December 27, 2012
Throughout this year’s Illinois budget negotiations, the IIFS blog was a valuable source of information and focus in the State’s murky and complex budget process. This year’s negotiations included a groundbreaking effort to address the Medicaid funding gap, new pension reform proposals and yet another downgrade to the State’s credit rating.
The Institute started the year with a report projecting an alarming increase in the State’s backlog of unpaid bills. The report was cited by Illinois Governor Pat Quinn in his February budget address to the Illinois General Assembly. The following posts discuss the Governor’s FY2013 budget recommendations and emphasize the need for immediate action to improve the State’s finances:
- Governor’s Three-Year Budget Projections: More Cuts and Looming Deficits
- Senate Hearing Sets Stage for Governor’s FY2013 Budget Recommendation
- Civic Federation Supports Governor’s Budget but Raises Concerns
Pension Reform Proposals
The financial condition of the State’s five retirement systems continued to deteriorate this year, with the systems’ total unfunded liability growing to nearly $97 billion as of June 30, 2012 and the combined funded ratio declining to 39.0%. As the State’s actuaries released new information, IIFS tracked the alarming decline in pension funding with the following posts:
- Pensions Consume Growing Share of State Revenues
- Total State Pension Contributions Proposed to Rise by Nearly $1 Billion in FY2014
- State Pension Funding Dips to 39%
Despite calls for reform that included a proposal from Governor Quinn and a resolution from the State’s largest retirement system, reform efforts collapsed in the final days of the General Assembly’s regular session.
During the fall veto session, a bipartisan group of legislators introduced HB 6258, a new pension proposal which includes changes to the automatic annual increase, retirement age, pensionable salary and employee contributions. The proposal may be considered when the General Assembly returns to session in January.
Medicaid Funding Gap
In its FY2013 State Budget Roadmap, IIFS relied on a five-year budget analysis from the Illinois Department of Healthcare and Family Services to project that unpaid Medicaid bills could grow to $21.0 billion by FY2017 without increased appropriations or significant program cuts. The following blog posts explain this projection and provide more detail on Medicaid funding in Illinois:
- Five-Year Medicaid Projections Show Growth in Unpaid Bills
- The Section 25 Exception: How Illinois Defers Medicaid Bills
- Medicaid 101: How $337.5 Million Turns Into $675 Million
In the final days of the 2012 regular legislative session, the General Assembly passed a groundbreaking package of bills designed to close a $2.7 billion gap in the State’s Medicaid program and prevent the collapse of vital healthcare services for Illinois’ most vulnerable populations. IIFS continues to monitor the implementation and projected savings for these painful but necessary changes.
- General Assembly Approves Legislation to Close Medicaid Funding Gap
- Update on State’s Backlog of Unpaid Medicaid Bills
Broader Perspectives on the FY2013 Budget Negotiations
The IIFS blog examined Illinois fiscal developments as seen by the rest of the country. In August Standard & Poor’s reduced the State’s bond rating for the third time since March 2009. The agency cited the State’s weak pension funding levels and the General Assembly’s failure to enact pension reform.
While Illinois is far behind in fiscal performance and credit rating, the State does share many of the same challenges facing other governments. Several blog posts this year analyzed reform proposals being considered by other states facing unsustainable pension costs.
The Institute’s analysis also elevates the Civic Federation’s work with local governments in the Chicago area by providing a broader perspective on the financial challenges facing the City of Chicago, Cook County, Chicago Public Schools and other municipalities that rely on the State of Illinois. In particular, several blog posts this year discussed a proposal by Cook County’s financially challenged public health system to get a head start on federal funding for low-income adults who will be eligible for Medicaid under federal healthcare reform beginning in 2014.
- State Seeks Early Medicaid Expansion for Troubled Cook County Health System
- State to Seek General Assembly Approval for Medicaid Expansion
Continue to follow the IIFS and Civic Federation blogs in 2013 for ongoing analysis of FY2014 budget negotiations and fiscal developments across Illinois. You can subscribe to both blogs via RSS feeds compatible with Microsoft Outlook, Gmail and most web browsers.