State of Illinois Budget

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This is a presentation done by Dr. Richard Voltz, IASA Associate Director. It is an analysis of the finances in the State of Illinois as of March 12, 2010 based on the budget proposal presented by Illinois Governor Patrick Quinn.

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  • State of Illinois Budget

    1. 1. Hot Topics Dr. Richard Voltz, IASA March 12, 2010
    2. 2. Budget, Budget, Budget
    3. 3. State of the State • Illinois is estimated to be $11B to $13B in debt • Federal Funds via ARRA replaced $922M of state funds per year for the last two years • ISBE presented a flat budget for FY 2011 • In order to fund this flat budget Illinois needs to generate $1B in additional revenue • Current political climate may not allow for additional revenue generation
    4. 4. State Revenues Down Income tax Sales tax CPPRT
    5. 5. Expenses Keep Climbing Pension costs, for instance, will jump by about $1.7M
    6. 6. Governor Quinn’s Budget Proposal • $2B across the board cut in state spending • $1.3B from K-16 schools, an 17% decrease • GSA Foundation Level estimate $5,669 • Cannot fall below 2006 level of $5,500 due to ARRA maintenance of effort
    7. 7. • 13,000 education jobs lost • State will still be $11B in hole • $4.7B FY 2011 operating deficit • $6.3B from FY 2010 • Proposed 1% Income Tax Surcharge • "He's not included a tax increase in this budget, and that's a conversation that has to happen," Jerry Stermer, Quinn's chief of staff, said of the governor's plan. "The General Assembly has not acted on a tax increase and have given signals they don't want to act on a tax increase."
    8. 8. • Quinn’s Five Pillars of Recovery • Cut spending • Strategically borrow • Get more federal $ to Illinois • Encourage new jobs • Increase state revenues
    9. 9. Foundation Level History !"#$%&'()*+&($,-.-/$ !,#*&&' !,#++(' !*#(*(' !,#&&&' !*#$%"' !*#,,(' !*#*&&' !*#%%"' !*#+%"' !"#()&' !*#&&&' !"#$%&' !"#*&&' !"#&&&' -&&"' -&&*' -&&,' -&&$' -&&)' -&&(' -&+&' -&++'
    10. 10. )%/"0,1%"$2(3(-$ !#$$% !'$$% !*$$% !"$$% !'$$% !"#$% !"#$%&$'(#$ !&$$% !"$$% !""#% !&($% !&#'% !$% )!&$$% "$$#% "$$(% "$$+% "$$,% "$$-% "$&$% "$&&% )!"$$% )!'#$% )!*$$% )!'$$% )!#$$% )*+#,-$.(,&$
    11. 11. Problem with Illinois
    12. 12. Quinn Budget • GSA cut by $613M • Foundation Level at $5,669 • Flat Grant ??? • GSA Hold Harmless -$16M (-100%) • MCATS cut $402M • Early Childhood -$54M (-16%) • Extraordinary Sp Ed -$66M (-20%) • Reading Improvement -$36M ( -53%) • Regular Transportation -$65M (-19%) • Textbook Loans -$40M (-100%) • Billingual Education -$20M (-30%)
    13. 13. ISBE & IASA Estimates • 12,400 employees • Remember this is based on flat budget • 6,000 teachers • 6,000 support staff • 400 administrators
    14. 14. Less state support to local governments • Governor is proposing to take away part of sales tax to cities • -$300M • Increase pressure on local taxing authorities to raise taxes
    15. 15. More State Borrowing • Quinn will propose borrowing billions of dollars to pay off long-overdue bills
    16. 16. Still Leaves $5B Hole • Raise taxes • or • Borrow more
    17. 17. Income Tax Increase • Not likely • Polls show voters are angry • Senate President Cullerton and Speaker Madigan have advised Governor to introduce a budget without a tax hike.
    18. 18. Possible Solution • “Get out of Springfield quick” • May 7, 2010 • 6 month budget possible
    19. 19. Will this happen? • Iowa • New Jersey
    20. 20. IASA Services
    21. 21. MCATS • For FY 2010 • Received two due in FY 2009 • Received one for FY 2010 • Anybody’s guess about second payment for FY 2010
    22. 22. Equalization Formula • There is a chance that both “flat rate” and “alternative” formula funding will be eliminated • Hold Harmless probably eliminated
    23. 23. Superintendent Salaries
    24. 24. HB5188 Killed in Committee 5-11
    25. 25. Why give to IPAC?
    26. 26. HB 5188 Details • Bill prohibits districts from paying any staff member more than State Superintendent of Schools (currently $190,000) • No General State Aid if salary exceeds limit • What’s next, no superintendent can make more than mayor of town?
    27. 27. Arguments Against • Sunset legislation on salaries (salaries have to be posted on the district website) • Usurps local control • Caped salary bumps for pensions several years ago • Local school boards seek the most qualified candidate, local community elects school board members
    28. 28. Pension Reform • It will happen! • Two tiered system likely • Employee contribution likely to increase
    29. 29. Illinois State Pension Legislation • Look at handout • Civic Foundation proposal • Decreases employee contribution to 7% • Implementation date is 7/1/11 for both future and current employees • Current employees based on A + B
    30. 30. Future Employees • Max credit is 35 years, no use of sick or vacation leave • Age is Social Security based • Reduced annuity for five years less than Social Security age • Pension calculated on 96 of final 120 months (8 out 10 years) • Capped at lessor of $100,000 or SS base • 2% retirement annuity instead of 2.2% • COL at the lesser of 3% or 1/2 CPI
    31. 31. Pension Reform Analysis • Pension Protection Clause of Illinois Constitution ...”shall be an enforceable contractual relationship.” “Benefits shall not diminished or impaired.” • Supreme Court - “Pension benefits earned in the past cannot be reduced, while benefits that the employee hopes to earn in the future can be reduced.”
    32. 32. Other Issues
    33. 33. Interim Superintendents • ISBE wants to stop Interim Superintendents • Each school district should have a full time superintendent
    34. 34. More Stimulus Money? • There have been rumors that President Obama is considering another stimulus round. • Payoff for Illinois is $922M • Interesting???? • You draw your own conclusions...
    35. 35. IASA Resources
    36. 36. http://thecapitolfaxblog.com/
    37. 37. Miller reaction to Quinn • Final budget will not look like the Quinn proposal • Madigan still says tax increase will not happen this year • Cullerton said his chamber will not take the lead on a tax hike • GOP says no to all tax hikes
    38. 38. January 2010 Window • If Governor Quinn is elected then... • if some Republicans cross over and vote for income tax increase... • then possible revenue generation
    39. 39. Illinois School of Advanced Leadership
    40. 40. Principal Preparation and Certification • Task Force has redesigned principal preparation programs • Internship required • Curriculum revised • Limit enrollments • Start new “Teacher Leader” program
    41. 41. Principal Evaluation • State must develop • Teacher evaluation will probably be based on Danielson if no local agreement • Must include culture (climate) • RTTTP provisions • Rubric based on ISLLC 2008 Standards
    42. 42. SyfrSpace http://www.syfrspace.org/

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