Progress Illinois

The backlog of payments to Medicaid providers is a serious problem in Illinois. When these notoriously low reimbursements to primary care physicians administering care to Medicaid patients don't arrive on time, it makes the doctors increasingly reluctant to treat that population. That diminishes health care access for some of the state's most vulnerable citizens, thus raising the potential for public health outbreaks and preventive disease and deaths. It's an unsound system, both economically and morally.

Since the recession hit, Illinois has been making payments to most providers by the skin of its teeth, thanks almost exclusively to President Obama's stimulus bill, which provided $2.9 billion in short-term federal aid. Congress could pass along a little more help if the Democrats' health care reform bill passes; the version that the House approved provides $23.5 billion for state legislatures to pay a higher share of all Medicaid costs -- 66 percent on average, up from 57 percent prior to the stimulus -- for an additional six months in 2010.

This morning, the state also took some independent action aimed at solving this problem, as Gov. Pat Quinn signed into law HB 542, sponsored by Rep. Dan Reitz (D-Sparta) and Sen. Jeffrey Schoenberg (D-Evanston).

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That's how the Reader's Ben Joravsky describes our own Angela Caputo in his latest article on Chicago's tax increment financing (TIF) network.  And you can bet she's wearing that badge with pride.

Joravasky's piece also details how state legislators used a Freedom of Information Act (FOIA) bill to quietly extend the lifespan of four Chicago TIF districts by 12 years.  With little to no debate, the bill was passed by both chambers in the final days of the regular session and signed by the governor in late August.  Joravsky later notes that the projects to be subsidized by these districts during the extended period appear worthwhile, at least when compared with "some of the stuff the mayor comes up with, such as the recent $35 million handout to United Airlines."  But the process of approving the extension should nonetheless raise eyebrows:

You'd hope that in these calamitous economic times, Governor Quinn, house speaker Michael Madigan, and senate president John Cullerton would feel compelled to hold hearings and engage in debate before effectively raising Chicagoans' property taxes. But you'd hope in vain.

Joravsky further writes about Cook County Clerk David Orr's new TIF search engine and gives some great instructions on how to research the amount of individual property taxes that go into Daley's slush fund. Read the whole thing here.

After watching again and again as Illinois lawmakers relied on financial gimmicks to pay for core services, budget experts knew it was only a matter of time before Springfield would be forced to confront the state's ballooning structural deficit.

Last week, the Pew Center on the States confirmed that the moment of reckoning is near, ranking the Land of Lincoln among 10 states now on the brink of financial peril.  The Pew researchers recounted how Illinois lawmakers -- in order to avoid generating more revenue by modernizing the income and sales tax systems -- have resorted to short-sighted budget maneuvers, such as delaying bill payments and skimping on the state's annual pension contributions.

Now the nation is in a recession and those bills are coming due, leaving Illinois' an estimated $12.8 billion in the hole in FY 2011.

"It's like a balloon mortgage," University of Illinois at Chicago public policy professor Michael Pagano explained during a budget roundtable on WTTW's Chicago Tonight last Thursday. "At the end of the period you have to make a big payment for what you've been consuming. We've now been consuming a lot of state resources for the past eight years without paying for them." Watch it (full video here):

For some perspective consider this: On a per capita basis, Illinois is one of the lowest-spending states when it comes to core services.  Yet we still can't generate enough revenue to cover our obligations.  Why?  Because we are one of a mere mere seven states with flat income tax system.  Moreover, our 3 percent rate remains lower than the other six (Colorado: 4.63 percent, Michigan: 4.35 percent, Tennessee: 6 percent, New Hampshire: 5 percent, Pennsylvania: 3.07 percent, and Utah: 5 percent).

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With the Chicago Transit Authority and state officials reeling to plug a $300 million budget hole this week, there have been some questions raised about the systemic funding challenges facing the region's transit agencies.  We've proposed some solutions in the past, as have other transit wonks. But one option that's too often overlooked is the need to rebalance the state's surface transit funding formula.

There are several reasons why transit projects don't draw the same interest as road projects, but money is first among them. Last year, the transportation industry spent $1.12 million lobbying state lawmakers, according to a new study by the U.S. Public Interest Research Group (PIRG). Construction interests dished out $2.43 million. Their outsized influence, argues the study's authors, adversely effects how projects are prioritized:

“In our current campaign system elected officials must raise huge sums from major donors to win reelection,” said U.S. PIRG Democracy Advocate Lisa Gilbert, one of the authors of the report.

“In part because of this, we believe that transportation spending is skewed toward road-widening and new highway projects favored by developers, road builders and the other interests who make those contributions,” she added.

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With less than a week to go before the Chicago Board of Education votes on whether or not to authorize six new charter schools, Chicago Public Schools (CPS) held a round of public hearings last night. School reform advocates have long complained that CPS handpicks which charters will get the green light long before the hearings begin. And the opaque nature of the process generated a lot of criticism last year.  As a result, officials are treading more lightly as they move forward this year.

Unlike in the previous years of Mayor Daley's Renaissance 2010 program, only a handful of new charters are being considered this time around. Still, CPS chief Ron Huberman is recommending that an additional 8,130 charters seats be made available next fall, according to an analysis by the Caucus of Rank and File Educators (CORE). Alexander Russo reports that the established private school operators appear to have a leg-up:

Just six new schools are being recommended for approval -- most of them add-on campuses of existing networks.  Fourteen did a full application only to get rejected.  Meanwhile, a slew of existing contract schools are vying for charterization thanks to the newly lifted charter cap.

Contract schools -- which are also privately-managed but allow teachers to join collective bargaining under the Chicago Teacher's Union -- began to spring up when CPS nears the cap on the charter schools (originally set at 30). Regular readers may recall that the General Assembly agreed to lift that cap last spring, effectively allowing the number of Chicago charters to double.

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Back in July, The Chicago Reporter exposed one of the Prairie State's dirtiest secrets. Not only are dozens of Illinois nursing homes ranked among the worst in the nation (PDF), but African-Americans are increasingly likely to receive sub-standard medical care and be housed in facilities with dangerous criminals.

Social service providers were not surprised. For years, they've witnessed firsthand the way the poor have been dumped into these homes simply because affordable housing, drug treatment programs, and mental health facilities are in increasingly short supply. The private nursing home industry has been more than eager to fill this void (and, of course, cash in on the flow of Medicaid reimbursements).

In a subsequent investigation, the Tribune revealed how lax state regulation paved the way for the current situation. More from the Trib's investigation:

Mentally ill patients now constitute more than 15 percent of the state's total nursing home population of 92,225, government records show, and the number of residents convicted of serious felonies has increased to 3,000. Among them are 82 convicted murderers, 179 sex offenders and 185 armed robbers [...]

Just 50 nursing homes in Illinois house more than half of the 3,000 offenders, according to the Tribune's analysis. In Chicago, many of those homes are clustered in a few ZIP codes in Uptown and on the South Side.

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This week, the 19-member Pension Modernization Task Force will finalize its report on how Illinois should reform its retirement benefit program for government employees. The panel includes lawmakers, labor leaders, business representatives, and public pensioners.  Because they're still deliberating, we aren't sure exactly what their recommendations will be. But details are beginning to emerge. According to reporting from Doug Finke of the State Journal-Register, those hoping to move to a two-tiered system won't be happy with the results:

Another task force on Illinois’ massive state pension problems is set to wrap up its work next week, but it appears the group will not formally recommend changes to pension benefits as a way to save money. [...]

A draft copy of the task force report specifically blames lack of state funding — not too-generous benefits — for the financial problems facing the systems. The draft report says comparisons were made to public employee pension systems in other states and that Illinois’ systems “were generally found to be in the statistical median.”

The draft report also asserts that the cost of public pensions, measured as a percentage of payroll, are comparable to or less costly than private-sector retirement programs. The Civic Committee and Civic Federation of Chicago disagreed with that analysis. One version of the draft report included those disagreements; in another draft version circulated last week, the disagreements were deleted.

While we credited the Tribune editorial board for their TIF commentary today, their reaction to this news wasn't as reasonable.

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Two weeks ago, state lawmakers wrapped up the fall veto session and headed home with hopes that Illinois' financial crisis wouldn't follow them back to their own districts. So far, the bad budget news has trickled in slowly enough that many have been able to distance themselves from the severity of the state's financial situation. But they won't be able to dodge blame forever. For example, adding millions in school reimbursements to the growing pile of unpaid bills is weighing heavy on cash-strapped districts. And in places like the Central Illinois town of Pekin, the backlog -- coupled with other uncertainties and cutbacks -- is growing too big to sweep under the rug. The Pekin Daily Times explains:

The state has a multi-billion-dollar deficit. Inflation is down so far that school districts are limited in how much they can raise taxes to bring in new revenue. Corporate Personal Property Replacement Taxes and sales taxes are down.

General state aid funding for schools is running three months behind. Programs like special education and transportation will not be funded at the full levels. The state has not yet received an application for additional federal American Recovery and Reinvestment Act funding, which was used in lieu of state-generated general state aid payments.

Illinois State Board of Education Chair Jesse Ruiz summed it up best when warned that if the state doesn't generate new revenue for schools next year, "we fall off the cliff."

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If there's one thing observers of Illinois politics can agree on, it's that next year's state budget deficit is going to be extraordinary. Not only are billions in federal stimulus money scheduled to dry up, but state officials will soon have to pay out $3.5 billion in pension notes and cover $3.9 billion in unpaid obligations from the current fiscal year. Compounding the problem are tanking revenues and the need to pay back $205 million in short-term loans used to cover college aid.  Now the projected 2011 shortfall has hit a whopping $12.8 billion, according to the Voices for Illinois Children's (VFIC) latest policy memo.

VFIC puts the staggering deficit in perspective:

How much is $12.8 billion? This amount is equivalent to total state General Funds spending for the State Board of Education and the departments of Human Services, Children and Family Services, and Public Health. The entire General Funds budget — aside from mandatory spending for pension costs, debt service, and other statutory transfers — is about $26 billion. Closing a $12.8 billion gap without new revenue would require devastating spending cuts, on top of those enacted this year. If such reductions were applied across the board, they would slash 50 percent of funding from every state program; if not distributed equally, many specific cuts would run far deeper.

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This morning we flagged an ominous warning from State Sen. Donnie Trotter (D-Chicago), who predicted that "drastic cuts" to state services are on the horizon. With the backlog of bills already topping $3.7 billion and an estimated $11 billion shortfall looming over next year, there's no question that Illinois is running on fumes at the moment.  During a roundtable on WTTW's Chicago Tonight yesterday, Chicago Democratic Reps. Art Turner and Greg Harris pointed out the backdoor cuts that are already occurring across the state as a result of the General Assembly's failure to pass a responsible budget this year.  To illustrate the ripple effect, Turner reported that there is a severe shortage of amenities -- such as walkers -- at Stroger Hospital in Cook County, spurring some local residents to search for donations.

Host Carol Marin later asked the panel -- which included GOP Reps. Jim Durkin (Western Springs) and Suzie Bassi (Palatine) -- "Does it feel like the state's on fire and nobody can find the hose?" Watch an excerpt from their conversation:

TURNER: Absolutely. I have a relative that was just admitted to the hospital who informed me that he did not get a wash cloth, toothbrush, or any welcome to the hospital kit. And here was there for three days. It wasn't until they found out that his parents were there that they brought out the gowns and things. I went by to visit him and the nurse told me that the vendor has not been paid. So they're not dispensing walkers, slippers. My neighbor is a physical therapist and she's actually collecting walkers in the community to take to the hospital.

MARIN: Do you hear this from other constituents, Rep. Harris?

HARRIS: We hear service organizations are not able to pay their employees and take holidays because the state is not able to pay its bills. And they're behind in paying people in a timely manner who are doing the after-school programs for our children. It's only going to get worse until all of us take responsibility for what we need to do and bite the bullet.

"The numbers keep getting worse," Turner said elsewhere in the segment. "We have not seen a baseline for how bad it is." 

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