Statement Regarding Civic Federation’s Five Year Budget Projection

The Governor’s Office of Management and Budget is pleased the Civic Federation recognizes the meaningful reforms enacted by Governor Quinn. Those reforms have begun to address decades of serious financial mismanagement in Illinois.

As the report notes, due to that long history of mismanagement, the coming years will bring significant fiscal challenges. As such, we call on the Civic Federation, legislators, interest groups and individuals to partner with the Governor to pursue major reforms and return Illinois to sound financial footing.

Report documents: Governor Quinn tackles inherited challenges while significantly reducing discretionary spending.

According to the report, between FY2008 and FY2012, spending by state agencies has declined by 2.2 percent – from $24.9 billion in FY2008 to $24.4 billion in FY 2012. That reduction indicates Governor Quinn continues to be the only governor in the past two decades who has significantly reduced discretionary spending. Those spending reductions, while still continuing to invest in education and healthcare, are unprecedented in Illinois.

Report documents: Governor Quinn’s significant reforms to save taxpayers billions.

As the Civic Federation acknowledges, Governor Quinn has enacted significant reforms impacting pension, Medicaid, education, unemployment insurance, and workers’ compensation. As a result, taxpayers are saving billions of dollars.

The Governor will continue to manage state agencies to further reduce expenses and find additional efficiencies. Since January 2009, such actions have produced close to $200 million in annual savings through decreasing the number of state employees by more than 2,000, which also has reduced future pension funding requirements.

Report documents: State’s challenges are pension and Medicaid costs not discretionary spending.

The report focuses on the state’s two largest fiscal challenges: pension and Medicaid costs. Pension costs have skyrocketed due to decades of underfunding, while Medicaid costs have increased at approximately 6 percent a year.

As documented in our 3 year projection, one can clearly see the pension challenges before us. Of note is the fact that only 24 percent of the pension contributions made by the State are for State employees. The remaining 76 percent are for non-state employees including suburban and downstate teachers, as well as university employees.

Here is the solution:

Governor Quinn is committed to further pension reforms to strengthen the state pension systems, beyond his proposals that resulted in the Tier II system for new employees which will save over $200 billion. Most recently, the Governor has convened a pension working group to pursue reforms that are fiscally responsible, fair to employees and constitutional.

Of particular note, the historical practice that results in the State funding local teachers and university employees’ pensions requires careful examination and reform as employers need to have a stake in funding their own employees’ pension costs.

An aggressive restructuring of the Medicaid system is also needed, not just to slow spending growth but to structurally change the system. Such changes can prevent tens of billions of dollars from being incurred, as the report suggests could happen.

Report documents: No appetite for significant reforms from interest groups and General Assembly.

Overall we find the Civic Federation’s report constructive since it clearly projects Illinois’ fiscal path if additional reforms are not implemented immediately. It points to specific examples where Governor Quinn has proposed further reforms (ie. 6 percent Medicaid reimbursement rate reduction) to control skyrocketing costs, only to realize the General Assembly’s appetite for significant reforms did not exist.

Report questions: Overuse of institutional care. Answer: Quinn’s rebalancing initiative.

The Civic Federation report refers to the reliance upon institutional care for the elderly and people with disabilities. Recently, Governor Quinn unveiled his rebalancing initiative, which will build upon his commitment to helping people with disabilities live in community settings by closing outdated institutions and moving residents into community-based care. This initiative will save taxpayers millions of dollars but most importantly, will improve the quality of life for our fellow citizens with developmental and mental health disabilities.

The Bottom Line: Governor Quinn’s budget plan for fiscal year 2013 will continue to make the tough decisions necessary to address the state’s financial challenges. It will also demonstrate his long standing commitment to creating jobs and investing in education, while protecting public safety and our most vulnerable residents. Fostering a robust economy, along with aggressive budget reforms will ensure long- term fiscal stability for our state and continued bipartisan support is essential to achieve this goal.