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    SB 2505 raised income tax rates through 2015 to increase annual revenues by $7 billion and establish two trust funds for human services and education beginning in 2015. However, it also imposed spending caps that will likely force cuts to state programs including human services to deal with growing costs. A recent survey found that over 95% of human services agencies reported negative effects from state budget cuts such as reduced services, longer waitlists, and shut down programs. United Way is working on initiatives to improve coordination and effectiveness of human services funding through a statewide database and other reforms.

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    SB 2505 raised income tax rates through 2015 to increase annual revenues by $7 billion and establish two trust funds for human services and education beginning in 2015. However, it also imposed spending caps that will likely force cuts to state programs including human services to deal with growing costs. A recent survey found that over 95% of human services agencies reported negative effects from state budget cuts such as reduced services, longer waitlists, and shut down programs. United Way is working on initiatives to improve coordination and effectiveness of human services funding through a statewide database and other reforms.

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    95 views3 pages

    Notes From The Field

    Uploaded by

    UnitedWayChicago
    SB 2505 raised income tax rates through 2015 to increase annual revenues by $7 billion and establish two trust funds for human services and education beginning in 2015. However, it also imposed spending caps that will likely force cuts to state programs including human services to deal with growing costs. A recent survey found that over 95% of human services agencies reported negative effects from state budget cuts such as reduced services, longer waitlists, and shut down programs. United Way is working on initiatives to improve coordination and effectiveness of human services funding through a statewide database and other reforms.

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    of 3

    Notes from the field…

    Springfield Update
    In the waning hours of the 96th General Assembly a bill passed the legislature that combines
    spending caps and increases in income tax rates with mixed results for human services.

    SB 2505, signed into law as Public Act 096-1496 on Jan. 13, raised the personal state income tax
    rate to 5% and the corporate income tax rate to 7% through 2015. As a result, annual revenues
    are projected to increase by approximately $7 billion. From 2015 to 2025, the personal income
    tax rate will fall to 3.75% and the corporate income tax rate will drop to 5.25%.

    Beginning in 2015, .25% of the personal income tax increase will go towards human services and
    education through two newly established trust funds: The Commitment to Human Services Fund
    and The Fund for the Advancement of Education. The fund for human services, estimated to
    bring an additional $400 million to programs, represents the first time the sector has received a
    set aside. Still, it is unclear if human services funding will actually increase given past cuts and
    those anticipated in fiscal year 2012.

    At the same time, SB 2505 imposes hard spending caps on future budgets. General fund
    spending growth will be limited to 2% annually between fiscal years 2012 and 2015. Because of
    pension contributions and Medicaid obligations the spending cap will result in cuts to state
    programs – including human services. With pension and health care costs growing about 8-10%
    per year, the spending cap will force legislators to cut about $800 million in the 2012 fiscal year
    and $2.2 billion from fiscal years 2012 to 2015 combined.

    Based on recent appropriations, there is reason for concern about the impact on human services
    funding. For the current fiscal year, $576 million has been slashed from the Department of
    Human Services. Human services cuts in this year alone accounted for almost $1 of every $5 cut
    over the past two years, or 19.2% of $3 billion in total reductions. The state’s human services
    budget fell from about $4.05 billion in fiscal year 2010 to about $3.47 billion in fiscal year 2011.
    Grants worth $515.7 million were cut, reducing or eliminating non-Medicaid programs in mental
    health, developmental disabilities and rehabilitative services. Furthermore, there is still the very
    real possibility of further cuts to human service programs for the current fiscal year under the
    Governor’ Emergency Budget powers.

    In a recent survey by Illinois Partners for Human Service, more than 95% of the 282 human
    services agencies responding reported negative effects of state budget cuts. The survey showed
    half of organizations reduced hours or their level of service. More than 40% saw their waiting lists
    grow and almost 30% had to refer clients to other providers with no guarantee they would be
    served. Almost 30% shut down programs, which eliminated essential services and jobs in the
    community.
    Survey results also are broken down by Cook County, northern counties, north-central counties,
    south-central counties and southern counties.

    Another budget reform bill, HB 5424, will implement “budgeting for outcomes,” a set of policies
    that requires the Governor and state agencies to prioritize outcomes and undergo performance
    measurement, allowing the state to make funding decisions based on sound evidence about the
    most effective programs. United Way of Illinois will work with other stakeholders to ensure priority
    setting takes into account the expertise of the philanthropic and nonprofit sectors in Illinois.

    Streamlined Auditing
    The Streamlined Auditing Bill (HB 5124), endorsed by United Way of Illinois and a focus of our
    advocacy on Lobby Day last April, was signed by the Governor as Public Act 96-1141 last
    summer. This legislation requires several state departments to reduce administrative costs
    associated with duplication in program and accreditation audits as well as agency oversight.
    United Way played a key role this fall as a member of the steering committee charged with
    producing a report to the General Assembly. The process was a model for partnership between
    the nonprofit sector and government, as well as inter-agency collaboration at the state level. The
    final report had recommendations in seven categories:

    1. Deemed Status for Accreditation


    2. Fiscal Audits
    3. Centralized Repository
    4. Medicaid
    5. Technology
    6. Contracting
    7. Streamline Monitoring Procedures

    While the Steering Committee was only charged with producing the report, it has also begun
    contemplating the implementation process, and is committed to working collaboratively with all
    parties to bring the required changes to fruition.

    211
    Activity continues on a number of fronts to move 211 from the pilot stage to more expansive
    implementation. A committee of the 211 Illinois board, which was selected as the lead entity to
    govern and manage the program, reviewed and recommended changes to its contract with the
    state. We are currently awaiting the state’s response. A meeting was held with the new
    permanent director of 311 in Chicago to explore possible coordination with 211. United Way
    Metro Chicago convened a meeting with information and referral providers to begin discussing
    the development of a calling center for the metro Chicago area. Our three pilot programs in
    cooperation with the United Way of the Quad Cities, The United Way of Greater St. Louis and
    United Way of McLean County continue to serve 13 counties in Illinois with increased call
    responses. At the federal level, our valiant efforts to pass the Calling for 211 Act came up short
    when key committees were unable to recommend the bill for consideration by either the House or
    Senate.

    Stress Testing the Human Services Sector


    United Way of Metro Chicago funds 257 agencies consisting of over 450 programs. As part of
    their due diligence process to ensure quality investments they require agencies to report their
    financial performance. They review their Net Profit (Loss), Days Cash on Hand (60-day
    benchmark) and Current Ratio (1.5:1 benchmark). Among the findings from their most recent
    audit:
    • 72 (28%) of the agencies flagged on 2 or more of the indicators;
    • 70% of the agencies flagged for financial stress in at least one indicator;
    • Late state payments are not only affecting cash flow, but also limiting access to cash
    (lines of credit being reduced).

    UWMC continues to monitor their performance and work with them to provide technical
    assistance as appropriate. Agencies are addressing their situations in a variety of ways (e.g.
    staff layoffs wage and benefit reductions)

    A version of this “stress test” is now being considered by local United Ways across Illinois as
    a tool to improve their own evaluation of agency capacity and to develop a statewide picture
    of the financial condition of the human service sector.

    Human Services Database


    Work continues to progress on this initiative aimed at developing a process and supporting tools
    to enable human services funders to make informed decisions surrounding provider funding,
    resource needs and available service offerings to meet the diverse needs of Illinois communities.
    A data sharing agreement and governance charter are close to approval by the state’s
    Department of Human Services, the City of Chicago, the Chicago Community Trust and United
    Way of Metro Chicago. An RFI process to identify a database custodian conducted interviews of
    four prospective vendors and is now preparing its recommendations. A fundraising plan is in
    development with the intent to seek corporate and foundation funding in 2011.

    Illinois Partners
    Illinois Partners for Human Service, the statewide coalition in which we played a founding role just
    a few years ago, now has over 600 members in every county and legislative district representing
    the full range of human services. The advocacy and active engagement of its members has had a
    dramatic impact on a number of issues affecting the sector and resulted in major achievements
    including the human service funding set aside in the recent tax bill signed into law. During the fall
    gubernatorial campaign, Governor Quinn and representatives of Sen. Bill Brady both responded
    to specific questions concerning the human services sector during the coalition’s special call-in
    meetings. The coalition also worked closely with the Governor’s Office of Management and
    Budget to expedite payments to providers and market a new vendor payment program to reduce
    the delay in payments. Conducted in the fall, the state budget impact survey referenced above
    demonstrated the dramatic impact that funding cuts continue to have on programs and
    employment. The survey resulted in extensive statewide press coverage and a story in The
    Washington Post.

    Human Services Commission


    The second report issued by the Commission in December, “A Review of Past Efforts and
    Current Directions,” captures lessons learned from key human services reform efforts and
    recommendations made by hundreds of lawmakers, advocates, service providers, consumers
    and experts serving on various commissions, task forces and advisory councils. The
    recommendations were sorted by issue areas or populations served.

    Renewing the Social Compact


    With dramatic changes at the national level and unprecedented challenges in our state, it is more
    important than ever for nonprofits, foundations and government to form strategic partnerships to
    advance good public policy. Brent Never’s essay “Renewing the partnership between the state
    and nonprofits” reframes Illinois’ fiscal and systems failures as a breakdown in the key
    partnerships between government and nonprofits. He issues a call to action for the state,
    nonprofits and philanthropies to form a social compact that will move us forward. The essay,
    which was published by Illinois Issues and commissioned by Donors Forum, also examines how
    a problem similar to the breakdown in Illinois was tackled in England and in New York City.
    United Way of Illinois is included in photos and references to our survey results.

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