Fiscal Issues

November 13, 2018 Meeting Documents

NWSOFA – Nov – Federal Fiscal Econ – v1

September 13, 2018 Meeting Documents

2018 – 09 – September meeting – State issues NWSOFA Fiscal & Economic Issues

NWSOFA – Sept – Federal Fiscal Econ – v7

Our special guest this month is John Perryman, M.D. from the Illinois Physicians for a National Health Program ( He will be speaking on the economic issues of single payer. Given the recent headlines on the estimated costs and potential savings of Medicare for All, we are excited to have this knowledgeable guest speaker.


Facebook Live Link:

Part 1:

Part 2:

August 14, 2018 Meeting Documents

Below are the files for tonight:

Part 1 – 2018 – 08 – August meeting – State issues NWSOFA Fiscal & Economic Issues

Part 2 – 2018 – 08 – August meeting – State issues NWSOFA Fiscal & Economic Issues

NWSOFA – Trade Slides – August 2018 – v6

NWSOFA – August – Federal Fiscal Econ – v9

July 9, 2018 Meeting Documents
Below is the current draft of our presentation for the federal update part of tomorrow’s presentation, as well as the start of a presentation on trade issues.  The meeting will primarily focus on Representative Mussman’s discussion of state budget issues.

Come join us tomorrow/Monday, July 9th for

Monday JULY 9 @ 7:00 pm – 9:30 pm
Schaumburg Library
130 S. Roselle Road 
We are very excited to hear from Representative Mussman once again!  Last year in June Illinois State Representative Michelle Mussman talked about ongoing budget negotiations after we missed the May 31st deadline for passing the budget.
This month at 7 p.m. on July 9th we are bringing back Representative Mussman to again brief us on State budget issues. But this year she gets to talk about the successful passage of the fiscal year 2019 (July 2018-June 2019) budget by May 31st.
Expected topics of discussion include:
1. What got included in this year’s state budget and what got left out or cut.
2. What are the ongoing/future budget challenges and how might they be solved.
There will be time for questions for Representative Mussman.

NWOFA – July Fiscal Econ Mtg PowerPoint

2018 – 07 – July meeting – State issues NWSOFA Fiscal & Economic Issues

Trade Slides 2018


June 12, 2018 Meeting Documents


NWSOFA Fiscal and Economic Issues Group will meet tonight at the Arlington Heights library at 7 pm.  We will give a brief update on what is in the new Illinois budget, as well as discuss national economic issues.   Preparation for retirement will be tonight’s special topic.  A copy of tonight’s PowerPoint presentation is attached for your review.
Bring your topics as well.  Although we don’t have anything prepared, I suspect there will be some discussions of the impact of last week’s G-7 summit and pending tariffs on trade.  Trade issues will probably be a special topic at a future meeting.  I look forward to some good discussions tonight.
Other ways to learn more about Illinois’ FY 2019 budget:
State Sen. Laura Murphy will host a pair of town hall meetings this month to update constituents on the state’s budget process and recent legislation.
The Democrat from Des Plaines will be joined at the events by Ralph Martire,
executive director of the Center for Tax and Budget Accountability, to discuss
possible solutions to the pension crisis. Following the presentations, guests will
have an opportunity to ask questions.
6:30-8:30 p.m. Wednesday, June 13, at Prairie Lakes Community Center Theater,
515 E. Thacker St., Des Plaines.
6:30-8:30 p.m. Tuesday, June 19, at the Schaumburg Township District Library’s
second floor adult classroom, 130 S. Roselle Road, Schaumburg.


Statement from Senator Heather Steans re the FY 2019 budget that was passed:

Over in the Senate Wednesday night, lawmakers approved a balanced, bipartisan budget which the House supported today. This budget is the result of negotiations between all four caucuses and represents real compromise. It is truly balanced, spending within our means while implementing some cuts and pension reform to keep our state on a path toward fiscal stability.

Above all, the budget is an investment in our communities. From funding for cities and towns to social services to providing educational opportunities, I believe Illinoisans young and old will fare better under this budget than they have in years.

The budget provides additional funding for social service providers compared to what the governor proposed, including sexual assault services, community mental health and addiction services. It also raises wages for direct support personnel who care for developmentally disabled individuals and increases funding for Child Care Assistance Program providers.

It invests in public K-12 schools by increasing education funding under the evidence-based model. It also increases higher education funding and provides additional opportunities for students to go to college in Illinois through the Monetary Award Program and a new matching grant, AIM HIGH, for universities to award merit-based scholarships to Illinois students.

As for pension reform, the budget package lays out a voluntary cost-of-living adjustment buyout for inactive vested Tier 1 pensioners that would allow individuals to invest on their own while saving the state nearly $400 million. It also reduces salary spiking, whereby some school districts increase a teacher’s salary significantly in their last few years of teaching to garner them a greater pension, which the state funds. Currently, the state limits school districts to offering raises of no more than 6 percent. If they offer a higher raise, the district has to pick up the pension difference. Under the budget proposal, raises will be capped at 3 percent to alleviate the burden on state taxpayers.

This budget provides the foundation for us to move forward to address the backlog and our pension liability. We still have more work to do, but for a moment, let’s celebrate these victories


A more detailed analysis from Voices for Illinois Children can be found at 


Teachers’ Extra Hours Are Different


May 15, 2018 Meeting Documents

The Greater Palatine Area Democrats (see attached letter) have asked our assistance in developing questions for an upcoming Democratic Candidate Forum featuring:
 We will spend a few minutes on this tomorrow.  Even if you are not attending tomorrow, please take a couple of minutes and forward your thoughts on topics or specific questions for the candidates to me and to  Alma Kubota Greater Palatine Area Democrats Steering Committee, Events  Email:   Especially if you live in any of these legislative districts.  Just “Reply All” to this email with your thoughts.
A couple of my thoughts on these candidates:
    • Jobs and economic growth – Neither Ms. Gillespie nor Ms. Trevor have issue sections on Jobs or Economic Growth.  Mr. Casten lists it as an issue with a few paragraphs, but does not have a more detailed plan like he does for other issues.  I think all three candidates should provide more answers about how they would work to grow jobs in their districts, both at the forum as well as in their websites.  As the candidates move from Democratic primaries to general elections they may want to raise the profile of this and some other issues to appeal to moderate voters.
    • Deficits and debt reduction – Neither Ms. Trevor nor Mr. Casten mention  this in their issues.
      • Especially disappointing regarding Mr. Casten as Representative Roskam was a principal author of the 2017 tax bill which is adding well over $1 trillion to deficits and the debt.  Mr. Casten may want to consider something like David’s graphic showing who does and does not benefit from the tax bill, even before considering the additional debt per person being generated by this tax bill.
      • Ms. Gillespie has a good section on “Solving Illinois’ Fiscal Crises” by finding additional revenue at the state level through a combination of graduated income taxes, sales taxes on services, and other new sources like legalized marijuana.  I suspect today’s Supreme Court decision allowing legalized sports betting in Illinois cold put this potential revenue source on the table.  http://annforillinois. org/issues/#1515618592453- 814e5381-8149
        • What are Ms. Trevor’s thoughts on Ms. Gillespie’s proposals or other solutions for the Illinois’ fiscal issues?
      • How do the state candidates feel about a constitutional amendment to allow changes to pensions?  At the very least an elimination of the minimum 3% COLA going forward?
    • Protecting the social safety net / economic ladder, especially for low income working families – None of the candidates address these issues on their issue pages.  Many low income working families rely on government assistance, at least temporarily, to make ends meet.  These include preschool and before and after school programs that allow parents to work full-time, other child care assistance, food assistance, housing assistance, transportation assistance, and healthcare.  Republicans are currently attacking many of these programs.  I would like candidates who defend these valuable programs, as well as look for ways to improve these programs.  How do the candidates plan to address these issues?

April Meeting Notes

  • Fiscal Live Stream 4-17-18 – 3 – Watch third with PowerPoint Open
  • Fiscal Live Stream 4-17-18 – 2 – Watch second with PowerPoint Open
  • Fiscal Live Stream 4-17-18 – 1 – Watch first beginning at minute 13 with PowerPoint Open
  • NWSOFA – Fiscal and Economic Issue Team Meeting April PowerPoint Slides- v15a
  • 2018 – 03 – March Fiscal Meeting – State issues NWSOFA Fiscal & Economic Issues
  • 2018.01.13 Federal Tax Law_Schakowsky Event
  • U.S. lawmakers are redistributing income from the poor to the rich, according to massive new study
  • GOP Senator Implies Those Who Aren’t Millionaires Waste Money On ‘Booze, Women’ – HuffPost
  • FACT CHECK: How Does Paul Ryan’s Case For Tax Cuts Match The Facts? – NPR
  • More than 400 millionaires tell Congress: Don’t cut our taxes – Chicago Tribune
  • The Future of Trade from a Foreign Policy Perspective – Institute of Politics
  • Budget Update: Bipartisan efforts to end the budget stalemate

    Dear Neighbor,

    The Senate is working on a bipartisan package of bills to end the budget stalemate. Illinois is in its 19th month without a State budget – longer than any state in history has been without a budget. This impasse is devastating children, seniors, single parents, universities, school districts and health and human service providers across the state.

    Below is an overview of the 12 bills that comprise our package. While anyone may quibble with individual pieces of this plan, it is a comprehensive effort to provide a balanced budget – with additional revenues and spending cuts – and improve our economic climate. In the words of Senate President Cullerton, “I think we’ve made it clear that the Senate is not afraid to take tough votes to solve problems and move this state forward.”

    1. Two year property tax freeze (SB 13). Establishes a two year property tax freeze for home rule and non-home rule districts with exemptions for bond payments and pension contributions. It also provides mandate relief for school districts, including greater flexibility in scheduling physical education, using commercial driving schools for driver education, and contracting with third parties for non-instructional services.

    2. Local government consolidation (SB 3). Extends local government consolidation procedures that exist in DuPage, Lake and McHenry counties to the entire state, allowing counties to dissolve local governments by referendum. It allows townships to merge with adjacent townships or if the township is coterminous with a municipality, to be dissolved. It further allows a township to absorb a township road district.

    3. Pension reform (SB 11). Addresses the constitutionality of changing pensions by using a contractual approach. Employees are offered 3 items in exchange for eliminating the compounded 3% annual increase in their pensions: 1) a payment equal to 10% of the previous pension contributions; 2) a 10% reduction in future pension contributions; and, 3) a promise that all future salary increases will be pensionable. The bill also closes the General Assembly pension to future members, establishes an optional defined contribution plan, and makes changes recommended by the Governor in his last budget proposal.

    4. Workers’ compensation reform (SB 12). Makes a number of changes to workers compensation, including: 1) cuts reimbursement for cost outliers on the medical fee schedule; 2) requires the Workers’ Compensation Commission to establish a prescription drug formulary; 3) creates a legal standard for traveling employees; 4) freezes the maximum wage benefit level for four years; 5) allows crediting for repeat injuries to the same part of the spine; and, 6) adopts other cost savings and efficiency measures.
    5. Minimum wage increase (SB 2). Increases the minimum wage from $8.25 to $9 starting 7/1/17 and by 50 cents each year thereafter until it reaches $11.
    6. Procurement reform (SB 8). Improves the efficiency of the procurement process to save money while maintaining transparency.
    7. Borrowing to pay off the backlog of bills (SB 4). Allows the state to bond $7 billion to pay down bills (currently the state has over $11 billion in unpaid bills), paying off bonds over seven years.
    8. FY17 supplemental appropriations (SB 6). Funds higher education, human services, group health insurance, and state operations for the remainder of this fiscal year.

    9. Revenue bill (SB 9). Makes progressive changes to revenue as follows: 1) increases the personal income tax rate from 3.75% to 4.95% as of 1/1/17 and increases the corporate income tax rate from 5.25% to 7% as of 1/1/17; 2) implements a new tax of $0.01 per ounce on soda; 3) eliminates three corporate tax “loopholes”; 4) increases the Earned Income Tax Credit by 50%; 5) eliminates the corporate franchise tax; 6) increases the cap on education expense credit to $750 and creates a tax credit up to $250 for teachers who use personal funds to purchase classroom supplies; 7) reinstates the research and development tax credit and extends the sunset for the film tax credit; and, 8) reduces LLC filing fees.

    10. Gaming bill (SB 7). Similar to a gaming bill passed by the General Assembly but vetoed by Governor Quinn, creates six new casino/riverboat licenses (one in Chicago with full oversight by the Illinois Gaming Board), allows existing racetracks to obtain gaming positions, and increases the number of gaming positions at existing riverboats. The bill will generate almost $1 billion in up-front revenue and increase annual tax collections.

    11. Pension parity for Chicago Public Schools (SB 5). Requires the state to pay the employer normal cost for Chicago teachers beginning FY17 to achieve parity in how Illinois pays for local teacher pensions.

    12. Term limits for Senate Leaders (Senate Resolution 3). As its first act of business after electing Senate President Cullerton and Minority Leader Radogno last Wednesday, the Senate passed a new rule to limit leaders to five 2 year terms (10 years of service). We intend to vote on a constitutional amendment later to apply to both chambers.

    These bills all include language that only allows them to become law when all of the bills are enacted into law; no single item can alone become law. I intend to vote for the most progressive package we can put on Governor Rauner’s desk at the earliest time possible to end the shameful destruction of our health, human services and educational systems here in Illinois. I welcome any feedback and suggestions.

    Heather Steans
    Senator Heather Steans
    7th District – Illinois


  • Committee for a Responsible Federal Budget

    January 17, 2017

    Read the paper.

    Policymakers are expected to soon consider legislation to repeal and possibly replace large parts of the Affordable Care Act (“ACA” or “Obamacare”). Any significant changes to the ACA are likely to have substantial impacts on health care costs, insurance coverage, premiums, the distribution of benefits, economic growth, and the federal budget.
    Because the ACA included a mix of spending increases, spending reductions, and tax hikes, the magnitude and direction of the budgetary impact of “repeal and replace” legislation is highly dependent on yet-undetermined details (see our estimates of some illustrative scenarios here).
    With the national debt at post-WWII era record-high levels and growing unsustainably, it is important that changes to the ACA be fiscally responsible. We recommend that any repeal and replace legislation – whether enacted all at once or in pieces – follow these guiding principles:
    1. Retain or replace, and build upon, the ACA’s cost-control measures.
    2. Reduce, rather than increase, the debt.
    3. Maintain or improve Medicare solvency.
    It appears some policymakers would prefer to enact ACA repeal and replacement in pieces, with the first part (“repeal and delay”) setting a future date for the ACA’s coverage provisions to expire. This approach is not optimal. But if it is pursued, repeal and delay should not only abide by the principles above but also the following additional principles:
    4. Continue the ACA’s offsets as long as coverage provisions are retained.
    5. Generate sufficient repeal savings to finance any future replacement.
    6. Enact any replacement in a timely and fiscally responsible manner.

    Legislation that fails to meet these goals would likely lead to higher debt, a less secure Medicare program, and ultimately slower economic growth.

    1) Retain or replace, and build upon, the ACA’s cost-control measures
    Combined federal health care spending is the largest part of the federal budget. It is also the fastest growing part aside from interest. Repeal and replace legislation should therefore focus on controlling health care cost growth; at minimum, it should retain the parts of the ACA designed to do just that.
    As recently as 2000, federal health spending totaled 3.1 percent of Gross Domestic Product (GDP). Today, it costs 5.5 percent of GDP. And based on Congressional Budget Office (CBO) projections, we estimate it will grow to 6.7 percent of GDP within a decade and 9 percent within thirty years. Though this growth is in part due to the population aging, it is also due to per-capita heath care costs continuing to grow faster than inflation or the economy, which impacts not only the federal government but also state and local governments, businesses, and households.
    Health care cost control is hugely important. Over the next three decades, CBO projects per-capita health care spending to grow about 1 percentage point faster than the economy each year, on average. If policymakers successfully slowed its growth to the pace of the economy, debt in three decades would rise to slightly over 100 percent of GDP, rather than roughly 140 percent. On the other hand, if health costs grew 2 percentage points faster than GDP per capita, debt would rise to over 190 percent of GDP.
    Although many parts of the ACA likely accelerated health care cost growth, many other parts – particularly those addressing Medicare – were designed to slow cost growth.
    In particular, the ACA included:
    • “Productivity adjustments,” which limit the growth of Medicare provider payments in order to encourage more cost-effective delivery of care.
    • Payment reforms and experiments designed to reduce hospital readmissions, increase the use of comparative effectiveness research, encourage care coordination, and begin to replace fee-for-service with new models such as bundled payments and Accountable Care Organizations (ACOs).
    • New government entities charged with developing and testing new payment reforms (the Center for Medicare & Medicaid Innovation) and limiting Medicare cost growth (the Independent Payment Advisory Board, or IPAB).
    • Demonstration projects to test mechanisms for better coordination of Medicare and Medicaid enrollees who are eligible for both programs, including managed care for long-term services and supports, multi-payer arrangements, and behavioral health integration.
    • A “Cadillac tax” on high-cost insurance plans designed to slow the growth of health spending resulting from employer-provided health insurance.
    Many of these provisions are still in their infancy, though some are already proving effective in helping to stem health care cost growth. For the most part, they should be retained and built upon under any repeal and replace plan. For example, policymakers could adopt recommendations we made in 2015 to significantly expand ACOs and bundled payments.
    Policymakers may wish to repeal some of the ACA’s unpopular cost-control measures. If repealed, these provisions should be replaced with others that are at least as effective. For example, if the Cadillac tax is repealed it could be replaced with a limit on the tax exclusion for employer-sponsored health insurance. If IPAB were repealed, it could be replaced with a “Medicare trigger” that limits Medicare cost growth by encouraging congressional action and making automatic changes (for example, payment freezes) if action fails.
    Repeal and replace proposals should be viewed as an opportunity to enact further cost controls on top of those in the ACA. These could include, for example, modernizing Medicare cost-sharing, limiting Medigap plans, reforming medical malpractice rules, reducing costs through more market competition, or encouraging the use of low-cost drugs.
    While the debate over repeal and replacement is likely to revolve largely around coverage, it is important that policymakers remember cost control is the key to sustaining any reforms over the long run.
    2) Reduce, rather than increase, the debt
    Repeal and replace legislation – whether enacted in a single bill or across multiple bills – should aim to reduce the near- and long-term projected debt. Certainly, health reform should not be adding to the national debt, which is already higher as a share of GDP than at any time other than just after World War II.
    Repealing the ACA in its entirety would cost $350 billion ($150 billion on a dynamic basis) over ten years, but even retaining all of the ACA’s Medicare savings would only generate $750 billion ($950 billion, dynamic) of savings. $750 billion may prove insufficient to pay for replacement legislation, considering that the ACA’s coverage provisions cost $1.55 trillion on net ($1.75 trillion, dynamic) and close to $2 trillion when removing savings from the individual and employer mandates. See our full paper “The Cost of Full Repeal of the Affordable Care Act” for more discussion of these scenarios.
    Ensuring repeal and replace legislation reduces the deficit will likely require policymakers to retain most health and revenue offsets from the ACA, or else replace them with alternative savings measures, while ensuring any replacement is cost-effective and affordable.
    Policymakers should especially focus on ensuring legislation reduces the long-term debt over the next few decades, as the baby boom generation retires. By our estimates, repealing the coverage and revenue provisions would save roughly $1.5 trillion over two decades, while repealing only the coverage provisions would save about $3.5 trillion. And repealing the entire ACA would cost nearly $4 trillion over two decades.
    Over the long term, savings from repeal should be larger than the cost of replacement.
    3) Maintain or improve Medicare solvency
    While much of the focus around the ACA is on the exchange subsidies and Medicaid expansion, the law also made significant changes to extend the solvency of Medicare Part A’s Hospital Insurance (HI) trust fund. Though these initial improvements were made in part by “double counting” some savings, policymakers should nonetheless avoid backtracking and thus worsening the state of the HI trust fund.
    The ACA strengthened the HI trust fund in two ways. First, it increased the revenue going into the trust fund through a 0.9 percent HI payroll surtax on high earners. At the same time, it reduced the growth of Medicare spending by reducing reimbursements to Medicare Advantage plans, slowing the growth of provider payments, and enacting other reforms.
    By our estimates, full repeal of the ACA – including the Medicare cuts – would advance the HI insolvency date from 2026 to 2021 and triple its 10-year shortfall. Repealing the coverage and revenue provisions while retaining the Medicare cuts would advance the HI insolvency from 2026 to 2024 and increase the 10-year shortfall by about half.
    Policymakers should preserve and build upon the Medicare solvency improvements. This could be accomplished most easily by maintaining all of the Medicare reductions and the HI surtax in the ACA. But even if policymakers decide to repeal the ACA in full, these provisions should be replaced with alternative improvements.
    Repeal and replace legislation should also maintain or improve the financial sustainability of Medicare Part B and Part D, though those programs do not rely on trust fund financing in the same way Medicare Part A does.
    Repeal and delay must meet additional standards
    While many health experts believe ACA repeal and replacement should be enacted concurrently, some policymakers argue they should be enacted in parts. The “repeal and delay” strategy would repeal large parts of the ACA at some point in the future – perhaps after two or four years – with the intention of enacting an ACA replacement before that time frame passes.
    Separating “repeal” from “replace” legislation introduces a number of challenges, many beyond the scope of this paper. From a fiscal perspective, timing issues might be used to obscure the costs or savings; repeal and delay legislation might make it more difficult to pass fiscally responsible replacement legislation.
    To ensure health reform is fiscally responsible, repeal and delay would need to conform with the three principles above as well as the additional principles below:
    4. Continue the ACA’s offsets as long as coverage provisions are retained
    The previous version of repeal and delay, vetoed by President Obama in January 2016, would have repealed the ACA’s mandates and revenue provisions immediately while delaying repeal of its insurance subsidies and Medicaid expansion for two years. Such an approach would add to near-term deficits and would likely reduce long-term deficits in name only.
    We estimate under an approach like this that a two-year delay would cost roughly $50 billion over two years, while a four-year delay would cost $135 billion over those four years. In this case, the $450 to $600 billion of gross savings in subsequent years would not only have to pay for a replacement, but also cover the cost of repeal in the early years. Adding to near-term deficits for this purpose would be unjustified and unwise. (See “Repeal and Delay Shouldn’t Increase Near-Term Deficits“ for more detail.)
    Delayed repeal should mean delay for all parts of repeal, not just the coverage provisions. Retaining the ACA’s giveaways while repealing its offsets – even on a temporary basis – represents irresponsible budgeting that could prove costly in the future. So long as policymakers continue to offer costly coverage provisions, they must keep all the measures paying for that coverage. Better yet, policymakers should retain all of the offsetting provisions until a replacement is put in place.
    5. Generate sufficient repeal savings to finance any future replacement
    If policymakers retain the ACA’s Medicare savings, repeal and delay legislation by itself is likely to reduce budget deficits. By our estimates, repealing all mandate and revenue provisions immediately and coverage provisions after two years would save $550 billion over a decade; repealing coverage provisions after four years would save $300 billion.
    However, if replacement legislation is expected to follow repeal, simply reducing the deficit in repeal is not enough. Instead, repeal legislation needs to reduce the deficit by enough to fully finance the net cost of any future replacement legislation. Since consensus replacement legislation has not yet been written, it is impossible to know the cost of any new coverage provisions nor the savings from new offsets and thus what is needed to pay for the difference. Given this reality, it is best to follow the guideline that “more is better” and generate as much savings as possible in the repeal and delay legislation. If a replacement bill ends up being less expensive than the savings from repeal, leftover funds could be dedicated to deficit reduction.
    6. Enact any replacement in a timely and fiscally responsible manner
    The longer policymakers wait between repealing the ACA and replacing it, the more disruptions and uncertainties will be created for individuals seeking coverage, companies, and providers – not to mention the additional cost and fiscal implications. Maintaining coverage with no individual mandate and a set of exchanges slated to disappear will likely require spending more on insurance companies so they continue to offer coverage and more on individuals who will be facing higher premiums and thus larger subsidies. Yet replacing the ACA with an even costlier plan would worsen an already unsustainable fiscal situation.
    Upon repeal, policymakers should act quickly to develop, agree to, and pass any replacement legislation in a way that – in combination with the repeal legislation – reduces rather than adds to the overall debt now and in the future.
    The new Congress and president have made clear that Obamacare repeal and replacement is a top priority. Any legislation to significantly modify or replace the ACA will have numerous implications, including many fiscal in nature.
    Certainly, repeal and replacement legislation should be designed and evaluated based on its impact on coverage, premiums, and economic growth. But it is especially important that policymakers focus on the impact of repeal and replacement on health care cost growth and the overall federal budget.
    As we argued around the passage of the ACA eight years ago, health reform is an iterative process that requires time and vigilance to ensure that long-term goals are being met.
    The national debt continues to rise unsustainably, and that is in part a direct result of the unsustainable nature of U.S. health care costs. If policymakers want to repeal the ACA, they need to do so in a way that would improve the debt’s trajectory, shore up Medicare, and spur further economic growth.
    Committee for a Responsible Federal Budget
    1900 M Street, NW
    Suite 850
    Washington DC 20036 United States
  • 2016 – 08 – August meeting – NWSOFA Fiscal & Economic Issues
  • Illinois Stop-Gap Budget Explained

    Senator Steans

    July 5, 2016
    Dear Friends,

    Last week the House and Senate passed and the Governor signed a partial budget compromise that will allow schools to open on time, relieve uncertainty about their ability to stay open this year and stave off disaster for our remaining social services providers and the vulnerable populations they serve.

    It is – unequivocally – progress. But it is also a step that should have been taken more than a year ago and one that will not fully or immediately revive the many organizations that have already cut staff and/or closed their doors.

    The deal was comprised of several parts:

    Senate Bill 2047:

    • Increases PreK-12 education funding by $331 million, fully funding the current per-pupil Foundation Level for the entire 2016-17 school year and ending the practice of prorating General State Aid to districts in order to account for insufficient appropriations

    • Includes a $250 million “equity grant” that will be distributed to school districts on the basis of need
    • Funds other education programs, including mandated categoricals, agriculture education, bilingual education, student assessments and career and technical programs
    • Appropriates more than $720 million for state agencies’ operational expenses; this money will come from General Revenue Funds, the Budget Stabilization (“rainy day”) fund and the Commitment to Human Services Fund
    • Will allow the state to pay for many of the costs (such as food, medical care and utilities) incurred at state-run facilities such as prisons
    • Sends $655 million to the state’s nine public universities, totaling 90 percent of FY 15 funding for those universities with the smallest reserves and most significant fiscal challenges (Chicago State, Eastern University and Western University) and 82 percent of FY 15 funding for the other six
    • Appropriates $114 million for community colleges, $20 million for emergency expenses in higher education, $50 million for adult education programs and money for various grant programs for veterans, aspiring teachers and others
    • Covers remaining FY 16 MAP grant claims ($151 million), making whole the universities that continued to honor these awards last school year
    • Allocates more than $670 million from the Commitment to Human Services fund for services not covered by a consent decree; this funding can be used to cover both FY 16 and FY 17 expenses

    • These services include the Community Care Program, community mental health, addiction treatment, the Breast and Cervical Cancer Program, HIV/AIDS services, youth programs, homelessness prevention and services, burials for the indigent, immigration and refugee services, Adult and Juvenile Redeploy Illinois crime diversion programs and more
    • Funding for these programs is equal to 65 percent of an 18-month appropriation (FY 16 plus the first six months of FY 17)
    • Medicaid reimbursements and payments for services rendered under a consent decree will continue to be paid at FY 16 levels
    • Includes the full IDOT capital program for roads and transit
    • Includes money to restart some mothballed infrastructure projects for schools, water systems and park districts
    • Appropriates federal funds and money from “other state funds” for FY 17 (and FY 16 if not already appropriated)

    Senate Bill 318:

    Allows the Chicago Public Schools Board of Education to levy up to $250 million in property taxes, which will be used to make payments into the Chicago Teachers’ Pension Fund, helping to stabilize the district’s finances and ensure schools remain open

    Senate Bill 2822:

    Establishes one year of pension parity between CPS (which currently receives almost no money from the state toward its teacher pensions) and other Illinois school districts, which receive the full “employer contribution” toward teacher pensions from the State. Pursuant to a deal reached with the governor, this measure has passed both chambers but is being held in the General Assembly rather than sent to the governor’s desk pending debate and passage of a separate pension reform bill at a later date. This will likely be addressed in January. If the pension parity bill is released to the governor and signed, the state would cover $205 million in normal teacher pension costs (i.e., not including payments incurred because of the system’s unfunded liability) for CPS for FY 17 only.

    Senate Bill 1810:

    A Budget Implementation Bill (BIMP) that forgives interfund borrowing in order to fund part of the state operations portion of SB 2047 and undertakes other actions needed to put the partial budget into effect.

    I don’t intend to let the good news of a short-term budget compromise become an excuse for complacency. Instead, this legislation is a model for what can be accomplished when partisan barricades are abandoned and trust is built on a foundation of shared priorities. The rank-and-file working group process eventually bore fruit through a hard-won trust that launched a productive conversation with and among leadership. However, the budget group in which I participated also produced a complete budget; I am dismayed that we were not at the point where all leaders were willing to take that step.

    I will continue to fight for a complete, responsible budget and the revenue and reforms needed to sustain it. While pressure can incite action, as it finally did last week, it also takes a tremendous toll on individuals and families who are in no way to blame for the state’s fiscal crisis. That’s the wrong way to govern, but we’ve seen it happen time and again in the past year and a half, and it will continue unless we not only budget appropriately for the future but repair the damage inflicted during the impasse. I will use the breathing room provided by this partial budget as an opportunity to work toward that necessary goal.

    As always, please feel free to contact my office at (773) 769-1717 with any questions or concerns you may have about this budget or any issue in state government. A good opportunity to chat in person is a coffee I will host at the Swedish American Museum (5211 N. Clark) this Sunday, July 10 from 10-11 a.m. You can also visit my website for a list of upcoming events in the district; I’ll be in touch with further announcements as they arise.


    Heather Steans
    Senator Heather Steans
    7th District – Illinois

     District Office

    5533 N. Broadway • Chicago, IL 60640

    773-769-1717 (Phone) • 773-769-6901 (Fax)

    Springfield Office

    122 Capitol Building • Springfield, IL 62706

    217-782-8492 (Phone)

  • President Obama: The TPP would let America, not China, lead the way on global trade – Washington Post Opinion 5-2-16
  • Civic Federation rips Rauner budget, declares Illinois finances at ‘new low’ – Crain’s Chicago Business 5-3-16
  • Gov. Rauner’s interim grade: An epic F – Chicago Tribune Opinion Page
  • No – Raising the Minimum Wage Doesn’t Hurt Local Businesses – Washington Post
  • The Trans-Pacific Partnership Text – The White House
  • Now it’s going to be open to the public and to congress for up or down vote.
  • Presidential Innovation Fellow Program
  • Budget Petition Worksheet – JULY 26, 2015
  • July Tentative Fiscal Issues and Economic Team Meeting Agenda
  • Chicago and Cook County Sales Tax Increase
  • On Trade, Here’s What the President Signed into Law: | The White House
  • Map Where U.S. Businesses Are Being Created the Fastest – June 18, 2015 – Bloomberg
  • Illinois Budget Action Needed Now!
  • Trillion Dollar Fraudsters – Paul Krugman
  • Obama: Middle class plans work, ‘trickle-down’ doesn’t
  • What’s Wrong With Georgia? – from The Atlantic – January, 2015
  • The Cost of Inversions
  • Free College For All – Letter to the Editor by Kent Kirkwood
  • Agenda May2014 Fiscal and Economic Issues Meeting-4
  • NWSOFA Sequester Event 3-26-13 Invitation & Agenda.pdf – 5.20MB
  • Sequestration Event PDF Slides from the 3-26-13 meeting – redirects to