The proposed legislation would change the age of retirement, cap retirement income and most of all, deal with compounded cost of living allowances, or COLAs.
Feigenholtz said in a telephone interview the action on compounded COLAs was “the most major reform that passed out of the House. It’s the most painful vote I have ever taken but I understand it’s about shared sacrifice. The legislature cut its salaries as well. The COLA applies to the first $25,000 of pensionable income; it doesn’t kick in until five years after retirement or age 67.”
The Chicago Tribune, meanwhile, called it “the most significant action taken by lawmakers to slow the growth in taxpayer-funded pensions for retired state workers, lawmakers, university employees, and suburban and downstate teachers.”
Illinois has unfunded pension liability of $96 billion, which the House bill would cut by $20 billion, according to the Tribune. The shortfall comes from years of the General Assembly borrowing against the fund or failing to make required contributions.
Next year, the pension fund payment alone will be $7 billion, the Associated Press noted in January. “That’s more than 16 percent of the state’s general funds budget, up from 6 percent in 2008.”
Higher pension payments mean less money for other items in the state budget, according to the AP. Health care accounted for 28 percent six years ago but just 24 percent in the FY14 budget. Education received 30 percent of the general funds budget in 2008 but it’s allotted just 26 percent next year. Gov. Pat Quinn also proposed to cut education funding by $400 million.
“We do not want to ever say that people do not deserve their pension, because they do,” said Lore Baker, executive director of the Supportive Housing Providers Association. “But because the state chose not to make its pension payments every year and we now have increased pension payments going forward to make up that balance we owe, that pension payment is going to eat up any increased revenue that we have. It’s not going to be able to go back into the necessary services, supports and education for the people of Illinois.”
“Once we pay our pension obligation, we have no money left for anything else,” Feigenholtz said. “The last two years we have cut human services and Medicaid dramatically — painfully and dramatically. We have also reduced appropriations for education by $200 million.
“We’ve had to really pare down services for the most vulnerable and needy in Illinois,” said Feigenholtz, who served seven terms as chair of the House Human Service Appropriations Committee and who still sits on the committee. “It was a very, very painful exercise. We reduced the liability for Medicaid by $1.6 billion, took adult dental away from Medicaid patients, capped the number of prescriptions that we allow people. We did some difficult things and will continue to have to do this until we right the ship. The pension is eating us alive, not only on human service. Every single line item in the budget suffers.”
Feigenholtz said that many human service programs are “on life support” because the state has in effect “borrowed from our providers by not paying them on time.
“Providers of services to seniors are beginning to close their doors because of nonpayment,” she said. “When a homemaker is not taking care of grandma or grandpa, the senior could get hurt or end up in a more expensive setting.”
Specifically, Feigenholtz was referring to the Illinois Department of Aging’s Community Care program, which released a letter to 270 homecare agencies March 15 that said its money had run out through the June 30 end of the fiscal year. The state program allows 80,000 seniors to remain in their homes instead of more costly nursing homes.
According to a media alert from the Jane Addams Senior Caucus, the Illinois Association of Community Care Program Homecare Providers (IACCPHP) claims that “without emergency funding, the state’s home care system could collapse. The Association says that more than a third of its members have only 30 days to survive if the state’s funding is not restored immediately.”
In an effort to obtain emergency supplemental funding for the home care program, the Jane Addams Senior Caucus participated in a March 21 press conference with blaring alarm clocks at the James R. Thompson Center. The Community Care shortfall is $313 million: $173 million in unpaid bills from FY12 and a $140 million operating deficit from this year. The program employs 25,000 caregivers statewide.
“The state is not finding solutions to pay providers for services they delivered on the state’s behalf,” said Judith Gethner, executive director of Illinois Partners for Human Service, which has more than 700 members across the state doing contracted work in child care, foster care, senior services, veterans’ services, substance abuse and mental health, disabilities, domestic violence, sexual assault and immigration. “By not paying these providers, the state is technically borrowing from them rather than borrowing from outside sources to pay their debt.”
The state tends to pay providers of human services 60 to 90 days late, Gethner said, but some have not been paid since the July 1 start of the fiscal year. “Those offering after-school programs and senior programs seem to be the longest.”
By nature of being nonprofits, these service providers spend the money they make each year, Gethner said. Late payments force them to exist on a line of credit and then loans. However, banks are leery of loans to nonprofits, in light of the state’s late payments. This makes the providers’ survival even more precarious.
State Rep. Greg Harris (D-Chicago), who currently heads the Human Services Appropriations committee, said in a telephone interview that the committee is seeking both a supplemental appropriation for the community care program and additional funding for FY14.
“We’re also looking for ways to keep the lid on spending growth,” Harris said, such as electronic visit verification to make sure caregivers show up for work and do not fraudulently bill the state. Legislators are also pondering billing in seven-minute increments, rather than 15.
Caregiver tasks will be assigned a time parameter, for example, 45 minutes for laundry in the home and 30 meals for meal prep, Feigenholtz said. The task-based parameter is being designed right now. “Interventions need to be employed to tighten up this program and sustain it long term. Safeguards need to be put in place to retain the integrity of this valuable program.”
Feigenholtz agreed with Harris that legislators would work to come up with a supplemental appropriation for the community care program, because it is more cost-effective than premature entry into nursing homes. Community care is the fastest-growing program in Illinois because baby boomers want to grow old in their own homes.
Harris referred also to “very drastic cuts” Gov. Quinn’s budget made to funding for supportive housing and supportive housing for the mentally ill. “As the committee is reviewing the budget, we will take a hard look at how to restore those dollars.”
Advocates for affordable housing and to end homelessness will testify at House Human Services Appropriation Committee hearings April 10 and 11. Bob Palmer, policy director at Housing Action Illinois, said there are four main items they care about in the FY 2014 budget:
• Emergency and Transitional Housing funding maintained at $9.1 million.
• Homelessness Prevention funds maintained at $4 million.
• Homeless Youth Funding maintained at $4.1 million for outreach services, emergency shelter and longer-term housing
• Supportive Services funding of $28.5 million
Much of the money for the first three programs ($13.1 million of $17.2 million) is coming from the Illinois Affordable Housing Trust Fund. Originally, this fund was intended for the creation and preservation of new units, which is a long-term solution to homelessness.
“This is sort of like robbing Peter to pay Paul,” Palmer said. “We think this money should be coming from the general revenue fund instead of the Illinois Affordable Housing Trust fund but because of the pension crisis and all the unfunded bills way past due to human services providers, this is what they’re doing.”
The Emergency and Transitional Housing money goes to operate shelters for an annual 40,000 adults and children. Half of them exit to permanent or transitional housing, Palmer said.
Homeless Prevention funds provide one-time assistance to people who are behind on utilities or rent so they do not wind up on the streets. Chicagoans who need some of this money can call 311 and be referred to the Emergency Fund. This program was funded at $11 million in FY08, Palmer said.
Among unaccompanied homeless youth served in Illinois, state programs helped 87 percent moved into stable and safe housing.
The $28.5 million sought for supportive housing is intended to first restore $3 million that Quinn proposed reducing in the FY14 budget for recently opened supportive housing projects, Baker said. Located across the state from Chicago to Cairo, these projects already house 1,361 people.
Supportive housing is a three-legged stool, Baker said. The federal government provides the two biggest components, for construction and rent subsidies. However, the state must come up with its share of supportive services – or risk losing its federal dollars.
“Supportive housing is the best money spent in Illinois on housing for the mentally ill,” Feigenholtz said. The $3 million reduction in the last two years’ funding was the result of a technical error in the budget, which was fixed through a supplemental appropriation in November, she said. The remaining $1.5 million sought for FY2014 supportive housing would be money well spent, Feigenholtz said. “Unlike clients in institutions, supportive housing clients retain their own checks, instead of just receiving a small allowance,” Feigenholtz said.
“Human Services Appropriations Committee members are aware of the value of the supportive housing program. If they are able, I am certain the committee would like to restore the supportive housing cuts. However, it all depends on savings we will achieve through pension reform.”
By Suzanne Hanney,