The budget passed May 31 by the Illinois General Assembly “just pushes many budget decisions down the road,” said Martin Torres, policy director of the Latino Policy Forum.
Unable to pass an extension of the current income tax rate — or a budget reflecting the $2 billion revenue loss that comes with allowing income tax rates to revert to 2010 levels — legislators employed “one-time stop-gap measures to avoid the immediate pain associated with the tax rate coming down,” he said.
“The notion that we can lose that revenue without dire consequences is being papered over” with what is “essentially a budget with a big deficit,” said Larry Joseph, research director of Voices For Illinois Children.
Budget tricks employed included raising revenue projections, transferring hundreds of millions of dollars from dedicated funds to the operating budget and deferring state employee raises and health insurance payments, said Torres. “None of these are sustainable,” he said.
Earlier this year, the Forum joined leaders of 27 Latino organizations in the Illinois Latino Agenda to call for maintaining the five percent income tax rate, which was passed as a temporary measure in 2011. The groups warned of “unprecedented, disastrous” cuts if revenues weren’t maintained.
“We will continue to push elected officials to come up with sustainable policies that will allow the state to generate sufficient resources to meet its fiscal and moral obligations,” Torres said.
Funding flat, demand rising
Spending for education and human services was maintained at last year’s levels for the most part. But with basic costs and demand for services rising, that will continue to put the squeeze on nonprofits dependent on state grants to provide after school programs, domestic violence shelters, job training and mental health services — and on more than 2 million state residents who depend on them — said Judith Gethner, executive director of Illinois Partners for Human Services.
In addition, with state funding in these areas slashed by as much as 25 percent over the past five years, agencies providing such services are already underfunded, Gethner said. According to the Center for Tax and Budget Accountability, Illinois has reduced spending on services by $4.7 billion since 2009.
Funding for education is down by $1 billion a year since 2009, Torres added.
The chronic problem of delayed payments to service providers will worsen, the analysts said. Much of the additional revenue from the higher tax rate went to pay down a $10 billion backlog, which was cut by almost half since 2011. Joseph expects it to increase by $1.5 billion by the end of next year.
That will force some nonprofits to lay off staff, cut back service areas, and in some cases close down, Joseph said. Smaller agencies are especially vulnerable, he said.
Childcare assistance cut
While most programs were “flat-funded,” childcare assistance was reduced by $84 million. “That’s going to be a problem for a lot of working families, unless we start coming up with alternatives,” Torres said. It could mean increased parent copayments which could prevent some eligible families from accessing services, he said.
Some agencies may be unable to continue providing lower-cost childcare, Joseph said.
“You can’t take from one area to fund another,” said Gethner. “A lot of people who need services need more than one service. Someone needing job assistance might need child care too” in order to join the workforce. “You need the entire fabric of services,” she said.
The analysts noted that demand for senior services is increasing as the Baby Boomer generation ages, including home care that lets people avoid nursing homes, but funding isn’t being increased.
“Services like home meals and transportation to health providers are mandated by law,” Gethner said. “Even if there’s not enough in the budget, we still have to deliver those services.”
“Because of growth in enrollment, it amounts to a funding cut,” said Joseph.
The budget squeeze will impact Latino communities disproportionately, Torres said. With the Latino population growing by 33 percent over the past decade while spending has been slashed, “the state budget has continually fallen short in funding programs and services at a rate necessary to keep pace with our burgeoning population,” he said.
“We know that as far as state investment in the Latino community — grants to Latino-led and Latino-serving organizations — there’s been a decrease in homelessness prevention, immigrant integration, domestic violence and youth services,” said Torres. “These are all critical needs for Latino communities.”
The impact on local agencies
It’s not yet known how they will be implemented, but major reduction in the childcare assistance program of the Department of Human Services could impact families at child development agencies including El Valor, Gads Hill Center, El Hogar del Niño, and Chicago Commons.
“It’s going to be detrimental,” said Maria Lopez of El Valor, “We won’t be able to serve some of the families we’ve been serving.” The agency offers child and family development at offices in Pilsen, Little Village and South Chicago.
Childcare funding was reduced by $24 million, and an additional $60 million gap in administrative funding was left open; whether it will be closed by a supplemental appropriation probably depends on the outcome of the November election, said Martin Torres of Latino Policy Forum.
“We hope they will put off implementing the cuts until after the election,” he said. “If they do begin implementing the cuts, we hope they don’t decide to eliminate assistance for undocumented families.”
Childcare assistance has been reduced for several years, including jumps in copays required of families — in some cases making the program unaffordable for eligible families — and reducing the income level for eligibility, he said.
Limited access to childcare will make it harder for some families to make use of early childhood education programs, said Larry Joseph of Voices For Illinois Children. Many child development agencies offer preschool for part of the day and supervised care for the remainder, and working parents depend on full-day coverage, he said.
The agencies’ early childhood programs were “flat funded” at last year’s levels, but that comes after several years of funding reductions — while the population of Latino children who need the services has steadily grown, he said.
Since 2009, $80 million has been cut from the state’s Preschool For All program, with 25,000 fewer children now able to participate, Torres said.
“Early childhood education is well documented as one of the most effective public policy interventions, but it does take resources,” he said.
Another area where funding levels remain flat despite increased need is senior care. In addition to early childhood and family support programs in Back of the Yards, Pilsen, Grand Boulevard and West Humboldt Park, Chicago Commons serves 1,500 seniors in its home care program. Testifying at a legislative hearing last month, Chicago Commons CEO Edgar Ramirez pointed out that the number of people over age 60 rose by 14 percent over the past decade, with the number of people over 85 rising even faster.
“Because the situation is still very fluid, it is difficult for us to know exactly how our programs will be impacted,” said Carolyn Brandon, spokesperson Chicago Commons. “We do know, however, that without additional revenue our programs will downsize, as will the number of clients we have the capacity to serve.”
Flat-funding ignores the reality of rising costs for nonprofits, said Maria Pesqueira, executive director of Mujeres Latinas en Accion, which offers domestic violence and sexual assault programs along with family and youth engagement.
“We’re still getting less than we were in 2008,” she said, despite rising costs, and frequently delayed payments from the state create additional costs when the agency has to pay interest on loans to pay its bills.
“Every year we have had additional cuts,” she said. “Every year we have tightened our belts. Now we’re bare bones and we’re chipping at the bones.”
At Enlace Chicago, executive director Michael Rodriguez cites the problem of staff living without cost-of-living raises along with “uncertainty about what is going to happen.”
In the area of violence prevention, “certainly there is more need that the state budget is not addressing, even with flat funding,” he said. “With the Latino community growing so quickly in Illinois, flat funding is in reality a decrease.”
At Brighton Park Neighborhood Council, funding for Teen Reach and Parent Mentors was actually increased. But executive director Patrick Brosnan noted that additional Teen Reach funding came from the elimination of another after-school program. Overall state funding for after-school efforts is down by $5 million, he said.
“We need the state to act — short-term, to extend the tax rate and long-term there needs to be a graduated income tax,” he said. “Until we get that there’s going to be this constant fight for resources. A lot of these programs are so underfunded.”
Unless something changes, “it’s only going to get worse,” Torres said. Revenue losses for Fiscal Year 2016 will be twice as high as 2015, when the tax rate comes down in the middle of the year.
“What’s done about that will depend on who the next governor is,” Joseph with Voices For Illinois Children said.
The incumbent, Democrat Pat Quinn, supports maintaining the tax rate, while his Republican challenger, Bruce Rauner, calls for reducing it. Though he has not revealed any details on his budget plan, Rauner says he would increase spending on education.
Since an increasing portion of the state’s operating budget goes to “hard costs” including debt service and pension payments — and because most health care spending is required by the federal Medicaid program — Rauner’s plan seems likely to include huge cuts concentrated largely in human services.
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