Big Nonprofit Exhale across Illinois Upon Temporary Reprieve

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ib0870 springfield state capitol interior dome statehouse / Mark Goebel

ib0870 springfield state capitol interior dome statehouse / Mark Goebel

June 30, 2016; Chicago Tribune

The schools, universities, and social service agencies of Illinois got some good news last week. The state’s feuding political leadership was able to find a small patch of common ground upon which to stand as they agreed to a set of stopgap measures that will allow some state funds to flow. Doing so averted the complete state shutdown that would have occurred had midnight June 30th come and gone with no action taken. But it did next to nothing to resolve the state’s serious fiscal problems, which include unfunded pension plans in excess of $100 billion and a level of state spending that continues to exceed current revenues by billions of dollars annually.

For the past 12 months, the state has operated without a budget as Republican Governor Bruce Rauner battled with the Democratic-controlled state legislature over their very different views of the role of government in strengthening the state’s economy and in providing essential services to its citizens. Caught in the crossfire have been social service agencies of all shapes and sizes, public schools and colleges, state employees, and anyone counting on the state government for service and funding. A series of limited funding bills and court orders averted a total meltdown but did not stem the serious pain.

Public school districts will receive $361 million more than the previous year, with the increases targeted toward those districts with high concentrations of poor students. About $100 million will go to Chicago’s public schools, which were also given the ability to raise Chicago property taxes by as much as $250 million. These are large numbers, but for Chicago, it’s not even half the new funding their schools require to have a balanced budget for the new year!

The state’s colleges and universities will receive $1 billion, including $150 million earmarked for Monetary Assistance Program scholarships for low-income students, who were left totally unsupported last year. While this will ease the pressure on these schools, it is only about 25 percent of the funding that would have been expected based on pre-impasse state budgets. For smaller schools, with student bodies significantly composed of low-income and minority students and limited reserves left to draw down (if any), this level will still leave them facing difficult decisions about how to balance their budgets.

Social service agencies were allocated $667 million to cover services that were contracted for by state government but not funded over the last 12 months, plus services to be provided through the end of 2016. But this represents only about 65 percent of the funds owed to these contracted agencies. Their cash flow will be helped, but they’ll still need to tap reserves or curtail operations to make up for the missing 35 percent.

Left unresolved was any permanent change to the formula the state uses to allocate funds to public schools, which could ameliorate the dependence on property taxes that cripples schools in the poorest communities. No resolution was reached on fixing the public pension system, nor did state leaders tackle how to increase state funding or permanently cut expenditures so that a fully funded budget could be created. And, lastly, no compromise was reached on the strategic and philosophical divide that has made progress on tough issues impossible.

Shortly after approving the legislation needed to implement these actions, Democratic State House leader Michael Madigan said:

We have seen with previous successful budget efforts that we can come together, achieve compromise and pass a budget when the governor’s demands relative to his personal agenda that hurts families are dropped. That happened again today. […] My priority, and the priority of House Democrats, continues to be the passage and implementation of a comprehensive, full-year state budget that fulfills the promises to Illinois’ middle class, the elderly, children and most vulnerable. This can be achieved if we can again work together toward compromise, and instead of focusing on agendas that would hurt Illinois’ middle class, focus on a budget that improves the quality of life for all Illinoisans.

Those “demands by the governor” are for changes to labor contracts for public employees, in the state’s worker’s compensation program, and other structural reforms that remain his agenda.

“This is not a balanced budget,” Rauner said, “This is not a solution to our long-term challenges. This is a bridge to reform. That’s what this is.” Rauner praised Chicago Mayor Rahm Emmanuel and Illinois Senate President John Cullerton for their efforts to negotiate an agreement. Rauner ignored Madigan and his statement to the media made hours earlier.

The immediate threat of a government shutdown has passed. State officials can wait until after the November elections to before they again try for a real solution. Those charged with providing essential services have some money to spend but remain without a clear picture of their future and still in need of ways to fund what the state will not for their clients and students.—Martin Levine

  • Cynthia Worsley

    This is a good description of Illinois’ budget problems. However, as the Director of a non-profit serving the elderly, I argue with the statement that non-profits will have to “tap reserves or curtail services.” There will be little choice but to curtail services. Non-profits serving Illinois have NO RESERVES LEFT.” According to a survey of 429 agencies from all Illinois counties by United Way of Illinois cash reserves have been depleted by $38 million, 45% have laid off staff and 36% of the agencies anticipate closing their doors within 6 months if a full year budget is not passed. This is devastating to agencies, clients, employees and the vendors not being paid for providing goods and services to the agencies.