The “Do Nothing” Budget

Illinois currently has approximately $34.4 billion in obligated funding for the 2016 Fiscal Year (FY16) that runs from July 1, 2015 to June 20, 2016. These obligations include the K-12 funding, the one funding item that Governor Bruce Rauner signed into law last summer, as well as items that must be funded because of the law, federal consent decrees, or lawsuits brought against the state. In addition to $6.9 billion in K-12 education spending, these obligations include:

• $6.8 billion in pension contributions. Though the state may not be making these payments currently, it is legally required to do so. Failure to make pension contributions in the past several decades, along with borrowing from the pension funds to pay current bills, has resulted in Illinois having the largest underfunded pension system in the country.
• $1.7 billion in insurance payments. The state-run insurance plans are not currently making payments to providers, but the state must make these payments eventually.
• $2.1 billion in debt service. The state must pay the interest on its debt.
• $2.3 billion in local government transfers. These are funds collected by the state that belong to local government entities, such as local portions of sales taxes and gasoline taxes.
• $8.9 billion in Medicaid payments. The state originally planned to not make Medicaid payments but hoped providers would continue to provide services. As a result of a lawsuit, the state is now making these payments.
• $4.3 billion in state employee salaries. The state continues to pay state employee salaries rather than shut the government down.

While these and other obligated state spending totals about $34.4 billion, state revenues are projected to only be about $32.1 billion for FY16, meaning that without a state budget in place, our “do nothing” budget approach is running a $2.3 billion deficit.

No Public Debate Budget Cuts

While our “do nothing” budget is still spending more than the state brings in, there are also “do nothing” budget cuts that have occurred without public debate because they have not been funded through budget bills, consent decrees, lawsuits, or federal funds that pass through the state coffers. The effect of these cuts will be long-lasting, as laid-off employees move on to other jobs in other states. Voices for Illinois Children has documented many of these cuts in a report. Among them are:

• Illinois State Board of Education (ISBE): While ISBE employees are being paid and school districts are receiving non-grant funds from the state, ISBE itself is not funded. This means that Illinois will not be offering every high school junior a free college entrance exam (ACT in years past, SAT currently) this year. While some school districts are able to pick up this cost for their students, most do not have the funds to do so.
• Higher Education ($1.9 billion in FY15): The state has not provided any funding for Illinois colleges, universities, or community colleges. Included in this is funding for the Monetary Award Program (MAP) grants that provide up to $5,000/year for tuition and fees for low-income students. The lack of MAP funding was generally covered by colleges and universities for the fall semester in anticipation of a state budget passing. This spring, most are now telling students that the MAP grants will not be covered by the college or university and that these students may need to pay back the MAP grants if a state budget is not passed. Colleges and universities have seen their credit ratings downgraded, and accreditation groups have warned that those institutions who cannot demonstrate that they have the resources to provide a quality education may have their accreditation pulled. 
• Teen REACH After School Programs ($13 million in FY15): At least 18 programs have closed and 94 staff have been laid off, resulting in 14,000 teens now having nothing to keep them busy and off the streets after school.
• Redeploy Illinois ($4.8 million in FY15): 23 counties are no longer providing these diversion programs for non-violent juvenile offenders and three counties are reviewing closures. Those 23 counties served 275 youth through Redeploy Illinois in FY15 at a cost of $1.6 million. The cost to incarcerate those same 275 youth is $30.5 million. By not funding this program, Illinois is costing itself even more money and making its budget problem worse.
• Teen Pregnancy Prevention: While contracts have been put in place for FY16, these contracts are lower than for FY15, are capped at $50,000, and are not being paid by the state. As a result, sex education programs in areas with high rates of teen pregnancy and sexually-transmitted diseases (STDs) cannot be offered. In addition, staff cuts and reduced hours of service (often only open one day a week) have made it more difficult for Illinois teens to access the services that are available, especially downstate where those in need may need to drive for an hour or more to reach an open facility.
• The Autism Program ($4.3 million in FY15): The Autism Program (TAP) was a nationally-recognized network of autism support services for Illinois families. The elimination of funding for TAP has resulted in program closures in Chicago and Charleston and reduced programs in Rockford and elsewhere. The Centers for Disease Control and Prevention (CDC) estimates that 1 in 68 children are on the autism spectrum, and earlier intervention with support services is crucial for helping these children become productive adults.
• Substance Abuse and Prevention Programs ($67.5 million in FY15): There is no state funding for non-Medicaid services, which has resulted in at least 1,000 mental health and substance abuse workers being laid off. An estimated 47,000 individuals have been denied services, been placed on increasingly longer wait lists, or provided reduced services. For many of these people, the lack of services mean that they are more likely to end up in the justice system at a higher cost to the state.
• Child Care Assistance: While the legislature and governor agreed to child care assistance funding in December 2015, the governor reduced the income eligibility level from 185% of the poverty level to 50% of the poverty level. The result of this reduction means that a person working a 40-hour minimum wage job makes more than twice the income cutoff for child care assistance. Put another way, a single mother with a 20-hour part time minimum wage job makes too much money to receive child care assistance.

Education is an Investment

We often hear politicians say that education is an investment. That often simply means that children are our future, and spending money on them now won’t see returns until many years in the future. But education truly is an investment, and a very profitable one for Illinois at that.

Higher education levels mean for Illinois:

• Lower welfare and criminal justice system costs
• Higher tax revenue
• Lower Medicaid costs
• Lower child care costs
• Better health and child development
• Greater economic growth

Walter W. McMahon, an emeritus professor of economics and of education from the University of Illinois at Urbana-Champaign calculated the return on investment (ROI) of education spending in Illinois in the Journal of Education Finance. His study looked only at the monetary costs and benefits of education spending in Illinois. He found the following return on investment:

• K-12 education spending: 9.5% ROI
• Community College spending (2-year degree): 12.9% ROI
• College/University spending (4-year degree): 12.3% ROI
• And for comparison, a Standard & Poor’s 500 stock index fund: 7.2% ROI

Education spending in Illinois out-performed the stock market as an investment. In fact, Illinois education spending pays for itself every 2.3 years in state budget savings alone.

The Bottom Line

The Illinois PTA convention body passed a motion urging every Illinois PTA member to contact their legislator concerning the budget. It's easy to contact your legislators and the governor today through our Voter Voice system.   The key points you will want to make are:

• Revenues must be increased. Our current “do nothing” budget is running a deficit of over $2 billion.
• Choosing not to pass a budget is still making a choice. It is a choice to cut funding for higher education, social services, and more. It is a choice to make these cuts without a hearing, without any public input, without any debate, and without any discussion as to whether these cuts are the best use of our limited resources.
• Education is an investment, not a cost. Every dollar spent on education in Illinois is earned back in 2.3 years.