Illinois Budget Reflects Administration's Priorities

The Illinois General Assembly wrapped up its work for the year, on May 4, with passage of the 2007 fiscal year budget, which will fund state government from July 1, 2006, to June 30, 2007. Gov. Rod Blagojevich’s fourth budget is in keeping with the spending priorities—with an emphasis on health care and education—to which he has adhered in prior years.

All Kids

The budget funds the first year of All Kids, the universal health care program for all uninsured children in Illinois. The legislation establishing the All Kids program became law last fall, but the new budget ensures that the program is funded and will start on time on July 1, 2006. This continues the Blagojevich administration’s national leadership on health care issues. Bucking the trend in many states to slash health coverage as a budget-balancing device, Illinois has enacted and funded historic expansions, while holding the line on the base Medicaid program.

Preschool for All

Also funded is the initial year of the Preschool for All program, which will eventually offer free, optional preschool to all 3- and 4-year-olds in the state. The funding for the first installment of this initiative is a $45 million increase in the Early Childhood Block Grant. Eligibility for the program also was extended to all families, with the first priority being providers who primarily serve children at risk of academic failure, the second priority being providers who primarily serve families below four times the federal poverty level ($80,000 for a family of four), and then all other families (see “Illinois Takes Leap Forward on Early Childhood Education and Care,” in this issue).

Per-Pupil Spending

The budget contains over $400 million in new funding for basic primary and secondary education. Among other initiatives, this raises the basic “foundation level” (the amount of state funding per pupil) by $170 per student.

Education funding is an avowed priority of the Blagojevich administration, and so overall funding is increasing in this budget in spite of the fiscal crisis in Illinois. Nevertheless, the funding remains well below the generally recognized goal for the “foundation level.” The overall education funding picture (state plus local funds) continues to be characterized by deep inequities due to overreliance on local property taxes. The inequity can be offset in a way that does not punish the wealthier districts, but only by increasing the state contribution to the less wealthy districts.

Child Care Assistance

The state child care assistance program, which helps low-income working families pay for full-day, full-year education and care, received a net increase of $34 million in General Revenue Funds, including $50 million to fund the first child care provider rate increase in six years. This program is the centerpiece of the state’s work-focused welfare reform and ongoing supports for working families (see “Illinois Takes Leap Forward on Early Childhood Education and Care,” in this issue).

Other programs that serve children and received increases in this year’s budget include mental health programs, early intervention programs, and cost-of-living increases for some programs that the Departments of Human Services and Children and Family Services administer and social service agencies provide.

Health Services

The screening and treatment program for breast and cervical cancer is expanded in the budget. Women with income up to 250 percent of the poverty level are now eligible for screening, and those who need treatment and are not otherwise covered will be eligible for treatment.

Seniors receiving Medicaid will have the asset limit substantially increased, that is, they will be able to keep more of their funds (up from $12,500, to $17,500) before losing eligibility. Department on Aging case management and coordination services are also funded.

A new program will offer affordable comprehensive health coverage to veterans to the extent that federal veterans’ programs deny them coverage.

Student Aid for College

There is a substantial increase for needs-based student aid for college, and there is a new program to provide grants to middle-income families sending a child to college in Illinois. The student-aid increase is in the Monetary Awards Program, which helps thousands of low-income students, including “nontraditional” students (low-wage workers, single parents, etc.), go to college. This is one of the state’s most important policies to promote economic opportunity and upward mobility.

Affordable Housing

The Affordable Housing Trust Fund and the Rental Housing Support Program fund, originally targeted for “fund sweeps” where “excess” money would be diverted to the general revenue fund, were left undisturbed in the final budget. This recognizes the compelling affordable housing shortage in the state and the ongoing acute need for these funds to stay with and be used for their intended purposes.

More Needed for Human Services Staffing

The new budget continues to support too few employees in state agencies, especially those charged with implementing key programs for low-income people at the community offices of the Department of Human Services. Chronic staff shortages prevent the state from properly delivering critically needed programs.

Many human service providers did not receive a cost-of-doing-business increase. These providers are the delivery system for many key programs, and they are unable to maintain the adequate delivery of critical services at the current level of funding.

Meeting the State’s Spending Commitments

There has been much concern about the ability of state revenues to fund the state’s spending commitments fully. The state has a structural deficit, under which the ordinary revenues of our existing tax structure fail to produce enough money to pay for the programs and policies that the General Assembly enacts and the voting public demands.

The Blagojevich administration has aggressive priorities that it wants to fund, including its exemplary performance on health care and early childhood education and care. It can do this and still balance the budget only by identifying new sources of revenue and innovative management of the budget. For example, the administration has restructured the pension system (allowing a two-year hiatus in payments to bring the pension funds up to date, but also calling for large annual payments to begin again next year), undertaken various bond initiatives to take advantage of low interest rates, increased many fees and payments to the state, and diverted special purpose funds to the general revenue fund. These tactics have succeeded so far, but many of them are short-term and as a whole do not focus on the underlying structural deficit or lead to a stable financial foundation for the governor’s initiatives. The structural deficit remains a major problem.

Whoever wins this fall’s election will face a crossroads in confronting the state’s structural deficit. The strong initiatives on health care and education are extremely vital advances in public policy in Illinois. They must continue and expand, and both gubernatorial candidates must promise to continue these trends and avoid any rollbacks. But these initiatives and the rest of state government need a healthier revenue stream. Fundamental reform of the revenue system is badly needed, and there must be a full discussion of all the possible solutions.