Illinois Pension Debt-Nation's Worst

Observations and comments about state government by State Representative Robert W. Pritchard.

March 15, 2010

Governor’s Budget Rejected

Illinois’ Pension Debt Tops National Study

Where to Cut State-Budget

Bill Action Highlights

A Real Program Success

Volunteer Service Award

Governor’s Budget Rejected

The analysis of the Governor’s brief budget address last week began immediately in the rotunda where media peppered legislators with questions. The responses I noted with interest were from the Speaker of the House and President of the Senate. In essence they said it contained some interesting ideas but don’t expect us to support any of them. The budget was rejected.

I met with the Governor later in the afternoon to again offer my support in a bipartisan effort to address the fiscal crisis before adjournment in May; before the general election; before more teachers lose their jobs and before human service providers close their doors. My suggestions were spelled out in letters sent to the Governor before and again after the speech.

The FY2011 budget must be balanced; reforms made to pensions, Medicaid and education; and operating efficiencies implemented. A three- to five-year plan is needed to work out of the financial hole. Such a plan may include temporary extra revenue but only if it is used to pay bills and retire debt.

I also expressed my concerns about any tax increase at this time when, as the Governor said in his speech, families and small businesses are struggling to stay above water. We must also put people back to work in our state. When people are working they are buying which puts more people back to work. I complimented him on his $2500 tax credit proposal for creating new jobs, which is very similar to Senator Brady’s idea. It’s refreshing to see agreement on at least one idea.

Illinois’ Pension Debt Tops National Study

According to a recent study by the Pew Center on the States, Illinois has the most troubled pension system in the nation with only a 54% funding level and an unfunded liability of more than $54 billion. Only California has a higher unfunded level at $59 billion. The report found that on aggregate, states were 84% funded for their pension liabilities and 38 states had taken steps in the last three years to reform their pension systems.

Pew deemed 16 states solid performers in how they fund pensions, 15 needed improvement and 19 (including Illinois) were facing serious concerns. The report pinpoints that some state policy makers (including Illinois’) have exacerbated the problem by expanding benefits, relying on overly optimistic assumptions about investment returns and failing to sufficiently fund their programs.

The study found that pension reforms fell into five categories: make required state payments each year, reduce benefits and increase retirement age, share the risk with employees, increase employee contributions and improve investment oversight. The full report can be viewed at www.pewcenteronthestates.org.

Where to Cut State Budget

The Governor offered a few ideas to cut state spending and raise additional revenue in his budget proposal. Even with $2.2 billion in proposed cuts his spending plan was still $4.6 billion larger than anticipated revenues and ignored another $6.3 billion in unpaid bills.

The Council on State Governments in the latest issue of its magazine Capitol Ideas spells out how other states are balancing their budgets. You’ll find many of the ideas my colleagues and I have been proposing among these top ten strategies to close the funding gap.

1) Privatize government services, 2) trim pensions, 3) cut salaries, 4) consolidate state agencies, 5) release nonviolent offenders, and 6) impose 4-day work weeks. Other ideas included 7) reclaiming tax incentives for failure to perform, 8) tax internet sales, 9) offer a tax amnesty period, and 10) raise income taxes on upper-income earners (not allowed in the Illinois Constitution).

Another cut the Governor could make would be to stop the Department of Aging from moving out of state-owned office space. The agency plans to consolidate employees under one roof in rented space at a cost of $530,000 per year plus moving expenses. That’s a cut that wouldn’t cost any jobs.

You’ll note that the article did not mention the strategies proposed by the Governor for FY 2011. For example not paying providers for work already done, reduce tax revenue sharing with local units of government forcing them to make even bigger cuts in local services, and cutting funding for classroom teachers.

Bill Action Highlights

HB 4810 failed to pass out of the Human Services Committee last week. The bill would have required drug testing for adults receiving public aid. Those with a positive drug test would have received rehabilitation treatment or removed from public aid.

HB4583 as passed the House last week seeks to discourage teenagers from sending sexually provocative photographs via their cell phones or computers. The bill would impose civil penalties and subject violators to in-house counseling and/or community service. The proposal to ban what is called “sexting” now moves to the Illinois Senate.

HB5322 which was passed by the House makes permanent the Preschool for All Program. Funding each year will depend upon state appropriations which were $380 million this year. Under the program funding is provided for prekindergarten programs that serve children at risk of academic failure or come from low-income families.

HB5664 passed the House last week with its requirement that all college fraternity and sorority housing be equipped with fire sprinklers by 2019. The bill is an unfunded mandate that ignores the cost or architectural difficulty of installing sprinklers. Legislation was passed in 2003 requiring college dormitories to have sprinklers by 2013.

HB 6042 as passed out of the House Education Committee would eliminate writing exams in the third, fifth, sixth and eighth grades. The savings would amount to over $3 million but many were concerned that writing would be de-emphasized as teachers focus on subjects tested by the state. The sponsor agreed to work on an amendment to still test writing at one of those grade levels.

SB 0365 passed out of the House last week and heads to the Governor with its reforms on how General Assembly college scholarships are awarded. The bill would prevent the family of any campaign contributor from receiving a scholarship. HB 4685 as passed out of the House earlier this month would eliminate the General Assembly Scholarship program after June 1.

A Real Program Success

As discussions continue over state budget cuts, it is important to put a face on those cuts and value for real citizens of state programs. Thanks to Liz Carney, Interim Executive Director of Elder Care Services serving DeKalb County, for sharing this example with me recently.

A county resident over the age of 60 was receiving a modest social security income but had medical costs that left her with $890 per month for housing, food and other expenses. Elder Care Services receives a grant from the Illinois Department of Aging to help clients review eligibility for state programs.

Debbie, an Information and Assistance Specialist with Elder Care Services, helped the client navigate the often difficult Medicare program and was able to save this client over $3,900 annually. As you can see, the client’s new plan will meet her health and living needs at a greatly reduced cost.

Nominate Someone for Volunteer Service Award

Nominations are due this week for the Governor’s Volunteer Service Awards. The program recognizes individuals for volunteering and serving their communities. Details are on the website: www.serve.Illinois.gov.

Help the Irish celebrate St. Patrick’s Day

Bob
District Office 815-748-3494 or E-Mail to bob@pritchardstaterep.com