teacher/poet/musician glen brown: Civic Federation: “Illinois Faces Financial Disaster; Urgent Need for Medicaid and Pension Reforms”

13 Feb

Civic Federation: “Illinois Faces Financial Disaster; Urgent Need for Medicaid and Pension Reforms”

[Selected Findings and Recommendations from the 53-page document]

“Due to data limitations, the Federation’s projections are rough forecasts intended to indicate the long-range consequences of current revenue and expenditure policies…

“Civic Federation Findings: The General Funds operating deficit is projected to increase to $3.2 billion in FY2017 from $508 million in FY2012. This projection assumes that Medicaid appropriations are limited to annual growth of only 2%—well below the anticipated increase in Medicaid costs but consistent with the State’s past budget practices.

“Largely due to projected underfunding of the Medicaid program, the State’s total unpaid bills—including both General Fund’s bills and bills outside of the General Funds—are predicted to increase from $9.2 billion at the end of FY2012 to $34.8 billion at the end of FY2017.

“General Fund’s revenues are projected to decline by $427 million, or 1.3%, to $32.7 billion in FY2017 from $33.1 billion in FY2012. The decline is largely due to the lower income tax rates that take effect in FY2015; all other revenue sources are projected to increase over the next five fiscal years. 

“General Fund’s expenditures are projected to increase by approximately 6.9% from $33.6 billion in the enacted FY2012 budget to $36.0 billion in FY2017. This conservative projection is based on the assumption that the Medicaid program will continue to be underfunded. It accounts for cost increases in group health insurance and pensions but leaves most other areas of the budget unchanged or flat from FY2012. 

“General Fund’s costs for Medicaid are projected to increase by more than 40% to $12.1 billion in FY2017 from $8.6 billion in FY2012. If Medicaid appropriations increased by only 2% a year, well below predicted costs, the backlog of unpaid Medicaid bills would reach $21.0 billion by the end of FY2017. 

“General Funds pension costs—including statutorily required State pension contributions and debt service on pension bonds—are projected to increase by approximately 35% from $5.7 billion in FY2012 to $7.8 billion in FY2017. Pension-related costs increase from roughly 17% of total General Fund’s expenditures in FY2012 to 21.6% in FY2017. 

“General Fund’s costs for State employee group health insurance are projected to increase by approximately 39% from $1.4 billion in FY2012 to $2.0 billion in FY2017. Roughly 91% of the 81,900 retirees covered by the group insurance program do not pay any premiums for their coverage. 

“The Governor’s three-year budget projections, released on January 3, 2012, show an operating deficit of more than $500 million in FY2012 and a total of $818 million in FY2015. The Governor’s projections do not account for the full annual cost of Medicaid or group health insurance based on current policies and do not address the increase in unpaid bills… 

“Civic Federation Recommendations for State Pensions:  It remains unclear how the State can comply with statutory pension funding requirements and also pay for other costs of running State government. In light of fiscal realities, the Civic Federation recommends that current Illinois retirees and employees hired before January 1, 2011 receive the same annual benefit increases as new workers: 3% a year or one-half of the increase in the CPI, whichever is less, and that benefits be increased by a simple interest rate. The Federation also supports reducing non-vested benefits for current employees, increasing employee contributions or both…
“Civic Federation Recommendations for State Retiree Health Insurance: The Civic Federation supports requiring all State retirees to share the cost of their health insurance premiums. The Federation also supports abolishing any law or rule that allows retirees who live outside Illinois to pay lower premiums than retirees who live in Illinois for the same insurance coverage… 

“Civic Federation Recommendations for Medicaid: The State should move aggressively to implement the significant reform legislation passed in January 2011 by enrolling Medicaid recipients in coordinated or managed care networks and moving residents from State centers for the developmentally disabled to community settings. The State should continue its efforts to control prescription drug costs, the most expensive optional medical service provided under the Medicaid program. Short-term savings on Medicaid should come from programs that are not eligible for federal reimbursement. One such program the State cannot afford to continue and must eliminate is Illinois Cares Rx, a prescription drug program that supplements coverage for seniors in Medicare Part D… 

“Civic Federation Recommendation on Borrowing for Operations and Unpaid Bills: The Civic Federation opposes any additional borrowing by the State of Illinois to support its ongoing operations or to pay down its backlog of bills because it cannot afford any additional debt service. Borrowing for operations generates one-time revenues that increase future spending pressures. The Federation supports the State’s efforts to ease the burden on vendors through an improved and cost-effective vendor payment program… 

“Civic Federation Recommendation on State Employee Salaries: Given fiscal realities in the State of Illinois, there is no room for bargaining unit increases in FY2013 or in the foreseeable future. The Civic Federation urges the Governor to keep the State’s dire financial condition in mind as new collective bargaining agreements, effective in FY2013, are negotiated… 

“Civic Federation Recommendations on Retirement Income: The Civic Federation supports broadening the individual income tax in Illinois to include federally taxable portions of retirement and Social Security income. This policy would provide additional revenue stability and reduce preferential treatment of retired taxpayers that the State can no longer afford, while protecting the lowest-income individuals…

“Civic Federation Recommendation for the State Cigarette Tax:
The Civic Federation supports increasing the State tax on cigarettes from the current rate of 98 cents per pack to $1.98 per pack in FY2013 to reduce the State’s budget deficit and to fund public health expenses in future years… 

“Civic Federation Recommendation for Statutory Transfers Out: The Civic Federation recommends limiting the use of statutory transfers out of General Funds to ensure that State resources are used in the most effective way possible. The Federation supports the Budgeting for Results Commission’s recommendation to end the funding of State operations through statutory transfers out, excluding transfers for debt service, local government sharing, revolving funds and cash flow purposes. The State should move to consolidate Special Funds currently supported by transfers out and review programs funded through these accounts as part of the annual General Funds appropriations process… 

“Civic Federation Recommendation for Fund Sweeps: The Civic Federation opposes interfund borrowing not repaid within the same fiscal year because it pushes current operating expenses into future years. Instead, the State should sweep any available surpluses in Special Funds into the General Funds to pay down its backlog of bills and ease cash flow issues. The Civic Federation also recommends that the State’s Special Funds be consolidated and/or eliminated except in cases of high priority or mandated expenses…

“Civic Federation Recommendation on Economic Development Incentives: The Civic Federation recommends that the State of Illinois develop a comprehensive economic development incentive policy to curb economic brinksmanship by Illinois businesses and allow the State to monitor the relative effectiveness of various incentive programs. Such a policy should be in place before the State renews, expands or creates any economic development incentives.”

via teacher/poet/musician glen brown: Civic Federation: “Illinois Faces Financial Disaster; Urgent Need for Medicaid and Pension Reforms”.


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