IIFS Blog

10.31.14

State's Operating Budget Continues to Supplement Capital Projects Fund

When the Illinois Jobs Now! capital spending program was approved in 2010 the State also approved a series of dedicated revenue sources intended to fund new borrowing costs outside the State operating budget. As previously sold capital bonds were retired, it was anticipated that the cost for new...

10.23.14

Budgetary Gimmicks Allow Spending Increases in State’s FY2015 Budget

As previously discussed here, the enacted FY2015 budget for the State of Illinois includes several budgetary gimmicks intended to make up for the loss of revenues associated with the expiration of the temporary income tax increases halfway through the fiscal year.  Two of these measures...

10.15.14

State of Illinois Education Funding: Analyzing Trends

Whether the State of Illinois has spent more or less on education in the last five years has recently been the subject of intense debate. This blog post examines various factors that affect the calculation of education spending trends and expands on the Civic Federation’s recent report on the...

10.09.14

An Overview of State Intervention Laws in Illinois

Municipal bankruptcies are very rare but a spate of filings, including the largest municipal bankruptcy in U.S. history by the City of Detroit, and ongoing municipal budgetary stress around the country has led to discussions of what, if anything, states should do to assist distressed cities. ...

10.02.14

Illinois Medicaid Enrollment under Affordable Care Act Nears 500,000

In the past few months, it has become evident that Illinois vastly underestimated the number of newly eligible recipients who would sign up for Medicaid under the Affordable Care Act. However, the fiscal implications of the unexpectedly strong enrollment remain unclear. Governor Pat Quinn said on...

09.26.14

Illinois Clears Backlog of Income Tax Refunds and Reaps Surpluses

As recently as 2011, the State of Illinois projected its backlog of unpaid income tax refunds could increase to more than $1.0 billion but by the end of FY2014 nearly all refunds were paid. In FY2015, for the second year in a row, the State transferred revenues originally diverted to pay for...

09.18.14

Illinois to Fund Kidney Transplants for Undocumented Residents

A new law that restores certain Medicaid benefits previously cut due to budget pressures also adds a new service: kidney transplants for undocumented Illinois residents. Public Act 98-0651, signed by Governor Pat Quinn on June 16, 2014, authorizes State funding of kidney transplants for low-income...

09.11.14

Social Impact Funding through Pay for Success Contracts in Illinois

Despite its name, a social impact bond (SIB) is not a debt instrument and does not require a government to issue debt. Rather, an SIB is a social impact financing arrangement whereby funds are raised from private sector investors to provide social service agencies the funding necessary to deliver...

09.04.14

Illinois Bond Disclosures Show Risk of Pension Borrowing

Information included in recent bond disclosures by the State of Illinois indicate that the pension obligation bonds (POBs) sold in 2003 primarily to boost the retirement systems’ assets have earned the minimum investment returns needed to break even in only seven of the last ten years....

08.27.14

Illinois Should Not Budget for Payment Delays

Businesses do not always pay their bills immediately, and neither do governments. Delays of a month or two are standard practice, although prompt payment is preferable to take advantage of discounts, avoid penalties and maintain access to the largest possible pool of vendors. Since FY2009, long...

08.22.14

Annexation of Unincorporated Areas in Illinois

Unincorporated areas lie outside municipal boundaries. The residents and businesses located in these areas are usually provided municipal services such as police protection and building code enforcement by county government or special districts. Because unincorporated areas may be scattered...

08.14.14

State Undertakes Revenue Study to Evaluate Reserves Policy

In the coming months, the State of Illinois will conduct a revenue volatility study to establish a basis for an adequate rainy day fund balance to protect the State from future economic downturns and other revenue variances. This analysis of historic changes in State revenues was mandated as part...

08.08.14

Illinois Medicaid Legislation Increases Payments to Nursing Homes, Hospitals

Despite Illinois’ tight budget for the current fiscal year, the State enacted major Medicaid legislation featuring increased payments to nursing homes and hospitals. Public Act 98-0651 covers 231 pages and was the result of months of negotiations involving legislators, State officials and...

07.31.14

Illinois' Revenues in FY2014 Exceed Expectations

According to recent reports, the State of Illinois’ operating revenues, which are expected to decline this year due to the partial rollback of State income tax rates, exceeded expectations in FY2014, the last full year of the increased income tax rates. Documents published by the State to...

07.25.14

Illinois’ Rating Reversed to Negative Due to Unbalanced Budget

Less than a month into the new fiscal year, which began on July 1, Standard and Poor’s announced that the financial outlook for the State has deteriorated from “developing” to “negative.” The rating agency directly blamed the FY2015 budget approved by the Governor and...

07.17.14

Retiree Health Insurance Ruling to Increase State Costs by $128 Million

The Illinois Supreme Court’s recent ruling on health insurance for State retirees is expected to increase State costs by approximately $128 million through FY2015, according to the Department of Central Management Services. Although litigation is ongoing, the high court’s decision...

07.09.14

Court Ruling on Health Insurance Could Add to State of Illinois Budget Woes

A court ruling on health insurance for retired State of Illinois workers could put additional pressure on the State’s stopgap budget for the year that began on July 1, 2014. In a 6 to 1 decision on July 3, the Illinois Supreme Court ruled that health insurance subsidies for State retirees are...

07.02.14

Governor Signs Illinois' Operating Budget but Vetoes Capitol Complex Upgrades

Despite criticizing the General Assembly for not passing an adequate budget for the new fiscal year, Governor Pat Quinn signed the legislature's appropriations bills into law on June 30, 2014, the last day before the start of FY2015. The Governor vetoed $250 million from the capital budget, but...

06.26.14

Teachers’ Retirement System Changes Will Affect Pension Savings

UPDATE: In addition to the Teachers’ Retirement System (TRS), two other large State of Illinois pension funds have also lowered their assumed rates of return on investment. Both the State Universities Retirement System (SURS) and the State Employees’ Retirement System (SERS) recently...

06.19.14

The Illinois Income Tax: A Significant Source of Revenue for Local Governments

Under Illinois law, the State is required to share a certain portion of state income tax receipts with municipal and county governments in Illinois through the Local Government Distributive Fund (LGDF).  The state revenue shared with local governments is a legislatively required transfer from...

06.13.14

Illinois General Assembly Approves Expanded Capital Budget with Additional Borrowing

Although Governor Pat Quinn originally proposed a capital budget for FY2015 with no new debt-funded projects, the General Assembly approved an additional measure that added $1.1 billion in new road projects that will be funded through the sale of long-term capital bonds. As previously discussed...

06.05.14

New Details Emerge on FY2015 Illinois Budget

A week after the Illinois General Assembly ended its spring session, legislative leaders circulated new information about the FY2015 spending plan approved by lawmakers. General Funds spending in the legislature’s budget totals $35.8 billion, according to a budget overview issued by Senator...

05.29.14

Illinois House Defers Major Budget Decisions

UPDATE: Illinois General Assembly Passes FY2015 Budget On May 30, 2014, a day before the end of the Illinois General Assembly’s regular spring session, the Senate passed the FY2015 budget previously approved by the House. As discussed below, the budget does not cut spending or extend existing...

05.23.14

State of Illinois Capital Budget Forgoes New Bond-Funded Projects

The capital budget proposed by Governor Pat Quinn for FY2015 represents the sixth year of the Illinois Jobs Now! capital spending program and the first year since its inception that new bond-funded projects are not included in the recommendation. The capital budget includes $2.9 billion in new...

05.15.14

Illinois Medicaid Enrollment under Affordable Care Act Exceeds Projections

More Illinois residents than originally projected are signing up for Medicaid as a result of the federal Affordable Care Act, but the long-term impact on the State budget remains unclear. Illinois officials had initially projected that 241,500 new recipients would sign up by the end of the current...

05.09.14

Governor’s Five-Year Projections Illustrate Dramatically Different Financial Paths

As part of the FY2015 budget recommendation for the State of Illinois, Governor Pat Quinn provided two separate five-year projections for both “recommended” and “not recommended” budget proposals. The long-term outlooks show the implications of the extension of higher income...

05.02.14

Rhode Island Pension Settlement Rejected, Trial Set to Start in September

A settlement agreement on Rhode Island’s pension reform litigation that was presented to pension system members for a vote has been rejected even though most groups overwhelmingly backed it. The vote was structured such that any one group of members could scotch the agreement if more than 50...

04.24.14

Illinois Lacks True Rainy Day Fund

Governor Pat Quinn’s recommended budget for FY2015 proposes that the State of Illinois build a financial cushion to deal with future economic downturns. The Governor suggests the creation of an adequate “rainy day” fund in a five-year blueprint for the State, but specifics of the...

04.18.14

Governor Quinn's FY2015 Budget Includes Interfund Borrowing to Close Budget Gap

Although the budget recommended by Governor Pat Quinn for FY2015 proposes extending current income tax rates to avoid a massive revenue cliff, it also relies on borrowing $650 million to close a budget gap and pay down a portion of the State’s backlog of unpaid bills. Despite the additional...

04.11.14

Illinois Delays Submission of $5 Billion Medicaid Plan

UPDATE: On June 4, 2014, the State of Illinois filed its application for a $5 billion Medicaid plan with the federal government. Advocates for Medicaid recipients said they were told by State officials that there were no substantial changes from the version of the plan posted for public comment in...