Notes from the Field...

PUBLIC POLICY & ADVOCACY NEWSLETTER – JUNE 2014


State’s FY ’15 Budget Spells Trouble for Future Funding of Human Services

  

The Illinois General Assembly adjourned its spring legislative session without adequately addressing either the looming decrease in revenues or current spending obligations, and passed a $35.7 billion budget built on accounting gimmicks and revenue that may never materialize.

Funding overall was flat compared with the 2014 fiscal year, which ends in June, but even without deep cuts, the budget presents serious concerns for human service providers. Under the recently enacted budget, the state will lose $1.8 billion in revenues midway through the FY ’15 fiscal year if income tax rates are allowed to fall – from 5.25% to 3.75% for individuals and 9.5% to 7.75% for corporations – as currently scheduled.

Particularly concerning is the impact that the revenue loss could have on the backlog of unpaid bills. Moody's Investors Service said in a recent report that, "Illinois could face a structural deficit that leads the lowest-rated U.S. state to rely on credit-negative practices such as increasing an already large backlog of unpaid bills to achieve balanced financial operations, reversing significant progress of recent years."

The state’s Office of Management and Budget has projected that the bill backlog could hit $16.2 billion in the next three years. The state’s FY ’15 budget depends on borrowing $650 million from "other state funds," reducing the monies for state group health insurance, not fully funding raises for state workers and under-appropriating in areas where the state may be able to delay payment of bills.

This budget sets up the state for a more than $4 billion dollar hole in FY ’16. If the temporary income tax rate isn’t extended or other revenues aren’t identified, even deeper cuts will be needed to pay back the borrowed money and reduce the larger backlog of unpaid bills. Already, child care assistance is taking a big hit in the new budget, being cut by $84 million from this fiscal year.

The silver lining of the budget came in the form of modest funding increases for programs United Way supports:

In addition, United Way-backed bills that support our Health policy priorities passed during the session, reflecting progress on key initiatives. Those include:

For Medicaid, legislators restored funding for adult dental and podiatry services, which had been cut during reform efforts two years ago. This welcomed restoration was part of a supplemental funding bill that gave $60 million to childcare and appropriated money from lawsuits and the court of claims. Medicaid was also modified to allow patients to have multiple psychotropic medications. These changes will provide quality care and prevent emergency room visits for thousands of Illinois residents.

 

Late Payments and Underfunding Plague Illinois Nonprofits

  

Nonprofit organizations in Illinois continue to struggle as government funders fail to cover the full cost of services and linger with promised payments. Illinois, in fact, is one of the worst states for both. Almost 50% of nonprofits surveyed said late payments and underfunding were "big problems." Another 27% reported they were "small problems."

As of April, the state owed nonprofits $4.2 billion in unpaid bills. The figure is still exorbitant despite having fallen by $1 billion over the past year. And the new fiscal year promises further aggravation to the situation. (See article above.)

New data on the issues plaguing Illinois nonprofits comes from a report, National Study of Nonprofit-Government Contracts 2013: State Profiles, from the Urban Institute. The report found that 1 in 3 Illinois nonprofits said its experience with governments had not improved since the Great Recession, when funding plummeted drastically and services were cut painfully. The average across the nation was 1 in 5.

According to the report, "The recession had dire effects on nonprofits’ funding from government and private sources, in a time when the demand for services was higher than normal." The recent report examining the state of nonprofits in 2013 builds on the Urban Institute’s initial review in 2010, which focused exclusively on human services providers.

Problems with government funding did not end with recession, which affirms United Way’s focus on human services funding and advocacy for a state budget that ensures adequate funding for providers.

Our work on the Human Services Commission over the past four years has focused on strengthening human services across the state by:

Government funding of nonprofits is now the norm. It began in the 1960s and accelerated in the ’80s. As a result, nonprofits have been able to expand their reach. Nonprofits now are being hamstrung by inadequate funding and late payments.

Illinois nonprofits had to take more drastic actions in response, according to the Urban Institute’s latest report:

In a complementary report, Toward Common Sense Contracting: What Taxpayers Deserve, the National Council on Nonprofits recommends several solutions for government contracting and grantmaking. Here are a few:

According to the National Council on Nonprofits, "The problems in the current government-nonprofit contracting ‘systems’ across the country are profound, thoroughly documented, and, most importantly, solvable." Let’s continue to do our part to help solve the issues facing Illinois nonprofits.

 

Advocacy Days Focus on Policies that Strengthen Nonprofits and Support Education

 

United Way members throughout Illinois met with key decision makers in Springfield and Washington, D.C., to push for policies that advance the common good in our four focus areas of Education, Income, Health and Community Strengthening. Lobby Days in April and May had a critical role in our advocacy efforts.

On April 30, staff, volunteers and agency representatives from local United Ways across the state discussed concerns about human services funding with Senate President John Cullerton and Senate Minority Leader Christine Radogno. In addition, members of our group met with Jerry Stermer, Director of the Governor’s Office of Management and Budget.

In these meetings, we impressed upon state leaders that deep budget cuts over the past five years are hurting communities throughout the state, as 2 million Illinois residents depend on human services, including mental health, substance abuse and disability programs. Over the last 5 years these programs have all seen cuts in excess of 20%.

Partnering with the Federation for Community Schools, representatives of our group also met with Julie Smith, the Governor’s deputy for Education, Rep. Will Davis, House Education Committee Chairman, and members of the House Elementary & Secondary Education Committee, to ask for their support of community school partnerships, including the 21st Century Community Learning Center (21st CCLC) program.

Community schools serve as hubs of support services, which are provided by nonprofits, and have been shown to improve academic and social outcomes for youth. With current grant agreements for the 21st CCLC program ending on June 30, we urged state leaders to implement a timely process so new grants could begin on July 1 and avoid jeopardizing programming for more than 30,000 children throughout the state. (See article below for an update on the 21st CCLC grant agreement.)

Our Hill Day in Washington, D.C., on May 14 similarly focused on Education and Community Strengthening, in addition to issues related to Income and Health. United Way members from Illinois joined nearly 1,000 staff and volunteer from United Ways across the country for this far-reaching advocacy event.

Forty leaders from United Ways across Illinois met with legislative assistants to Sen. Dick Durbin and Sen. Mark Kirk, as well as many of our House members. We thanked Congressional leaders for supporting education programs, including increased funding for Head Start, the Child Care and Development Block Grant and Preschool Development grants included in the Fiscal Year 2014 Omnibus Appropriations bill. We also asked legislators to continue supporting funding for early learning.

In addition, we asked legislators to support tax reforms to help working families by:

In the area of Health, we urged legislators to preserve funding levels for the Federal Children’s Health Insurance Program, which provides health coverage to nearly 8 million children and families.

Both days were a success, thanks to the work of United Way staff, volunteers and agency representatives. We encourage our local United Way members to find opportunities to meet with your state and federal office holders when these leaders are back home in their districts. Let’s all work together to advocate for the common good!

 

Advocacy Efforts Help Secure Funding for Community Schools

United Way teamed up with several concerned organizations to prevent a funding crisis for community schools across Illinois. Our unified approach resulted in changes to how the state handles 21st Century Community Learning Center (21st CCLC) funding, which prevented 322 schools serving more than 30,000 students from losing access to individual services in June.

In addition, our successful advocacy means 98 communities will not lose infrastructure, relationships and school-wide supports that reach thousands of other students and their families.

  

Our advocacy efforts spanned three months. We brought the issue to the attention of Illinois State Board of Education (ISBE) Chairman Gery Chico in March. In April, we worked with the Federation for Community Schools to push for change at our annual Lobby Day in Springfield. (See previous article.)Then in May, we spoke with ISBE Superintendent Chris Koch to present practical policy options that could fix the funding problem and were consistent with federal guidelines.

21st CCLC grants are an integral funding source for community schools. Until now, the state’s cap of two grant cycles threatened to undermine many of these partnerships. Grantees awarded in Fiscal Year ’10 and ’12 would have rolled off funding concurrently in June but wouldn’t have been eligible to reapply in the next round.

Our conference call with Superintendent Koch resulted in the following important changes:

  1. ISBE agreed to an early June RFP release date and Sept. 1 grant start date.
  2. Current grantees will be granted a no-cost extension for July and August in advance of the next round of grants.
  3. Current second-cycle partners that meet performance and documentation requirements will be eligible to apply for continued funding.
  4. Partners may implement their current sustainability plans to supplement available resources.
  5. The RFP will be modified to stabilize the yearly flow of funding. ISBE is receptive to ideas about how to achieve this, such as by averaging the total award and providing the same amount all five years.

We are excited about the progress we’ve made on this issue with the help of our partner organizations: Brighton Park Neighborhood Council, Children’s Home + Aid, Family Focus, The Federation for Community Schools, Metropolitan Family Services and YMCA of Metro Chicago.

 

Save the Date

Mark your calendars for our Annual Meeting on July 29 in Chicago. The time and place are being determined, but our special guest speaker will be Stacey Stewart, U.S President of United Way Worldwide.

 

Recent Research

EDUCATION

National Institute for Early Education Research, The State of Preschool Yearbook

Catalyst Chicago, Absenteeism, truancy up in elementary grades

 

INCOME

Corporation for Enterprise Development, Findings from the 2014 Assets and Opportunities Scorecard

Pew Research Center, Americans agree inequality has grown, but don't agree why

Economic Policy Institute, The Increasingly Unequal States of America

 

HEALTH

Robert Wood Johnson Foundation, How can healthier school snacks and beverages improve student health and help school budgets?

The Henry J. Kaiser Family Foundation, Women and Health Care in the Early Years of the ACA