April 6, 2017; Capitol Fax
Nonprofit organizations in Illinois that provide services under state contract have now been operating without benefit of a state budget for a second year. That’s long enough for the situation to feel like “the new normal.” In fact, other than the waves caused by the political bickering around the lack of the budget, it’s apparently no longer very newsworthy. A recent impact study completed by the United Way of Illinois provides a picture of the damage being done to the framework of the state’s essential human services infrastructure. It tells a depressing story, but one that neither major Chicago newspaper thought worthy to cover.
By the provisions of the state’s constitution, Illinois cannot spend funds if the state’s legislature and governor have not specifically authorized it. Usually, this is done through the comprehensive state budget, which is mandated to be in place by June 30th. The Democrat-controlled legislature and the Republican governor have not been able to agree on a spending plan for two budget cycles, leaving the state unable to write checks. A total shutdown of all state-funded activities has been avoided only through the passage of interim agreements that have continued to authorize K-12 public school and some college funding, public services like the state police, some “essential” human services, and federal fund pass-throughs and federal-state partnership programs with significant federal funding, like Medicaid. Federal courts have also stepped in to require continued funding for services operating under court-approved consent decrees. That is a long list, but it has big holes. Funding levels under this jury-rigged system are inadequate, and many areas of need are not covered at all. Things took a turn for the worse for colleges and social service providers in January when an expired stopgap measure was not extended into 2017.
The loss of even limited funding by many organizations prompted the United Way of Illinois, a network of 52 local community United Ways, to update its previous impact studies to see how they were faring under weight of even greater budget constraint. Sonja Reece, board chair of the United Way of Illinois, gave her assessment of the new reality:
We see the deep and lasting effects of this impasse every day in our schools, in our neighborhoods and in the state’s spiraling reputation. The lack of urgency from the state in coming together to work on a full budget is negligent given rising violence, population decline and the loss of jobs and talent. While stopgap funding provided limited and temporary relief to some service providers, it did not repair the long-term damage imposed by the lack of a full budget, nor is it funding current service delivery.
As the political stalemate continues, the already difficult situation has only worsened. Organizations providing a wide range of services find themselves with no other recourse than cutting back. Organizations have tried to offset lost state funding by reducing their personnel costs; almost 50 percent have not filled open staff slots and 30 percent have permanently reduced staff. Waitlists have increased in more than 25 percent of organizations responding to the survey. Ultimately, the price of a dysfunctional state government is borne by those who are served, or not: “Less than three months since the stop-gap budget ended, 46 percent of all agencies surveyed have reduced the number of clients they serve.”
The lack of a budget and the corresponding limited ability of the state to write checks are not the only state-caused problems facing Illinois nonprofits. The United Way study found that even authorized payments to nonprofit organizations were in arrears. For years prior to the budget stalemate, supposedly balanced budgets were, in reality, out of balance, resulting in an accumulated deficit. With estimates of unpaid bills ranging as high as $17 billion when this fiscal year ends on June 20th, even an approved organization may end up waiting as long as 12 months for payment.
As of mid-March, the state was $217 million behind in its payments for services already delivered. To fund unpaid bills, 45 percent of Illinois service organizations dipped into their reserve funds. Twenty-four percent have tapped lines of credit to fund operations while waiting for cash from the state. While fundraising efforts have increased, “9 out of 10 agencies were unable to raise 25 percent or more of the funding owed to them by the state.”
With the deadline for approving next year’s budget just weeks away (the state legislature is scheduled to adjourn on May 31st), the impasse between the governor and the legislature does not seem to be softening. Governor Bruce Rauner, empowered by the results of the presidential election, has demanded that any budget agreement must be tied to reforms. The Democrat-controlled legislature, empowered by the outpouring of protest to the presidential results, continues to insist that the budget problems be solved first before they discuss proposals not directly tied to the spending plans. A budget compromise reached the leaders of both parties in the State Senate but fell apart when the governor pressured Republican senators to walk away from the deal. Even efforts for short-term funding no longer seem possible: As the legislature left for its spring recess, it passed another $700 million stopgap budget bill that the governor said he would not sign.
The issues remain unchanged, as does the inability of those with the responsibility to govern to find solutions and enact them. The United Way of Illinois study documents the harm their inaction is causing. Will pressure to avoid starting a third year with no overall budget break up this logjam? Only real optimists think so right now. If they are wrong, the toll on vulnerable populations and the organizations that serve them will only get worse, if you can even imagine that.—Martin Levine
