCloud said deferring non-critical maintenance would mean putting off work such as painting, weather-proofing and upgrading to more efficient equipment. He added that administrative efficiencies would include “major” cuts to printing, travel, overtime pay, energy, leased office space, memberships to professional organizations and subscriptions to magazines and newspapers.

($2.4 million) Lump Sums.
This includes the elimination of the Environment and Nature Training Institute for Conservation Education (E.N.T.I.C.E.) program and the Wildlife Prairie Park subsidy. Funding for the Dam Safety Program, aimed at communicating drowning risks at run-of-the-river dams will be reduced.

Here is a dollar amount breakdown of the lump sum cuts and what they mean to each program:

The ENTICE program is facing the loss of its entire $273,000 budget. The program provides hands-on natural resources and conservation training for teachers. McCloud said DNR is looking for ways to continue the program through other funding sources. “The loss of the ENTICE program diminishes our ability to reach children and families through outdoor education,” he said in a written statement. McCloud added that Environmental Education Association of Illinois (EEAI), Illinois Audubon Society and Illinois Farm Bureau provide similar programs for educators. Elizabeth Hagen-Moeller, president of EEAI, said, “I think there are still alternatives. … a lot of park districts and informal educators will still offer training. … The piece that is missing is the connection to IDNR.”

Hagen-Moeller agreed other options are available for educators looking for conservation training. However, she said cutting ENTICE would mean removing an important avenue for networking teachers with experts in the natural resources community, including DNR employees. “It is disappointing because we definitely need both the formal educators and non-formal educators,” she said. A message I left with the ENTICE program seeking more information on the proposed cuts was not returned.

Wildlife Prairie Park near Peoria would lose its entire $790,000 state subsidy. McCloud said of the park in a written statement, “In the case of Wildlife Prairie State Park, we hope that the foundation which runs it can keep the park open for the many visitors who enjoy it every year.”

Jeff Rosecrans, the executive director of the park, said half the staff has been eliminated through a voluntary buyout option. He said park officials hope to fill the rest of the budget gap by cutting costs, stepping up fundraising efforts and trying to bring in more money. The park brings in revenue through admission costs, lodging and hosting events. He added, “We’ve got good support of community leaders stepping up to the plate.”

The Safety at Dams program would take a $100,000 hit. The program places buoys and signs at state-owned dams and waterways to reduce the risk of drownings. McCloud said the program has built up the number of such safely measures since its inception in 2008. He said funding for this fiscal year is at a “sustainable level for supporting this program.”

(For information on cuts to the Department of Children and Family services and the Department of Agriculture, see the first and second installments of "Delving deeper into the budget cuts" in earlier blog items.)

Brady unveils recovery plan

By Jamey Dunn

State Sen. Bill Brady, the Republican candidate for governor, laid out his plan for economic recovery today. He and Gov. Pat Quinn agree that job creation is the biggest issue of the campaign and even back some similar proposals. But their disagreements center on what may be the second biggest issue of the race: taxes.

Brady’s plan has four goals. The first is to create a “stable tax environment.”

As he has said before, he wants to repeal the sales tax on gasoline and the estate tax. He also wants to make permanent a research and development tax credit that the General Assembly extended this year.

He estimates that cutting the sales and estate taxes would cost the state $650 million to $1 billion. He says the economic growth those two cuts would spur means they would pay for themselves in a “year or two.” In the meantime, he would have to cut that amount if he wants to uphold his pledge of presenting a plan for a balanced budget to legislators next year.

Brady said discussion of an income tax increase, such as Quinn’s proposed 1-percentage-point hike, creates uncertainty for businesses and may encourage them to leave the state.

Besides pledging not to raise taxes, he wants to offer business a tax credit for hiring new workers. Quinn pitched a similar plan for small businesses, which is currently in effect. Any business with fewer than 50 employees that hires a new employee between July 1, 2010 and June 30, 2011 is eligible for a $2,500 tax credit. The total number of credits that can be doled out is capped at $50 million, enough for 20,000 new jobs.

Brady would offer $3,750 tax credit to all businesses for each new hire; $2,500 in the first year and $1,250 in the second year.

He would also create several panels to help him “engage in long-term strategic planning.” This second part of Brady’s plan includes naming a council of economic advisers and a task force to investigate the economic challenges facing communities on the state’s borders, which would be headed by Jason Plummer, Brady’s running mate.

Brady’s third goal is to make Illinois more competitive with other states. He says he wants to do that by making “significant changes” to the worker’s compensation system in Illinois and capping damages awarded for pain and suffering in medical malpractice cases at $500,000. Although the Illinois Supreme Court has struck down similar caps three times, Brady said he doesn’t think Democrats made a “sincere effort” to draft a bill that would hold up to a constitutional challenge. However, he could not describe what aspects of former bills he would change.

Finally, Brady says he wants to bring “transparency and accountability” to the budgeting process. He has said he cannot provide a detailed budget until after he is governor and can audit the state’s finances. Brady blamed his absence of details on a lack of transparency from the Quinn administration. He said he would appoint a jobs ombudsman to help businesses navigate state regulations. He also wants to prohibit new spending or programs without dedicated funding sources and “measurable” outcomes.

But Quinn said later that there is no money for Brady’s cuts. He said that businesses looking to set up shop in Illinois are most concerned with the quality of the state’s infrastructure and workforce. “I think he’s not being honest with the people running around the state saying he’s going to cut all these taxes. Well, how’s he going to pay for education, health care, public safety and helping our veterans?” Quinn has proposed property tax cuts if his plan for an income tax increases is approved.

Brady said that as a small business owner, he knows what businesses are looking for in Illinois. “I understand the importance of education. I understand the importance of infrastructure. I understand the importance of deregulation.”

Illinois' race for education funds spurred reforms

By Jamey Dunn


Losing both rounds in the Race to the Top federal grant competition was a frustrating experience, but Illinois is better for having tried, according to state schools Superintendent Christopher Koch.

In the first round of the competition, the U.S. Department of Education doled out $4.35 billion to two states. Illinois placed fifth with a score of 423.8 out of 500. In phase two, 10 states got $3.4 billion, and Illinois was 15th with a score of 426.6.

Koch said the Illinois State Board of Education worked hard to get more school districts and unions to sign on for phase two. The state’s participation levels were criticized in the first phase. (For more on this effort, see Illinois Issues, September 2010, page 13.)

He said some local officials were concerned about allowing the federal government to have too much control over education. Expanding programs based on federal grants that expire was also an issue. Schools were concerned about where the money would come from when the grants ran out.

Koch added it is difficult for Illinois to compete with states that have fewer districts. In some of the winning states, each county is a school district. By comparison, Illinois has 102 counties and 869 school districts. Two of the winners, the District of Columbia and Hawaii, each have just one district. “We have to just sell it to local boards and local school districts and local unions again and again and again. It just requires an awful lot of selling.”

Koch said the schools participating represent 82 percent of students in Illinois.

ISBE officials focused on the areas that lost points on the first round while doing little to change parts of the application that scored well. However, a completely new panel scored the second round. Koch said some of the areas of the application that impressed the judges in the first round failed to do so in the second. “It makes it hard because we were responding to the first application.” He added that because the judges do not compare the states and not all the same judges scored every state, some states had lower participation levels than Illinois but scored higher on that section of the application. “My take on this is that it depends on the team [of judges] you’ve got. … It sort if makes it more like a Race to the Top lottery.”

While the loss was disappointing, Koch said, competing in Race to the Top did spur important reforms that he said would have not happened as quickly on their own, such legislation that requires higher standards for principal certification. “I think that overall, that we are better for having gone through this process. … These are the right reforms.”

Funding for education jobs

Chicago Mayor Richard Daley and U.S. Sen. Richard Durbin announced in Chicago today that the federal government has released $415 million to help save education jobs in Illinois. Officials can begin allocating the money today. Koch called for the General Assembly to appropriate the funds in a special session, but Gov. Pat Quinn has said a special session is unnecessary, so it likely will not happen. Durbin estimates it will save 5,700 education jobs in the state.

Tax cuts don't add up

By Jamey Dunn

Gov. Pat Quinn has incorporated a new component to his proposal for the state budget: property tax relief.

Quinn’s original budget proposal included a 1-percentage-point income tax increase, which he said would go wholly to fund education. At the time, the governor was proposing a $1.3 billion cut to education as the only alternative to the tax, which he said would be necessary to replace federal stimulus funds that will not be coming this fiscal year. Quinn’s budget office estimated the tax increase would bring in $2.8 billion. Some of the money was also meant to go toward paying down the millions in overdue bills the state owes schools.

Quinn has been bringing up the point for months that cutting school funding could lead to higher property taxes. “If you don’t have the state fully supporting education the way it should, local property taxes go up. That’s a[n] iron law. That happens. If the state doesn’t pay for schools, then local property taxes end up paying for schools,” Quinn said at a Chicago news conference.

When pressed by reporters on the issue yesterday, Quinn said he would require local school districts to cut property taxes if his so-called “surcharge for education” income tax increase passed.

Today, Quinn emphasized a concept that is not new. “I think, from my viewpoint, we’ve got to reduce reliance on property taxes to fund education in Illinois. That is an imperative if we want to have a stronger economy and have better education. The state of Illinois, according to our Constitution, has the primary responsibility for funding schools.”

The idea that education should be funded predominately by state dollars and not local property taxes has long been a topic of debate. It was the thrust of the Senate Bill 750 plan, which the tax increase that passed in the Senate last year was based upon. However, that plan, which stalled in the House, includes a 2-percentage-point income tax increase and broadening sales tax to include some services.

Here is how Quinn explains his plan: “What I would envision is, the amount of money that the school districts get, additional new money from the state, a portion of that would be abated in property tax abatements — reductions — to the families and businesses and farmers of Illinois. … If you get additional new money from Springfield, from the state government, then I think part of the bargain has to be that the local school districts at least roll back a portion of their property taxes. … They end up getting more money. … They’ll get more money for education, and the taxpayers will get lower property taxes.”

But Quinn’s plan is scaled back on the revenue side. Promising more funding for education and a cut in taxes during an unprecedented budget deficit while facing a huge stack of unpaid bills may be unrealistic. Quinn’s proposed income tax increase would barely make a dent in the estimated $13 billion budget deficit.

Quinn’s Republican opponent in the governor’s race, Sen. Bill Brady, has claimed that he can balance the budget in one year, while avoiding mass teacher layoffs and property tax hikes. His plan also includes a billion dollars in tax cuts.

Kent Redfield, an emeritus professor at the University of Illinois Springfield and director of the Sunshine Project, a nonprofit campaign contribution database connected to the Illinois Campaign for Political Reform, doubts that large tax reductions will come if Brady is elected. “We’re not going to have a huge tax cut because we will have a Democratic Senate. And we can’t afford it anyway.”

Requests to Quinn’s budget office for more specifics on his proposal were met with referral back to tape of the news conference that Quinn held in Chicago earlier today, where he took questions on the plan but did not get into the numbers.

While proposals to cut taxes may play well on the campaign trails for both candidates, it appears that the money for such plans is just not there — even with an income tax increase. The state’s budget gap is just too big.

Delving deeper into budget cuts: part 2

By Jamey Dunn

Because the State Fair, which celebrates agriculture in Illinois, is in full swing this week, I thought I would delve into Gov. Pat Quinn’s $6.5 million in proposed cuts for the Department of Agriculture (Italics are pulled directly from Quinn’s proposal):

($1.1M) Operations Lump Sum
Additional management efficiencies

Jeff Squibb, a spokesman for the Department of Agriculture, said these funds would come from leaving vacant staff positions open and working to bring in more federal money. “We have been working for the past several years to wean the agency off of [state general revenue funds,]” he said.

Squibb said the department would attempt to find such efficiencies as keeping vacant positions open and monitoring office supplies. He says administrators will reassess the budget every month and may eventually have to make cuts to programs and services.

($5.4M) Grants Lump Sum
County Extension Programs
Soil and Water Conservation Districts reduced 42 percent in
administration costs to create efficiencies, while maintaining
capital projects to help control erosion and other conservation
projects in Illinois
State Fair Premiums reduced, resulting in smaller purses for
various contests

Richard Nichols, executive director of the Association of Illinois Soil and Water Conservation Districts, said the 42 percent reduction is from fiscal year 2010 funding levels. The organization could not, he said, maintain the two-person team, one administrative worker and one technical expert, that each district is meant to have as its staff.

“It’s going to be devastating,” he said of the proposed budget reduction. Some districts bring in money from handling permit reviews for the Illinois Environmental Protection Agency, but he  said the money is not coming in like it used to because development has shrunk as a result of the bad economy. He added that some districts receive county funds, but those are being cut, as well, because counties also face budget gaps. “Most on the soil and water conservation districts rely solely on state funding.”

Nichols said that because the districts are units of state government they cannot be consolidated or closed without referendums. So the end result may be that some districts continue to exist but not have employees to help bring in federal funds and advise on conservation projects.
“Some of them are going to go until they run out of money.”

He added that districts bring in “a lot of conservation funding. And, of course, those funds go to pay land-improvement contractors for what they do. So those are jobs we’re losing out on.”

Nichols said that some residents may not realize what their soil and water conservation districts do to prevent erosion, water contamination and flooding. “If they do their job correctly, nobody knows they’re out there. If they do their job correctly, all you see is grass and clean water.”

The University of Illinois Extension program has already undertaken a restructuring plan that will consolidate its 76 administrative units down to 30, each serving between three and five counties.

Robert Hoeft, interim associate dean of the Extension and outreach, said the Extension, which is best known for administering 4-H youth agricultural programs, is looking at program cuts. “In the past, we’ve tried to do anything everybody wanted. And we’ve just got ourselves spread so thin. So now we are going to target our programs to high-impact areas. So the things that are nice but don’t really make an impact in the state of Illinois — we are going to eliminate those things.”

Squibb said Extension officials did a good job of preparing residents for the changes. “They held hearings throughout the state; they were very proactive when it came to these budget cuts. …They recognized that in order to maintain some level of service, they were going to have to reduce their own spending.”

Squibb said overall he has not heard complaints at the fair where many in the agriculture community have gathered to compete and showcase farming. He said most people are aware that times are hard for the state and are prepared to see some tough cuts. “I am not saying they are happy. …We’re at a point now where we are cutting worthwhile programs. It is not an instance where we are eliminating — if you’ll pardon the phrase — pork.”

(For information on cuts to the Department of Children and Family services, see the first installment of Delving deeper into the budget cuts.)

Federal funds may require special session

By Jamey Dunn

As Gov. Pat Quinn tries to piece together a budget with billions in unpaid bills piling up, the federal government will be chipping in to help cover Medicaid and education costs. This new revelation could mean the General Assembly will have to hold a special session to dole out the education funds.

President Barack Obama signed a $26.1 billion spending package intended to preserve public sector and education jobs. The measure also extends an elevated Medicaid match — which works out to 62 cents on the dollar for Illinois instead of the usual 50 cents — that was set to expire at the end of the year. Illinois would likely get about $400 million for education and $550 million for Medicaid.

Officials at the Illinois State Board of Education believe that the General Assembly will have to return to Springfield to appropriate the federal dollars for education. From a newsletter written by State Superintendent Christopher Koch:

Illinois stands to receive an additional $400 million in federal education funding. We believe that if the spending measure becomes law, the Illinois General Assembly would have to come back to Springfield to pass a supplemental appropriation, and these funds would likely be distributed through General State Aid.

Quinn’s Office of Management and Budget and the legislative leaders are all reviewing the bill to determine if a special session is needed. Kelly Kraft, a spokeswoman for the governor’s budget office, said a decision could come by next week.

ISBE spokesperson Mary Fergus said the federal government estimated the money could save up to 5,600 education jobs in Illinois. She added that applications for the funds should be available to states in about a week.

Delving deeper into the budget cuts

By Jamey Dunn

Gov. Pat Quinn released a new round of budget cuts last week with no fanfare and little detail. The plan, displayed on a website dedicated to the budget, gives a one-page-per-agency description of which areas will be cut. It lists some grants and contains some rather cryptic descriptions. That is perhaps due in part to the fact that cuts to education and social services are unpopular, and details are still being worked out. The last thing Quinn’s administration wants to do is get people up in arms about specifics, only to see them change during the negotiation process.

However, the fiscal year is already a month old, and elections are only a few months away. School districts, local governments, social service providers, universities, community colleges and voters need to know the potential impacts of reductions to plan their own budgets and, in the case of voters, help them decide whom they want to represent them in the years to come as Illinois tries to climb out of this financial crisis.

In this spirit, I decided to take each breakdown of agency cuts and try to get more details on what the targeted areas are, such as what certain grants are used for or who benefits from certain programs. I will post my findings in the coming weeks. I expect to hit some dead ends because interested parties are often hesitant to talk about details for fear of throwing off negotiations. If I can’t get the details, I will at least let you know my process. And things will likely change as negotiations proceed and new developments come in, such as the possibility of more federal funding. If you have comments or suggestions, I would love to hear them.

First up: the Department of Child and Family Services, which faced a $6 million reduction in the first round of cuts Quinn proposed last month. That number jumped up to $34.5 million in the new plan released last week.

DCFS

Proposed drastic cuts to the Department of Child and Family Services budget last year landed the state in a lawsuit with the American Civil Liberties Union, and it could happen again this year.

The $34.5 million in cuts that Quinn proposed last week are not nearly as deep as the $460 million reduction he suggested as part of last year's “doomsday” budget, which was never enacted. However, it is unclear whether the new funding levels would cause the agency to break a court order.

Last year’s lawsuit was based on a settlement the state reached with the American Civil Liberties Union after a 1988 lawsuit that ushered in sweeping reforms to the way the agency does business. “Many of the standards that are in that consent decree are due to the cooperation between the plaintiff and the agency itself. … Many of those standards are above the national norms,” said Kendall Marlowe, a DCFS spokesperson.

The consent decree sets standards of care, such as on staffing levels, child-to-caseworker ratios and required programs. The ACLU is now the court-ordered watchdog in charge of making sure DCFS lives up to the settlement. While the decree contains no required funding level, DCFS is supposed to run its budget by the ACLU, so that organization can determine whether the funding is enough to meet the requirements.

Marlowe said the state would be able to meet its commitments in the consent decree with the new budget cuts.

However, ACLU associate legal director Benjamin Wolf is not sure. He said his organization approved the original $6 million in cuts after determining that the agency would be able to live up to the consent decree after the reduction. But it has not figured out whether DCFS will be able to make the grade under the new proposal, which the agency had yet to discuss with the ACLU as of last Thursday.

Wolf added that some time is still available for the two groups to get together to try to sort things out, since DCFS plans to avoid cutting staff who deal directly with children. “There is nothing in that plan which would endanger the health and safety of children next week,” he said.

Here’s the breakdown of Quinn's proposed cuts, according to Marlowe (Italics are pulled directly from Quinn’s proposal):

($4.3M) - Operations Lump Sum
Maintains budgeted headcount by filling vacant positions over a longer period of time and moving some operations funding from the General Revenue Fund to the agency’s Children’s Services Fund.

Cuts to operations costs will be realized by holding off on filling 139 positions. The department plans to hire for no more than a quarter of the jobs this year and fill the rest next year. Marlowe says these are office positions, such as administrative assistants and clerical workers, not “front line staff, ” such as caseworkers, who work directly with children and families.

The Children Service’s Fund has money in it from federal matching programs, so spending would be shifted away from state resources.

($30.2M) - Grants Lump Sum
Reestimate of Institution & Group Home demand
Reduces indirect contracts
Increases revenue opportunities & improves Federal claiming

Marlowe said DCFS makes projections for how many children may need to spend time in institutions or group homes, and those assessments can be trimmed back. “There is no way to know that in certain for advance, so you have to do projections.”

He added that DCFS has been working on a shift to community-based treatment and away from institutionalization, so reducing the number of kids going into such homes is in step with the current treatment philosophy.

Wolfe said that is one of the aspects of the cuts that he is most concerned about. However, Marlowe said children would not be turned away. “If the kid needs help and the kid needs to be placed in a group home, we’re going to place him in the group home.”

According to Marlowe, reducing indirect contracts would mean cutting down on consultants, such as hiring a child psychologist not employed by DCFS to help with a specific case. He said it would not include any reduction in payments to foster families, residential services providers or group homes.

The cuts would also mean a cut to funding for research the agency uses to pinpoint the best methods to help the kids it serves, as well as assess the effectiveness of its own efforts.

Marlowe says prolonged cuts to research could damage the agency in the long run. “Part of why we have gotten better at delivering service to children is because we have developed this research base. … Some of the background work we are doing now could benefits kids five [or] 10 years down the road.”

He added that the agency has made great strides to capture as much federal funding as possible through what he says are often complicated reimbursement programs.

Agencies to merge by the end of the year

Jamey Dunn

Gov. Pat Quinn appointed a new director to head up the Department of Juvenile Justice (DOJJ) and oversee an agency merger that he said is coming before the end of the year.

Quinn named Arthur Bishop, who is currently the deputy director of field operations for the Department of Children and Family Services (DCFS), as acting director of DOJJ. Quinn said he wants Bishop to be the “quarterback” leading the merger of the two agencies. Bishop will replace Kurt Friedenauer starting August 1.

As a first step to the eventual merger, Quinn signed legislation earlier this week that allows the Department of Child and Family Services to share resources with DOJJ.

Kendall Marlowe, a DCFS spokesman, said that his agency could help youth offenders by offering services such as placement in a safe environment after they have spent time in a detention facility, mental health treatment or programs to help prepare them for careers or higher education.

Marlowe added that DCFS plans to find ways to collect federal matching dollars for some of the services children in the DOJJ system need. “DCFS had made great progress over the past few years when it comes to claiming federal funds.”

Quinn says kids in both systems often have similar needs because they face similar obstacles, such as abuse addiction and mental health issues.

“The overwhelming majority of young people in detention are struggling with the effects of childhood mistreatment, and they would benefit from a system that understands that trauma often can lead to difficult situations, and we must relieve the trauma,” Quinn said at a Chicago press conference.

Both Bishop and Marlowe said that stakeholders have been in talks for months on the merger. Marlowe said his agency is moving forward under the assumption that it will be a reality before the end of the year.

Bishop said he hopes the merger will help “ensure first of all that there is safety in the community to hold youth accountable.” But also, “do a thorough assessment so that we can determine the needs of those youth so that those that are appropriately ready to be discharged from the [DOJJ] that they will be discharged into a community that’s prepared to receive them, that’s prepared to meet their needs so we can then reduce recidivism.

Budget
Quinn announced his newest cuts made with the budgeting powers the General Assembly granted him in the “Emergency Budget Act." Quinn and his nonunion staff will take 24 furlough days this fiscal year. They took 12 unpaid days off last year. The governor made this move after facing criticism over giving his employees pay raises while calling on government agencies and citizens to “share the pain” of the state’s fiscal crisis. Quinn said the furlough days are equivalent to about a 9 percent pay cut.

Quinn added that he has cut his budget more than any other executive agency and some of his staff has taken on new responsibilities.

Quinn also said that more cuts are in the works and the budget will be fluid throughout the fiscal year. “This budget year we are going to have constant review. It’s not a one-day document. It’s going to be day-to-day, week-to-week, month-to-month throughout this fiscal year. There will be administrative orders regularly in order to mange our state through a very difficult time.”

Some education programs spared

By Jamey Dunn


While K-12 education is still taking a hit under the budget plan Gov. Pat Quinn outlined last week, funding levels have improved since the Illinois State Board of Education laid out its budget last month.

The board based its budget on a predicted reduction of almost $300 million. Quinn’s plan would cut education by $241 million:

• $84 million from student transportation.
• $68.5 million from reading improvement grants and $70.5 million from other grant programs.
• $2.1 million from the ISBE operations budget.

Quinn also vetoed the $16 million appropriation in the General Assembly’s budget for hold harmless funding.

The ISBE budget zeroed out several high-profile programs. Funding has been restored for many of those programs, but not all would be back to fiscal year 2010 levels.

Under Quinn’s plan, advanced placement classes, agricultural education, alternative education for at-risk students and arts and foreign languages would all be funded at 80 percent. All the funding would be restored for the After School Matters program and Teach for America.

Funding would not be restored for the school breakfast program , nor for the longitudinal data system, which is intended to track student’s performances over their K-12 education careers. That system is an important part of the state’s Race to the Top application, but Mary Fergus, a spokesperson for ISBE, said that the cut should not hurt the state’s bid because Illinois has received millions in federal grants for the system.

The money for such programs is doled out through grants known as mandated categoricals, which are separate from foundation level funding , the amount allocated per student. However, David Comerford, a spokesman for the Illinois Federation of Teachers, said people should not mistake categorical grants as unimportant or expendable.

Comerford added that most of the more than $1 billion the state already owes schools is for mandated categoricals.

“It’s still a key funding source that helps pay salaries. … Categoricals can’t be looked at as extra curriculars. … That’s day-to-day education stuff. It’s not frivolous side programs,” he said.

Hynes report paints dire fiscal picture

By Jamey Dunn

At the close of the 2010 fiscal year, Illinois is running a record tab of unpaid bills and making payments more slowly than ever before.

According to Comptroller Dan Hynes’ quarterly report on state finances, Illinois rolled over $4.7 billion in unpaid bills into the new fiscal year. Not all the bills have come in, and the comptroller estimates that number could reach $6 billion by the August 31 deadline for submitting payment requests. The number of unpaid bills at this time last year was almost $2.8 billion.

The state takes on average 153 workdays to fulfill a payment request, up from 99 days last year. The General Assembly passed and Gov. Pat Quinn approved a measure that gives Illinois until December 31 instead of the usual August deadline to pay its bills from last fiscal year. Hynes estimates that after those debts are paid, Illinois will face its biggest budget deficit to date. The current shortfall is $4.692 billion.

Part of that deficit is due to drops in revenue. Income tax revenues, both personal and corporate, were down $1.6 billion at the end of fiscal year 2010. Sales tax collections were down $465 million. Taxes from other sources, such as investment income, insurance and inheritance tax, were down $123 million.

Revenues from last fiscal year fell $1.3 billion short of projections. So, according to Quinn’s Office of Management and Budget, Quinn, Hynes and State Treasurer Alexi Giannoulias have agreed to move forward with $1.3 billion in borrowing to make up the gap. The cash is expected to come in near the end of July and will go to pay down the backlog of bills.

Hynes’ report says without this borrowing, Quinn’s newly approved power to shift money from special funds to the general revenue fund and the securitization of national tobacco settlement payments, which will produce $1.2 billion upfront, Illinois would have no hope of meeting the extended December deadline to pay off last fiscal year’s bills.

But the report said services and programs for this year will suffer as Illinois stretches to pay down its debt. “It will be extremely challenging to close out fiscal year 2010 and maintain key functions of state government. Other than payments for mandated debt service on state bonds, general state aid to education, federal stimulus related Medicaid and critical state operations, an extremely limited amount of fiscal year 2011’s obligations are likely to be addressed in calendar year 2010 while the state is still dealing with the prior fiscal year’s bills.”

Quinn signs environment and election bills

By Jamey Dunn

After releasing his plan to cut the state budget last Thursday, Gov. Pat Quinn spent time over the holiday weekend signing bills into law. Here are some of the measures the governor recently approved:

House Bill 6099 requires commercial lawn care companies to test soil before applying phosphorous fertilizers. The soil has to show a deficiency of the element before the fertilizer could be used. Phosphorous has been linked to a 6,300 square-mile dead zone in the Gulf of Mexico, where algae chokes out most other life.

The bill went into effect once the governor signed it. For more on HB 6099, phosphorous and the dead zone see the current (June/July) Illinois Issues, page 32.

Senate Bill 2951 is intended to protect bicyclists from threats. The new law will make verbally harassing or “crowding” a bicyclist by driving dangerously close a misdemeanor punishable by up to one year in prison and $2,500 fine. The law also protects pedestrians and individuals riding horses or driving a vehicle pulled by an animal.

Senate Bill 2798 creates a “Share the Road” cycling-themed license plate. Money from plate sales will go to the League of Illinois Bicyclists for safety education programs. Twelve other states participate in the program.

Both bills will go into effect January 1. For more on biking in Illinois, see the current (June/July) Illinois Issues page 22.

Senate Bill 3012 creates a pilot program that for grace period voting and early registration on college campuses during the general election in November. It took effect upon Quinn’s approval.

Pension Borrowing

Quinn said today he does not expect the Senate to return the Capitol before November to vote on almost $4 billion in borrowing to make the required pension payment for this fiscal year. Quinn said Senate President John Cullerton plans to call his chamber back on November 4. When legislators do come back, Quinn expects them to approve the measure.

“The members of the Senate, they have a duty to look at a bill that passed the House dealing with borrowing. We have been told by the Senate president that that will be addressed, and we expect him to do it. And when he does it, calls the bill, then they’ll have a vote, and I am sure it will pass,” he said at a Chicago press conference.

Quinn admonished legislators for pushing difficult budget decisions off to him. “The Senate is not going to vote on this bill, it appears until the 4th of November. I’ll have to deal with that. We will deal with it, like we’ve dealt with everything. The General Assembly doesn’t have a lot of fortitude when it comes to raising revenue or making cuts. They made that crystal clear.”