Illinois’ public pension costs will eat up nearly a fifth of state spending in the coming fiscal year, with education largely absorbing the impact.
“This is the most difficult budget I have ever submitted to you,” Gov. Pat Quinn told lawmakers on March 6 during his annual budget address at the Illinois Statehouse. Quinn’s proposed $31.2 billion General Funds budget for Fiscal Year 2014, which starts July 1, aims to pay down old bills and avoid deferring new bills, but Quinn told lawmakers that cuts must occur because of the state’s growing pension obligations.
“Inaction on comprehensive pension reform has left our state with less revenue for our most important priorities,” Quinn said. “Without pension reform, within two years, Illinois will be spending more on public pensions than on education.”
The state’s pension payment is $6.1 billion in the upcoming fiscal year, an increase of $929 million over the current fiscal year. That $6.1 billion is nearly 20 percent of the governor’s proposed $31.2 billion General Funds budget, which is the part of the state’s budget that is considered mostly discretionary. The total state budget proposed by Quinn is $62.4 billion, which includes federal funds and special state funds that are already designated for specific purposes.
The governor’s budget proposal isn’t law, however, and the two chambers of the Illinois General Assembly will craft their own state budget plans which must be reconciled by the end of the current legislative session, which ends May 31.
Education makes up about 27.3 percent of the state’s overall budget, making it the largest expenditure and an easy target for cuts. Quinn’s proposal would cut $233 million from the Illinois State Board of Education, which oversees elementary and secondary education. That’s a 2.4 percent decrease from last year, leaving a total of $9.3 billion compared with the current year’s $9.5 billion. That money funds the 3,881 public schools in Illinois, including additional costs like special education, transportation costs, and free or reduced-price breakfast and lunch.
Higher education would be hit hard, as well, with the nine state university systems collectively losing $60.9 million in state funding for the next fiscal year. The three-campus University of Illinois system, which includes the University of Illinois Springfield, would take the largest cut of $32.7 million. However, the U of I receives the most money from the state: $662 million for the current fiscal year, which is more than triple the $204 million that Southern Illinois University, with two campuses, received from the state this fiscal year. Each public university’s state funding would decrease about 5 percent below the current year’s funding under Quinn’s proposed budget.
Despite the cuts to education, Quinn’s budget mostly protects state funding for social services like Medicaid and mental health care. In fact, funding for most state agencies would remain steady or even increase next fiscal year, with the Department of Aging, the Department of Human Services and the Department of Healthcare and Family Services seeing some of the largest increases. Those agencies provide services like public aid and care for senior citizens, children and disabled people.
The governor expects to pay off about $713 million in old bills to vendors who previously provided goods or services to the state. That includes numerous social service providers which have had to cut staff and reduce services because the state hasn’t reimbursed them for previous years. Quinn’s budget proposal says the current $7.5 billion backlog of bills could be reduced to $6.8 billion during the coming fiscal year.
To pay down old bills, Quinn proposed closing corporate tax “loopholes” that he claimed would bring in $445 million. The governor also signaled support for an expansion of gaming, which could bring in additional money. Quinn recently vetoed a gaming expansion bill because it would have put slot machines at the Illinois State Fairgrounds and because it didn’t contain provisions like a ban on campaign contributions from casino owners.
Quinn stressed to lawmakers that he is ready to sign a bill containing pension reforms.
“Today, our budget is being squeezed more than ever, and that will continue until we put a stop to it,” Quinn said. “The most important thing we can do to repair Illinois’ finances right now is to reform our public pension systems.”
Contact Patrick Yeagle at firstname.lastname@example.org.