Another busy week for The Arc. Today The Arc Team meets to discuss the stopgap budget and it’s implications for our Life Span Grant. The Life Span Grant was funded in the stopgap budget signed into law by Governor Rauner. Tuesday I will meet with the leadership of the Executive Forum to map out our agenda for the new fiscal year. Later this week I will meet with housing advocates to determine opportunities in affordable housing for individuals with intellectual and other developmental disabilities.
Story from today’s Chicago Tribune below.
Tony
Damage is done despite stopgap
Budget step brings limited relief; state braces to cut more
By Monique Garcia
Chicago Tribune
SPRINGFIELD — The ink wasn’t even dry on a partial budget to keep government running through year’s end when most of the state’s public universities saw their credit downgraded — a signal the deal between Republican Gov. Bruce Rauner and Democrats who control the legislature will do little to erase the damage done by their historic stalemate.
Indeed, in the days since the agreement was reached, Southern Illinois University announced it would still need to lay off workers and cut millions in spending; Lutheran Social Services of Illinois, the state’s largest human services provider, says it will not be able to rehire 750 workers cut during the impasse or restore more than 30 programs that cared for the vulnerable; and officials with the Illinois secretary of state’s office said the relief may not be enough to resume mailing out registration renewal reminders to drivers.
It’s a story repeated time and time again among those hardest hit by the impasse that has left Illinois without a comprehensive spending plan for more than a year. Now the stopgap budget has left many stakeholders to walk a fine line: They’re thankful they got any money at all but say a long-term solution is needed to stop further harm.
“This is better than the alternative of doing nothing, but the General Assembly and Gov. Rauner have set such a low bar for a state budget that it’s really kind of a sad commentary,” said David Lloyd, director of the fiscal policy center for Voices for Illinois Children, a nonprofit advocacy group. “It slows the deterioration … but the bottom line is that we are still left with a huge budget hole.”
Consider a recent survey by the United Way of Illinois: Of the 338 social service agencies that responded, 90 percent said they had to cut programs as they struggled to get by without state funds. That added up to 1 million clients who no longer get help. It’s a round number, but one that includes some overlap.
For instance, one person may be a client in multiple programs. Therefore it’s difficult to pinpoint exactly how many people have been affected, said Brigid Murphy, director of communications at United Way of Metropolitan Chicago.
While the temporary budget has helped slow the need for additional cuts, some providers say it’s unlikely they will be able to bring back the programs they had to close or scale back because of a lack of state funding.
That’s because the stopgap budget does not make these groups whole — they’re simply left to spread out fewer dollars over a longer period of time. Under the stopgap, social service providers not covered by a court order or consent decree will split roughly $665 million. That’s just 65 percent of what they’d normally get, which they must use to backfill holes from last year and keep programs running through the end of this year.
There’s also no guarantee they’ll get any more help come January, when the stopgap expires and political wrangling starts anew.
“This issue for us is that the state doesn’t pay for startup and closure. They say to us as a service organization, ‘Would you like to do home care? Good, go ahead and we will start referring (people).’ But all the costs of getting that going is ours,” said Mark Stutrud, president and CEO of Lutheran Social Services of Illinois.
“And when we close, we are responsible for unemployment insurance, leases on buildings, vehicle costs. So once we make a decision to close something, it’s very difficult to reopen. And the stopgap is not anything that’s close to allowing us or any organization to reopen service on any scale.”
Lutheran Social Services alone closed more than 30 different programs across the state, including drug and alcohol rehab facilities in Chicago and Elgin; mental health counseling services in Des Plaines, Wheaton and Elmhurst; prisoner re-entry counseling in East St. Louis; home care for seniors in Peoria and Rockford; and veterans services in Streamwood.
Stutrud predicted the stopgap budget would only keep most groups afloat “for a couple of months” because of the financial stress they’ve faced in keeping doors open, such as raiding reserves or maxing out lines of credit.
“We mirror the state. If the state is in structural deficit, then human services are in structural deficit,” Stutrud said.
Despite the cuts, Stutrud said his organization is still owed more than $4 million for services it performed while waiting on a budget. That’s because the state currently has a backlog of unpaid bills that’s hovering around $8 billion, and it takes at least two months for most providers to get paid for services they’ve performed on behalf of the state.
That situation is only expected to get worse. Republican Comptroller Leslie Geissler Munger predicted Thursday that the stopgap budget would push the backlog as high as $10 billion by the end of the year, which would leave nonprofits and small businesses waiting as long as six months for payments.
Munger said last week that her office would prioritize payments for social service groups that run autism programs and rape crisis centers but said her office is waiting on state agencies to process invoices before she could cut the checks.
“The good news is that there is a lifeline for social services and universities,” said Laurence Msall, president of the Civic Federation, a nonpartisan fiscal watchdog group. “But it doesn’t allow them to manage their operations in an effective way because it’s not predictable … the damage is continuing.”
Msall called the stopgap a “gimmick” that relieved political pressure because it funded elementary and secondary schools for a full year, but it does nothing in regard to the “tough decisions of matching actual expenditures to revenues.”
“It’s not a budget, its neither balanced nor is it comprehensive,” Msall said.
The damage is acutely felt by many of the state’s colleges and universities, which went without a dime in state assistance for most of the last year. In April, they got $600 million in emergency funds amid concerns smaller schools such as Chicago State University would be forced to close. The stopgap budget provided an additional $1 billion for higher education.
But that total is still much less than the $1.9 billion the state earmarked for colleges and universities the year before. That leaves most schools to get by with about 80 percent of one year’s funding, which they must spread out over 18 months.
To make matters worse, the temporary budget provided no money for a scholarship program for low-income students who are enrolled in classes for next year. Instead, the deal included money to repay colleges and universities that floated the scholarships to students last year.
The uncertainty surrounding the program could result in thousands of students delaying their schooling or deciding not to complete their degree, according to a recent study by the Illinois Student Assistance Commission, which administers the program. But the commission did the survey before the stopgap budget was passed, and it’s unclear if students would now respond differently.
Administrators are bracing for the ripple effect, saying they are already seeing signs that fewer students may be on campus this fall.
“We have a crisis in confidence right now,” said SIU President Randy Dunn. “This is the season of sealing the deal, and we are lagging in the final commitment with registrations and housing deposits. What we are reading is not coming to fruition as we see those students not showing up.”
The financial situation is so precarious that within hours of lawmakers passing the stopgap, Moody’s Investors Service downgraded the credit rating of six state public universities, saying schools “will continue to operate with lack of budget clarity” into the next year.
“They still face high likelihood of continued state funding reductions and delays given the state’s fundamental fiscal challenges,” the ratings agency said.
SIU will still go ahead with layoffs and plans to eliminate dozens of positions, as well as millions of dollars in cuts to departments and various programs. The moves are designed to give the school some flexibility given the possibility universities may not receive any more help for the school year.
In Chicago, Sharon Hahs, the soon-to-retire president at Northeastern Illinois University, wrote a letter to the board of trustees saying a national search for a replacement was not viable. She cited “fiscal realities and the reputational damage to the state” by the budget impasse.
Finances are more stable at the University of Illinois, which has a large donor network to cull from, but President Tim Killeen said cuts deferred because of the stopgap would be back on the table if universities don’t receive more funding for the school year.
“Operationally, we’re sound. Stopgap Two basically sets the reset button back to where we were a year ago. But it comes with huge uncertainty for FY ’17. Is that the way you want to run a state? I don’t think so,” Killeen said during an appearance before the Chicago Tribune Editorial Board last week.
“We are looking hard at strategic enrollment management, philanthropy as ways to offset massive state reductions. It’s been a deferral, not a complete avoidance, of these decisions that I alluded to. There would be layoffs. If it came to that, we would be looking at significant economic disruptions, closures of programs. It’s put off for now because of the stopgap.”
For their part, Rauner and Democratic lawmakers alike have said their work isn’t done. But it’s little comfort to those who have spent more than a year caught in the middle of a political battle that’s merely been put on pause until after the November election.
Indeed, the ideological battle at the heart of the matter remains on display. Rauner continues to call for changes he says will help jump-start the state’s economy, such as limiting costs associated with workers hurt on the job and curbing collective bargaining rights for unions.
“Frankly, when we have balanced budgets and we have a growing economy, I believe we won’t have as many people who need those human services and are vulnerable,” Rauner said last week.
Meanwhile, Democrats continue to warn they won’t abandon their friends in organized labor as they try to raise campaign cash from union allies in an effort to offset Rauner’s personal wealth he’s repeatedly tapped into in an effort to erode the Democratic majority.
And social service providers remain frustrated.
“We are going through an election cycle, and we are going to pretend we are not going to increase taxes. We’re going to pretend there’s not going to be pension reform, just to get through the election. It almost seems ludicrous,” said Stutrud, with Lutheran Social Services. “Why can’t we get to a budget now and live in reality?”
Chicago Tribune’s Dawn Rhodes and Kim Geiger contributed.
mcgarcia@chicagotribune.com
Twitter @moniquegarcia
Tony Paulauski
Executive Director
The Arc of Illinois
20901 S. LaGrange Rd. Suite 209
Frankfort, IL 60423
815-464-1832 (OFFICE)
815-464-1832 (CELL)
Tony@thearcofil.org