Notes from the Field...

PUBLIC POLICY & ADVOCACY NEWSLETTER – JANUARY 2014


Uncertainty Over Illinois’s Finances a Concern for Human Services

Earlier this year, we breathed a sigh of relief after the General Assembly preserved funding for human services in the state’s fiscal year 2014 budget. Now, with a legal challenge expected to pension reform and the possibility of less revenue from income taxes, human service agencies have reason to be concerned.

Uncertainty looms over the state’s budget and the result could be detrimental for human services.

Consider first the state income tax: In 2010, state legislators approved increasing the state income tax from 3 percent to 5.25 percent, with a drop to 3.75 percent scheduled for the end of 2014. The corporate income tax rate rose from 7.3 percent to 9.5 percent. It is scheduled to fall to 7.75 percent at the end of 2014, as well.

The state will lose $5 billion in tax revenue per year – or one-seventh of the state’s $35 billion operating budget – if legislators let the tax increase expire. Without that revenue, the state will be challenged to come up with a budget that does not result in significant cuts to human services and education, according to budget analysts at the University of Illinois.

  

Then there’s pension reform, which Gov. Quinn signed into law on Dec. 5. The law is designed to save the state $160 billion over 30 years and fully fund government employee pensions by 2044. The pension system is currently short $100 billion, an exorbitant debt that crowds out funding for human services, education, health and other state priorities.

Pension reform, though, faces legal challenges because it reduces promised contributions to current state employees. It also cuts retiree cost of living adjustments and delays retirement for workers aged 45 and under.

If the law goes into effect on June 1 as planned, the state would begin saving $1.5 billion a year in spending on pensions. But any legal challenge means the courts would decide the constitutionality of pension reform provisions. In the meantime, the squeeze on other critical areas of the state budget could continue.

 

State’s Backlog of Unpaid Bills Grows Again

  

A one-time increase in income tax collections in the spring brought the state’s backlog of unpaid bills down to $5.8 billion in May, which meant vendors including human services providers were getting paid and in a reasonable amount of time.

Then the backlog started growing again and was up to $7.6 billion at the end of 2013. This steady increase is a cause for concern for United Way as the agencies we fund are being squeezed once again. As we’ve seen in the past, when human service providers don’t get paid in a timely manner, they are forced to cut staff and hours. This squeeze impacts communities: Fewer people get the services they need.

As early as July, state Comptroller Judy Baar Topinka estimated that the state’s backlog would swell after the drop in the spring. Her prediction was mostly on mark: She forecast a $9 billion backlog in December but the growth peaked at $8.8 billion in November before falling before the year’s end. Here’s the timeline of the changing amount of unpaid bills this year:

That growth is troubling considering the current backlog is higher than in April, when income tax revenue started trickling in and offered relief. In an article in The State Journal-Register, Topinka’s office said that state vendors now are waiting longer for payment. In spring and summer, the backlog and payment delays decrease, while in fall and winter they swing back up.

The state remains in a financially precarious position with income tax collections expected to decline in the final quarter of fiscal year 2014 compared with the same period in fiscal year 2013. A one-time revenue surge in April 2013 brought in additional tax dollars as investors rushed to take capital gains on their investments at the end of 2012 and avoid higher federal taxes.

The General Assembly’s Commission on Government Forecasting and Accountability recently revised its revenue estimates for the current budget year, saying the state will bring in $369 million more than expected. Some, including House Speaker Michael Madigan, want the extra revenue to go toward the bill backlog.

COGFA has revised its revenue estimates for this budget year and now believes the state will collect $369 million more than originally anticipated. House Speaker Michael Madigan, among others, believes any unanticipated revenue like that should be applied to old bills, rather than increased state spending.

 

Cuts to Food Stamps Hurt Rural Residents and Grocers

This holiday season was tougher for struggling families trying to put food on the table. That’s because families receiving benefits from the federal Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, are seeing less money each month.

Since November, a low-income family of four in Illinois began getting $36 less from SNAP each month, totaling $668. The reduction is making it hard for these families to provide hearty holiday meals.

Because of the economic recession, the federal government in 2009 increased SNAP benefits as part of broad stimulus measures designed to prevent families from falling into poverty. The temporary increase expired on Nov. 1, resulting in a $5 million cut to SNAP funding.

  

National Public Radio (NPR) recently reported on how residents in rural Illinois and the grocers they frequent have been affected by reduced SNAP benefits. NPR talked to the manager of Countryside Market in Belvidere, who expects a 5% to 10% drop in business because of fewer SNAP dollars in the rural community.

One in seven low-income Americans buy their groceries with the help of SNAP benefits. All told, that’s 47 million Americans who now have to scrimp on other expenses so they can buy groceries for the entire month.

Residents in rural areas in Illinois and across the country are being hit hard. Data from 2010 shows that residents in rural areas are using SNAP more than residents in urban areas, according the U.S. Department of Agriculture, which runs the SNAP program.

About 16% of Illinois residents receive SNAP benefits, which is 2 percentage points above the national average. Individuals and families that qualify for SNAP have a net monthly income that is 100% of the federal poverty line:

Anticipating the need, local food banks and human services providers have been gearing up for the reduction in SNAP benefits.

 

State Releases New School Report Card

  

After three years of planning, the Illinois State Board of Education (ISBE) released its revamped school report card in a user-friendly, online format that provides key information about students and schools.

The new report card was a collaborative project involving ISBE, the Data, Assessment and Accountability Committee and the Family, Youth and Community Engagement Committee, both of the P-20 Council.

Covering schools, districts and the entire state, the new report card is designed to be more engaging and transparent for families and community members. It has two main components:

The new report card now tracks “Student Academic Growth” to assess the yearly academic progress of elementary school students in reading and math. Education experts say tracking progress will improve understanding of student learning and lead result in greater accountability among teachers and administrators.

What’s more, this new report card features summary responses to the first statewide survey on learning conditions and school climate. More than 70 percent of teachers and eligible students completed the survey in the spring.

 

Upcoming Events

2014 Great Rivers Conference: Feb. 18-21 at the Hilton Milwaukee City Center. Register on United Way of Wisconsin’s website.

United Way Community Leaders Conference: May 13-15 at the Gaylord National Harbor Hotel in Washington, D.C. Register on the United Way website.

 

Recent Research

EDUCATION

Chicago Tribune column, Educate children early on, by Advance Illinois, Robert R. McCormick Foundation and Ounce of Prevention Fund

National Institute for Early Education Research, Equality and Excellence: African-American Children’s Access to Quality Preschool

Center for Law and Public Policy, Investing in Young Children: A Fact Sheet on Early Care and Education Participation, Access, and Quality

 

INCOME

University of Illinois, Inmate Perceptions of Financial Education Needs: Suggestions for Financial Educators

The Hamilton Project, Redesigning the Pell Grant for the Twenty-First Century

The Corporation for Enterprise Development, Liquid Asset Poverty Rate

 

HEALTH

Prevention Institute, Towards a 21st Century Approach: Advancing a Vision for Prevention and Public Health

The Henry J. Kaiser Family Foundation, Getting in Gear for 2014: Shifting New Medicaid Eligibility and Enrollment into Drive

Centers for Disease Control and Prevention, Progress on Childhood Obesity