In many Illinois hourglasses, the sand is slowly falling. Some of them sit on the desks of nonprofit executives and board chairs, measuring how many days their organizations can operate without stable state funding—for a growing number, not much time remains before they are done. The most visible one in the state capital measures how many hours remain before a third consecutive year begins without a state budget and without a plan to pay the huge stack of unpaid bills, many of which are owed to the state’s nonprofits.
Every organization that has provided services under state contract has had no fiscal security since July 1, 2015, when the budget impasse between the state’s Republican governor, Bruce Rauner, and the Democratic controlled legislature began. Social service agencies, schools, and colleges were forced to cope with at best significantly reduced funding or, at worst, no funding at all. Even those with interim agreements for partial funding face months-long waits for payment as the state grapples with a growing cash shortfall. The harm done (see prior NPQ coverage) has been significant and it is getting worse.
One typical example is Dove, Inc. in Decatur. They serve as many as 5,000 homeless and at-risk clients a year, providing housing, case management, and other lifesaving interventions. One arm of Dove provides services to domestic violence victims, but that service may need to close within months. According to the Herald & Review, Dove faces the need to make severe agency-wide cuts if a state budget with adequate funding for human services is not passed.
While Dove was fortunate enough to have been given partial funding during the impasse, getting paid for its services has been quite another issue. Currently, the organization is owed approximately $500,000 by the state for services already provided.
According to Christine Gregory, Dove’s executive director, “We’ll be using the line of credit we have starting in the month of July. We have 60 days’ worth of operating cash for a line of credit. Once that runs out, we’ll have to close the shelter.” That would put domestic violence victims who desperately need a safe haven at risk. According to one client, “Closing that shelter would be a huge loss. They just need somewhere safe where they can go—somewhere for them and their children can go.”
Helen Michelassi, executive director of another Decatur-area service organization, Prairieland Service Coordination, which serves the disabled, described for the Herald & Review the challenge for organizations trying to cope.
When you’re trying to plan and budget, and you don’t know if you’re going to have that how are you going to plan and budget? If they stop the flow of money to us, within six months we could not operate, because we don’t have another revenue stream.
The list of program curtailments and agency closures across the state keeps getting longer day by day. That there has yet to be a total shutdown of the state-funded nonprofit sector is a tribute to its underlying strength, but that strength is waning with each passing month.
But, simply having a state budget is but one step toward solving the issues before the state-funded organizations in Illinois. An approved budget establishes how state funds will be allocated and gives state officials the authorization to write checks, but it does not guarantee that the state will have enough money to pay off the $14 billion dollars in unpaid bills that have accumulated. Without that money in the bank, nonprofits will still struggle to fund their receivables. For example, going into the 2017–18 school year, public school districts are owed $1.1 billion dollars, funds they have spent anticipating the arrival of state funding. Medicaid managed-care organizations are owed $2 billion. As nonprofits cope, using their own resources to make up for missing and late state funds, many are very close to the breaking point.
That breaking point has just been reached by Family Focus, an iconic Chicago-based nonprofit serving young children and their families. According to Crain’s Chicago Business, the organization has exhausted its resources and faces a severe cash flow crisis as it waits for the state to make good on $2.7 million it owes for services already provided. As of July 1st, it will be forced to “lay off 100 employees…71 percent of the organization’s staff, all of whom work directly with clients.…The layoffs will essentially shut down Family Focus, which serves 17,000 people in the Chicago area. Regular programming at all Family Focus locations will be suspended.”
With no guarantee of when their receivables will be paid or when they can know with certainty how the state will fund them in the coming year, Family Focus saw no alternative but shut down and wait.
The levels of funding contained in the budget also matter. State payment schedules are already quite stale, having not been increased to reflect higher costs for years. If they are reduced in order to reach a balance, nonprofits will be asked to fund the difference between cost and state payment, a gap many will not be able to bridge. Further reductions could be devastating.
The reality of Illinois in 2017 was well captured by Republican State Representative Bill Mitchell when he told the Herald & Review that “Illinois has never been in worse shape. There are going to be a lot of casualties—a lot of casualties.”
Getting agreement on a budget that will avoid this harm means coming to terms on new taxes. The last three years tells the story of just how hard that is, and the task has been made harder because the governor has insisted on a series of “structural reforms” that include a property tax freeze, pension reform, restriction on public employee unions, and more as conditions for his support of a budget. Three years into the tug of war, we continue to ask if Governor Rauner, House Speaker Madigan, and Senate President Cullerton are paying any attention to the harm their political war is causing and if they care.—Marty Levine