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Paid Sick Leave Benefits Children’s Health

This month, the Illinois Senate has the opportunity to pass legislation to protect children’s health by providing Illinois workers with paid sick days.

The Healthy Workplace Act (HB 2771) would allow an employee to accrue and use up to five paid sick days per year. Employees may use their paid sick days to care for themselves or a family member. It is an important measure when it comes to children’s health.

Receiving care from their parents is important for children’s mental as well as physical health. Parents have been shown to play important roles in the care of children with chronic and acute conditions such as epilepsy, asthma and diabetes.

Many studies have also shown that a parent’s presence helps with their children’s recovery. When parents are involved in children’s care, children recover more rapidly from outpatient procedures and the duration of hospital stays is reduced by 31%. When parental involvement in the care of sick children is increased, children’s anxiety decreases. On the other hand, separating young children from their parents when they are sick has been shown to have detrimental effects.

While parental involvement is key to the health of children, many parents are forced to decide whether to leave a sick child home alone, send a sick child to school, or stay home with their child and risk losing pay or getting fired because they have no access to paid sick leave. In one study, 58% of working parents continued to go to work when their children were sick. Of the parents who were able to stay home with their children when they were sick, more than half reported that the reason they could stay at home was that they received some type of paid leave. In a separate study conducted in Chicago and Los Angeles, 41% of parents with children with special needs stated that at least once in the past year they went to work even though they felt they should have taken time off to take care of their sick child.

Paid sick leave is important for all working parents but is essential for low-income working mothers, who are primarily responsible for their children’s health. More than half of low-income mothers must take time off when their children are sick compared to a third of higher income mothers. While 71% of higher income mothers have paid sick leave, only 31% of low-income mothers have the same type of support. Among the mothers who do not have other child care options and must miss work when their children are sick, 60% are not paid for that time off.

paid sick leave

 

Lack of paid sick leave compromises the health of all Illinois children. Parents without paid sick days are more than twice as likely as parents with paid sick days to send a sick child to school or day care putting at risk the health of their children and that of other children. On the other hand, parents who have paid sick or vacation leave are more than five times as likely to care for their sick children compared to those without leave shortening the time children are sick and protecting the health of other children.

Helping to ensure parents have the time and the financial resources to take care of their children, paid sick leave safeguards the health of children in Illinois.

Written by Militza M. Pagán
Consultant to Voices for Illinois Children

Higher Education Funding Cuts, Reduced Enrollment

The on-going impasse in Springfield continues to put a severe strain on the public university system in Illinois. As the legislature and governor fail to approve a complete budget for the fiscal year, it puts universities in the unenviable situation of having to raise tuition and fees while also looking at ways to cut costs. Some recent examples:

  • Southern Illinois University has reduced staff by almost 10% between the academic years starting in 2014 and 2016. It has reduced its authorizing budget by $21 million since the beginning of the budget impasse. Just last week, Southern Illinois University trustees approved a loan of up to $35 million from Southern Illinois University-Edwardsville to support its Carbondale campus.
  • Since 2016, Eastern Illinois University has reduced its workforce by more than 500 people (from 1,743 employees to 1,224 employees).
  • Chicago State University eliminated more than 400 staff positions in 2016.
  • Governors State University this year approved eliminating 22 degree programs and raises tuition by 15%.
  • Northern Illinois University has announced a reduction of 150 staff positons for Fiscal Year 2018.
  • As a cost-cutting measure, Northeastern Illinois University shut down the campus for three days last month. It has also required employees to take furlough days during the last two academic years.


State University Budget Cuts

university funding May
MAP funding

 

Student Enrollment
As the funding issues continue, it appears to be having an impact on the enrollment of full-time students.

university enrollment

 

In fact, Chicago State University enrolled just 86 freshman this fall.

This decline coincides with a trend that has been occurring throughout the decade. Illinois is among the nation’s leaders in outmigration of graduating high school students, with an estimated net loss of over 16,000 students. This is not a recent development; Illinois high school students have been leaving the state for college in increasing numbers.

Illinois out-of-state students

Source:  Illinois Board of Higher Education

Illinois high school and college students deserve a world class higher education system that allows them to compete in the world economy. As it currently stands, Illinois is underfunding its universities with subsequent staff and program cuts.

This graduate season it is worth contemplating the higher education system we want for our state.  More survey data might be needed for a more accurate picture to explain enrollment declines.  However, it seems the state’s high school and college students see what the future might hold for Illinois’ higher education system and are leaving.

Written by John Gordon

What do Illinois’ Moms want for Mother’s Day?

How about continued health care coverage?  As of the beginning of this year, there were 1,679,700 women and girls enrolled under the state’s Medicaid program.

Medicaid provides health care coverage to low-income children and their families, pregnant women, persons who are disabled and seniors. In Illinois, the program currently covers approximately 3.1 million people overall. In addition, there are 649,000 Illinoisans are enrolled under the Affordable Care Act (ACA) – 288,464 of them are women.

Most women covered by the state’s Medicaid program are low-income women of color – 28% are African American and 26% are Hispanic. Medicaid covers services related to preventative screenings, maternal health and long-term care affecting senior women – services that impact women inter-generationally. As an example, Medicaid financed 50% of all births in the state of Illinois in 2014. With Medicaid responsible for funding so many services specific to women’s health care, the recent U.S. House passage of the American Health Care Act (AHCA) endangers crucial coverage for Illinois women and their children.

Medicaid and Women 1 - T

The bill is before the U.S. Senate for consideration. The Congressional Budget Office (CBO) estimated that an earlier version of the bill could lead to a loss of coverage nationally of 24 million people nationwide by 2026. The newest version has not been scored by the CBO. However, changes in the bill before the Senate could lead to higher costs and additional loss of coverage.

Fewer Uninsured
Prior to the ACA, eligibility for Medicaid coverage was limited to “children, cash assistance recipients, seniors, and people with disabilities”. The ACA’s Medicaid Expansion allowed 32 states, including Illinois, to include women with incomes at or below 138 percent of the poverty line. With Illinois choosing to opt into the Medicaid Expansion, the number of uninsured women in the state, aged 18 to 44 has dropped from almost 18% to 13.4% in 2016.

uninsured

Those improvements are now at risk.

Overall, the bill cuts $839 billion in federal spending from Medicaid over ten years. One estimate puts Illinois’ potential financial loss over ten years at $40 billion.

Two significant funding changes in the AHCA are lowering the federal matching rate (or Federal Medical Assistance Percentage -FMAP) for new enrollees covered under Illinois’ Medicaid expansion and implementing a spending cap for each enrollee in the state’s Medicaid  program. (In Illinois, if the FMAP falls below 90%, state law requires that coverage ceases at the end of three months following changes in the FMAP.)

Among its other changes, the federal bill allows a state to:

  • waive the ACA’s community rating (which contains a prohibition against charging higher premiums for pre-existing coverage) if it creates a “high risk pool” and
  • waive the “essential health benefits” requirements.

High Risk Pool
How did these high risk pools work in the past?  In the pre-ACA era, they generally led to enrollment caps and unaffordable premiums. While the AHCA has allocated $130 billion in funding for high-risk pools, even if all of the funding were used for these pools, they would still be underfunded by at least $200 billion.

The cost of higher premiums for pre-existing conditions places an undue burden on women. Prior to the ACA, pre-existing conditions included prior C-sections, breast or cervical cancer, receiving medical treatment for domestic or sexual violence, and/or clinical depression. In Illinois, 26% of the population would have had a pre-existing condition that would make  them uninsurable.

Essential Benefits
While essential health benefits vary by state, the ACA provides a floor with a list of benefits that insurers are required to cover. In Illinois, these include: hospitalization, maternity, coverage for prescriptions, pediatric oral and vision coverage and newborn care, as well as preventative services like mammograms and bone density screenings. While the AHCA maintains preventative services for private plans, those requirements would no longer apply to the Medicaid Expansion population, meaning a loss of much needed services by women in that population.

Instead of taking away Mom’s health care coverage, let’s remind our federal officials this week (which is National Women’s Health Week) of the great strides we’ve made under the ACA and the great gift it has provided to Illinois women and their families.

Written by Mayumi Grigsby

Another Threat to Health Care for Illinois Women and Children

If Illinoisans were worried about losing coverage under the last version of the American Health Care Act (AHCA) proposed at the federal level, the latest incarnation will do little to reassure them.[1] Medicaid provides health coverage to low-income children and their families, pregnant women, persons who are disabled, and seniors.[2] The program currently covers 36 percent of Illinois children with a mix of federal and state funds.[3] Approximately 3.1 million people are currently enrolled in Illinois’ Medicaid program and 649,000 are enrolled under the Affordable Care Act (ACA).[4] Seventeen percent of Illinois women are covered by Medicaid.[5]

A reported agreement in the U.S. House of Representatives by the conservative Republican House Freedom Caucus and the moderate Republican Tuesday Group has revitalized the bill that failed to garner enough support at the federal level last month. The newest version keeps the base of the original AHCA bill while adding provisions that would further endanger coverage for vulnerable populations.[6] The previous proposed changes to the ACA, would have led to a loss of medical coverage for 14 million people in 2018.[7]  Changes to the tax subsidies allowing citizens to buy coverage and to the Medicaid program would have increased the number of uninsured from 14 million to 21 million in 2020, and to 24 million in 2026.[8]

The version garnering the endorsement of the House Freedom Caucus adds the following: a) it allows states to waive the ACA’s “community rating” requirements, which is the prohibition against charging people higher premiums for preexisting coverage, so long as the state creates a “federal high risk pool”;  b) it allows states to waive the ACA’s “Essential Health Benefits” standards, which are key services health market plans must cover, such as prescription drugs, mental health treatment and maternity care.[9] In Illinois, these benefits also include pediatric oral and vision coverage for children and coverage for autism spectrum disorders.

States would receive automatic approval for these waivers within 90 days if they attest that their purpose is to lower premiums, improve coverage levels, or advance another benefit to the public interest.[10]

These are significant steps. High-risk pools existed in many states prior to the ACA and they led to “enrollment caps, long waiting lists, unaffordable premiums, exclusions for pre-existing conditions, high deductibles, benefit caps, and annual and lifetime limits on coverage”.[11]

Illinois has existed without a complete budget for almost two years.[12] The state faces a FY 17 revenue shortfall of $5.7 billion and has amassed a backlog of bills totaling more than $13 billion.[13] Delayed payments or actual cuts continue to lead to providers curtailing vital human services.[14]

Under the previous version of the AHCA, Illinois stood to lose $40 billion over a ten-year period. Inaction by the Illinois General Assembly and the Governor to address the state’s revenue shortfall has already threatened services for vulnerable Illinois residents including low-income children and their families, persons with disabilities and seniors. The current changes proposed at the federal level further exacerbate that threat.

Written by Mayumi Grigsby


[1] http://www.chicagotribune.com/news/local/politics/ct-congress-illinois-aca-repeal-met-0316-20170315-story.html
[2] http://www.voices4kids.org/proposed-medicaid-changes-could-mean-end-of-services-for-thousands-in-illinois/
[3] http://www.voices4kids.org/proposed-medicaid-changes-could-mean-end-of-services-for-thousands-in-illinois/
[4] http://www.voices4kids.org/proposed-medicaid-changes-could-mean-end-of-services-for-thousands-in-illinois/
[5] http://kff.org/womens-health-policy/fact-sheet/womens-health-insurance-coverage-fact-sheet/
[6] http://www.cbpp.org/research/health/reported-amendment-to-house-aca-repeal-bill-guts-protections-for-people-with-pre
[7] http://www.voices4kids.org/proposed-medicaid-changes-could-mean-end-of-services-for-thousands-in-illinois/
[8]http://www.voices4kids.org/proposed-medicaid-changes-could-mean-end-of-services-for-thousands-in-illinois/
[9] http://www.cbpp.org/research/health/reported-amendment-to-house-aca-repeal-bill-guts-protections-for-people-with-pre
[10] http://www.cbpp.org/research/health/reported-amendment-to-house-aca-repeal-bill-guts-protections-for-people-with-pre
[11] http://www.cbpp.org/research/health/reported-amendment-to-house-aca-repeal-bill-guts-protections-for-people-with-pre
[12] http://www.voices4kids.org/proposed-medicaid-changes-could-mean-end-of-services-for-thousands-in-illinois/
[13] http://www.cbpp.org/research/state-budget-and-tax/many-states-face-revenue-shortfalls
[14] http://www.voices4kids.org/proposed-medicaid-changes-could-mean-end-of-services-for-thousands-in-illinois/

Paid Sick Leave in Illinois

The Illinois House has passed legislation (HB 2771) that would provide paid sick leave to Illinois workers who currently have no such right.

While Cook County and the City of Chicago have approved ordinances on paid sick leave that become effective July 1, 2017, there are still 1.5 million Illinois workers without the right to paid sick days.

The  Healthy Workplace Act would allow an employee to accrue and use up to five paid sick days per year.

Momentum to provide more workers paid sick leave has been building throughout Illinois and the nation. The City of Chicago and Cook County approved their measures in 2016. That same year, Arizona, Vermont and Washington-passed laws ensuring access to paid sick leave to all workers in their states.  Paid sick leave is also the law in four other states (Connecticut, California, Massachusetts and Oregon).

Jurisdictions with Paid Sick Days[1]
State and District Effective Date of Statutes
Connecticut 2012
Washington DC 2014
California 2015
Massachusetts 2015
Oregon 2016
Vermont 2017
Arizona 2017
Washington 2018
County Effective Date of Statutes
Montgomery County, MD 2016
Cook County, IL 2017
City Effective Date of Statutes
San Francisco, CA 2007
Seattle, WA 2012
New York, NY 2014
Jersey City, NJ 2014
Newark, NJ 2014
Irvington, NJ 2015
Passaic, NJ 2015
East Orange, NJ 2015
Paterson, NJ 2015
Trenton, NJ 2015
Montclair, NJ 2015
Bloomfield, NJ 2015
Oakland, CA 2015
Philadelphia, PA 2015
Emeryville, CA 2015
Pittsburgh, PA 2015
Elizabeth, NJ 2016
Plainfield, NJ 2016
San Diego, CA 2016
Tacoma, WA 2016
New Brunswick, N.J 2016
Los Angeles, CA 2016
Morristown, NJ 2017
Berkeley, CA 2017
Spokane, WA 2017
Santa Monica, CA 2017
Minneapolis, MN 2017
St. Paul, MN 2017
Chicago, IL 2017

What is paid sick leave?

Paid sick leave allows workers to take time off to recover from illness, attend a doctor’s appointment, take care of a sick loved one, or stay home to take care of children when school is canceled without a loss in pay. Workers accrue paid sick days based on the number of hours they work. The more hours an employee works, the more hours they accrue.

What are the benefits of paid sick leave?

Both employers and workers benefit from earned sick leave by reducing turnover, increasing productivity, saving on healthcare costs, reducing the spread of disease, and providing more economic security for workers.

Paid sick leave is good for children. Parents without paid sick days are more than twice as likely as parents with paid sick days to send a sick child to school or day care.

Paid sick leave provides job and financial security for minority and low-wage workers, whom are most often in jobs that lack sick leave benefits and can least afford to forego a paycheck if they become ill or must care for a family member. In Illinois, roughly 1.6 million workers are in low-wage jobs making $12 or less per hour. While only 14.7% of the Illinois population is African-American and 16.9% of the Illinois population is Latino, 33.6% of African Americans and 44.3% of Latinos in Illinois earn $12/hour or less. These lower income workers are less likely to have access to paid sick days. Nationwide, 80.6% of low-wage workers lack a single day of paid sick leave. And less than half of Latino workers in the US (46 percent) have access to paid sick time compared to 60 percent for all workers.

Working to ensure healthy and productive employees, paid sick leave helps provide a healthy Illinois economy and strengthens the economic security of the state’s citizens.

Written by Militza M. Pagán
Consultant to Voices for Illinois Children


[1] Laws differ on types of employees covered, the number of work hours required to earn paid sick leave, and the maximum number of sick leave hours employees can accrue; a detailed chart of paid sick leave statutes can be at found at http://www.nationalpartnership.org/research-library/work-family/psd/paid-sick-days-statutes.pdf

Illinois Falling Short in Reducing Income Inequality

As another year’s tax season comes to a close, Illinois data continues to show that we must work harder to enact policies that reduce income inequality in our state.

 In Illinois, income inequality is high and has worsened over time.

Wage stagnation and tax policy are contributing to the increase in income inequality.

Nationwide over the last four decades, wages have grown for top earners, but not much at all for those at the bottom and in the middle.[3] Furthermore, in Illinois, top earners pay a lower share of taxes.

According to ITEP’s Tax Inequality Index, Illinois has the 5th most unfair state and local tax system in the country. This places an increased burden on the already strained budgets of low-income families. In 2015 in Illinois, families in the lowest income group paid the most state and local taxes as a share of their income (13.2%), roughly double the share that the highest income groups pay.[4]

Total state and local taxes paid as a share of income, 2015

ITEP Tax Graphic

 Source: Institute on Taxation and Economic Policy

Illinois needs new revenue to resolve the current budget stalemate and continue to provide important services to its residents. In looking at the state’s tax system, elected officials should consider the existing income inequality among its residents. Two ways Illinois can reduce the tax burden on working families are by increasing the state’s Earned Income Tax Credit (EITC) and establishing a state child tax credit.  These two measures will help put Illinois on the road towards a fairer tax system and improve the lives of thousands of Illinois residents.

Written by Anna Rowan


[1]Via the Center on Budget and Policy Priorities: EPI analysis of IRS data. Estelle Sommeiller, Mark Price, and Ellis Wazeter, “Income Inequality in the U.S. by state, metropolitan area, and county,” Economic Policy Institute, June 16, 2016

[2]KIDS COUNT Data Center

[3]How State Tax Policies Can Stop Increasing Inequality and Start Reducing It,” Center on Budget and Policy Priorities

[4]Who Pays?” A Distributional Analysis of the Tax Systems in All 50 States, 5th Edition,” Institute on Taxation and Economic Policy

Benefits of Doubling Illinois’ Earned Income Tax Credit

Voices for Illinois Children’s President Tasha Green Cruzat recently testified before the Illinois House Revenue and Finance Committee on the importance of increasing the state’s Earned Income Tax Credit (EITC).

The federal EITC is one of the most effective poverty fighting measures. A federal tax credit for low- and moderate-income working people, the EITC allows an individual to take a percentage of earned income as a credit against his or her tax liability. If the amount of the credit (based on income, marital status, and number of children) exceeds the individual’s tax liability, the federal government refunds the balance to the taxpayer. In 2015, the federal EITC kept 6.5 million people out of poverty. More than half of them were children.

federal EITCTwenty-six states and the District of Columbia have enacted state EITCs. In Illinois, a taxpayer receiving the federal EITC may take 10% of that amount on his or her state income tax return. The credit is also refundable in Illinois. In Tax Year 2014, more than 900,000 Illinois taxpayers took advantage of the state EITC for an average of $245. HB 2475 would increase the state’s EITC from 10% of the federal EITC to 20% over five years. Given projected increases in the federal EITC, the bill could result in an additional $265 annually (after five years) for taxpayers claiming the Illinois credit. That’s additional money used for basic necessities:  buying groceries, paying for car repairs, or helping to pay for child care.

State EITC

A study of state EITC’s done by the University of New Hampshire[1] found they resulted in lower use of public health insurance and greater use of private health insurance for children. It also showed that mothers reported improvements in their children’s health (particularly for children ages 11 to 14).

Other studies show children in families receiving the EITC score higher on educational tests and are likelier to graduate from high school[2].

The state EITC is a good investment for Illinois citizens as well as communities around the state. A review of economic studies by the U.S. Conference of Mayors shows that for every EITC dollar increase received by low and moderate income families, there’s an economic multiplier in the money generated in local economies of 1.5 to 2[3].

  • In a study of EITC benefits received by Michigan residents in 2006, every EITC dollar spent generated $1.67 in new economic output in the state[4].
  • A 2010 study of 58 California counties showed $3.6 billion in federal EITC dollars spent locally generated $5.08 billion of economic output, $1.24 billion in labor income and $355 million in tax revenue[5].
  • A 2004 study of the impact of the federal EITC in San Antonio area showed every EITC dollar received resulted in a local economic impact of $1.58[6].

The actual dollars returned to a community may depend on how many taxpayers claim the credit in each year, the amount of the credits, and the retail market in a community. However, the evidence is clear that investing in the EITC produces economic activity in the taxpayer’s community and tax dollars for both the state and local governments.

Overall, the EITC is a proven winner. It helps lift families out of poverty, improves the health and educational outcomes of family members, and positively impacts local communities.  Voices strongly encourages the state to double its EITC.

Written by Mitch Lifson


[1] Baughman, Reagan. 2012. The Effects of State EITC Expansion on Children’s Health. Carsey Institute. University of New Hampshire

[2] Caines, Roxy. 2017. 5 Ways the EITC Benefits Families, Center on Budget and Policy Priorities

[3] U.S. Conference of Mayors. Dollar Wi$e Best Practices. 2ND Edition. Earned Income Tax Credit.

[4] Anderson Economic Group, LLC. 2006. Economic Benefits of the Earned Income Tax Credit in Michigan.

[5] Avalos, A., and Alley, S. 2010. The economic impact of the Earned Income Tax Credit (EITC) in California. California Journal of Politics and Policy.

[6]Texas Perspectives Inc. 2004. Increased Participation in the Earned Income Tax Credit in San Antonio


 

Proposed Medicaid changes could mean end of services for thousands in Illinois.

Proposed changes to the federal Affordable Care Act (ACA) and Medicaid could result in the reduction or elimination of services for thousands of Illinois residents now covered by Medicaid.

Medicaid provides health coverage to low-income children and their families, pregnant women, persons who are disabled, and seniors.[1] Services covered by Medicaid can include payments for hospital and nursing home care and prescription drugs.[2]

The program, jointly funded by the state and federal government, currently covers 36 percent of Illinois children.[3] In July of 2013, Illinois was one of 23 (now 32) states that opted to expand its Medicaid program under the federal Affordable Care Act (ACA).[4] The ACA expanded eligibility for Medicaid to 138 percent of the poverty line, or, families of three making $26,951.[5]

At the beginning of this year, there were 3.1 million people enrolled in the state’s Medicaid program. Of that amount, approximately 649,000 enrolled under the Affordable Care Act. Illinois now has one-quarter of its population enrolled in the Medicaid program.[6]

While Congress has not yet voted on the proposed legislation, nationally, the Congressional Budget Office has calculated that the proposed changes to the ACA could mean a loss of medical coverage for 14 million people in 2018.[7] The Office estimates that both changes to the tax subsidies that allow citizens to buy coverage and to the Medicaid program could increase the number of uninsured from 14 million to 21 million in 2020, and to 24 million in 2026. It also provides yet another major budget issue for Illinois.[8]

When the ACA became law, the federal government paid 100% of the costs for each new Medicaid enrollee through 2016. The percentage dropped to 95% this year. It is scheduled to phase down to 90% by January 1, 2020. Due to the federal reimbursement for new enrollees, Illinois received more than $3 billion dollars in Fiscal Year 2017.  Overall, Illinois spent approximately $12.5 billion in general funds (and related funds) on Medicaid in Fiscal Year 2016.

The proposed bill would make two major changes to Medicaid starting in 2020, each of which likely would reduce coverage in Illinois unless the state chooses to raise the necessary revenue.

First, it would reduce the federal matching rate for new enrollees in Illinois’ Medicaid expansion from 90 percent to Illinois’ regular Medicaid matching rate, just above 51 percent.[9] That means Illinois would have to pay nearly five times as much as under current law for new enrollees. Moreover, because low-income adults move on and off Medicaid over time, CBO estimates that the higher cost would apply to more than two-thirds of expansion enrollees within just two years. [10]

Second, the bill would cap per-person federal Medicaid funding – not just for the expansion population, but also for children, pregnant women, seniors, and people with disabilities currently covered by Illinois Medicaid.[11] The federal government now matches state Medicaid spending with no dollar limit per enrollee, meaning that federal funding increases based on the actual cost of serving vulnerable populations. Under the House bill, the per-person caps would grow more slowly than projected per-enrollee spending, and so Illinois would face increasing cuts in federal funding over time.

The implications of the federal changes in Illinois would further complicate by the state’s ongoing budget crisis. The state has been operating without a complete budget for 21 months. It has a shortfall of billions of dollars just to meet 2015 service levels and has amassed a backlog of bills totaling more than $12.5 billion[12]. Delayed payments or actual cuts have already led providers to curtail vital human services.

During an Illinois House hearing on the subject, experts testified that the proposed federal Medicaid changes could mean a loss of up to $40 billion for Illinois over a ten-year period. Absent any action by the Illinois General Assembly and the Governor to address the revenue shortfall, vulnerable Illinois residents including low-income children and their families, persons with disabilities and seniors, could see coverage cut and discontinued.

Written by S. Mayumi Grigsby


[1] http://www.cbpp.org/research/health/policy-basics-introduction-to-medicaid

[2] http://www.cbpp.org/research/health/policy-basics-introduction-to-medicaid

[3] http://ccf.georgetown.edu/location/illinois/

[4] https://kaiserfamilyfoundation.files.wordpress.com/2013/07/8457-the-cost-of-not-expanding-medicaid4.pdf

[5] http://www.cbpp.org/research/health/policy-basics-introduction-to-medicaid

[6]https://www.illinois.gov/gov/budget/Documents/Budget%20Book/FY2018%20Budget%20Book/FY2018OperatingBudgetBook.pdf

[7] https://www.cbo.gov/publication/52486

[8] https://www.cbo.gov/publication/52486

[9] http://kff.org/medicaid/state-indicator/federal-matching-rate-and-multiplier/?currentTimeframe=1&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

[10] http://www.cbpp.org/research/health/house-republican-health-plan-shifts-370-billion-in-medicaid-costs-to-states

[11] http://www.cbpp.org/research/health/house-republican-health-plan-shifts-370-billion-in-medicaid-costs-to-states

[12] As of 3/14/17: https://ledger.illinoiscomptroller.gov/

Deadbeat Illinois

When the week ended, the State of Illinois had a backlog of bills totaling $12.2 billion dollars. That amount represents a backlog in vouchers of 140,000.[1]

The bill backlog problem is not new.  Going back more than six years, the state had a backlog of nearly $7.9 billion at the end of 2010. In the following four years, there were fluctuations in the amount as the state worked to whittle down its bills.

However, as the chart below from Illinois Comptroller Susana Mendoza’s office shows, it has been a steady uphill climb since the budget impasse began (July 2015).

historic trend bill backlog

Just who is waiting for payment by the state?  On the same day that the Governor presented his proposed budget to the legislature, his Office of Management and Budget (GOMB) also put out an update on outstanding bills[2].  Using its own data and that from the Comptroller, the composition of outstanding bills was as follows at the end of January (when the bill backlog was just $10.9 billion):

outstanding bills

As noted by GOMB, the totals “do not include all bills received by state agencies that have not been processed by the Comptroller due to lack of FY16 and FY17 appropriations”. In a number of cases, particularly regarding human services, the state signed contracts with providers for services during the fiscal year even though there was not an appropriation for the full year.

Each outstanding bill also accrues interest the longer it waits to be paid. For self-insured providers of the State Employees Group Insurance Program, the interest is 9% annually after 30 days of non-payment. Most other bills accrue interest at a rate of 12% annually after 90 days of non-payment[3]. Comptroller Mendoza has noted that if the state budget situation does not change by the end of the fiscal year, the state could owe up to $700 million interest on a bill backlog that would approach $15 billion[4].

One proposal in the legislature is to borrow money to pay a portion of the bills and incur a lower interest rate. That’s still money needed each successive year over the life of the bonds for debt service. It’s also money that cannot be used for the provision of services in future years.

What Illinois needs is a balanced budget with sufficient revenue that allows it to provide the necessary services to its citizens and pay its bills.

 

[1] http://ledger.illinoiscomptroller.gov/fiscal-condition/#general-funds

[2] https://www.illinois.gov/gov/budget/Documents/Bill_Backlog_Presentation_for_January_FY17.pdf

[3] http://cgfa.ilga.gov/Upload/3YearBudgetForecastFY2017-FY2019.pdf

[4] http://thesouthern.com/news/local/govt-and-politics/interest-payments-add-to-illinois-budget-stalemate/article_9ea46b58-d9de-574a-83e8-652520d8a3c6.html

The Governor’s Proposed Fiscal Year 2018 budget: Balanced -in name

With the hope of closing a budget gap of more than $7 billion, Governor Bruce Rauner has presented the legislature with a Fiscal Year 2018 budget totaling $37.3 billion. His proposed methods for closing the gap includes some additional revenue but also a set of legislative measures to reform pensions, procurement, state employee health care, and human services.

Absent any change in state law (as well as what the Governor terms as spending controls), he puts the costs of an FY18 maintenance budget at $39.7 billion. To arrive at the lower amount of the proposed budget, the Governor has built in cost savings from a range of items that includes:

  • Offering a new level of pension benefits, Tier 3, to employees of the Teachers’ Retirement System (TRS), the State Employees Retirement System (SERS), and the State University Retirement System (SURS).

In 2010, the state created a lower level of pension benefits for those state and local employees who were hired after 2010. This was the “Tier 2” plan. Under the Governor’s proposal, new employees of TRS, SERS, and SURS could choose from either the Tier 2 or Tier 3 plan. For those not covered by social security, Tier 3 would consist of a hybrid of a defined-benefit plan and a defined-contribution plan. Employees covered by social security would have the option of enrolling in a defined-contribution plan (the new Tier 3 option) or the Tier 2 plan.  However, local employers would need to pick up the complete pension costs for employees choosing either Tier 2 or Tier 3.

  • Ending late-career salary spikes by local employers.
  • Eliminating funding for health insurance for retirees of TRS or SURS as well as a health insurance/pension subsidy to the pension fund for Chicago public school teachers.
  • Reducing state employee group health insurance benefits.
  • Freezing state employee general and step salary increases for several years (for those in bargaining units) while implementing a merit bonus system for “high-performing workers”.
  • Enacting a set of procurement reforms that include allowing Illinois to join other states in competitive bidding contracts.
  • Selling the James R. Thompson Center in Chicago.
  • Moving non-Medicaid covered seniors enrolled in the state’s Community Care Program (which provides support services to seniors allowing them to remain in their homes versus nursing homes) to a modified package of services (named the Community Reinvestment Program).
  • Additional steps on how the state calculates actuarial assumptions for the pension systems and system contributions based on payrolls.

The Governor proposed some of these measures last year but the legislature did not adopt them.

Even if the state enacted these measures into law, the Governor’s budget still falls approximately $4.6 billion short of estimated revenues for FY18.

To close the gap, the Governor lists savings and revenue from a “grand bargain” that could include new revenue and potentially: a property tax freeze, changes in the workers’ compensation system, additional pension system changes, and further procurement reforms.  Regarding pensions, Senate President John Cullerton has proposed a “consideration” model that would offer employees one of two choices of how future salary increases and cost-of-living adjustments are calculated for the employee’s future pension payments.

Absent any of the changes noted above, the Governor’s listed maintenance budget for FY18 is $7.2 billion higher than anticipated revenue.

Human Services

The proposed FY18 budget includes additional funding for the state’s child care assistance program (moving the income eligibility level back up to 185% of the federal poverty level). It also includes additional funds for the state’s early intervention program and home services.

At the same time, the Illinois Department of Human Services’ budget contains the discontinuation of funding, or a reduction, for a number of programs.

DHS reductions

Education

PreK-12 funding includes an additional $50 million for early childhood education and full funding for the General State Aid Level (set at $6,119/student). The proposed budget also includes full funding for bilingual education and categorical reimbursement for regular/vocational transportation.

There is additional FY18 funding for the state’s Monetary Award Program (a proposed $401 million versus FY15 funding of $364 million), which provides college grants to low income students. Yet, the state hasn’t appropriated any funds for FY17 MAP grants.

State universities, for which state appropriation authority regarding general funds expired at the end of last year, will see a decrease of 10% from FY15 levels under the proposed budget.

Higher Education -FY18

Bill backlog and remainder of FY17

The budget indicates the level of outstanding bills for the state could reach $14.7 billion by June 30th of this year and notes the Governor’s willingness to work with the legislature to “sell bonds or take other actions to reduce the backlog of bills”. As to whether any appropriations bill for the remainder of FY17 might begin to address the bill backlog, the Governor’s budget director indicated at a Senate hearing the day after the Governor’s budget address that the Governor wanted to first establish the framework for an FY18 budget before taking up any supplemental measure for FY17.

After being downgraded twice in the last two years by the three major credit rating agencies (Fitch, S&P, and Moody’s), Illinois’ credit rating for all three now sits just two notches above non-investment grade. A lower credit rating generally translates to higher interest rates for any future issuances.

However, the even higher price is the impact the budget impasse is having on vital human services and the state’s higher education system. Universities have cut staff and programs. Human service providers have cut staff or shut their doors altogether. With the stopgap budget expired and no general revenue appropriations for the remainder of the fiscal year, a number of providers likely will not make it much longer unless the Governor and legislature approve a plan that provides adequate revenue to fund these essential services. Failure to arrive at a full-year budget for the last 20 months has already frayed the state’s human service safety net. Prolonged inaction by our elected officials will have a devastating impact on Illinois for years to come.