* The Illinois Times broke this story a few weeks ago. The AP is now picking it up, but crediting it to the News-Gazette…

Illinois has borrowed more than $1 million this year to help cover its own expenses from money taxpayers give to charity.

The state government has borrowed about $1.17 million this fiscal year from money that Illinois taxpayers designate on their tax returns for charitable use, The News-Gazette in Champaign reported.

Lawmakers signed off on the plan to help deal with a multibillion-dollar state budget deficit.

Kelly Kraft, spokeswoman for the state Office of Management and Budget, said she expects the state to repay the money within a few months. By law, the money has to be returned, with interest, within 18 months, she said.

* From the News-Gazette…

Kraft said last week she expects the money to be repaid within a few months, at most. She said legislators approved the temporary borrowing to address cash-flow problems when they passed Gov. Pat Quinn’s lump-sum budget.

But some nonprofit agencies are unhappy, to say the least.

“My concern is that the taxpayers don’t know that they’re donating to charities that don’t even get their money. It just seems really inappropriate to use charities to pull money in, and then pull that money out to pay for bills,” said Stephanie Record, executive director of the Crisis Nursery of Champaign County. “This is crazy.”

Record, whose agency is slated to get about $7,000, said she had no idea the state could borrow against that money.

When the state’s crisis nurseries went through the process of getting on the tax checkoff list in 2009, they asked that very question: Will the money get held up because of the state budget crisis?

“We were told over and over and over again, ‘No, it’ll flow straight through an account at DHS (the Department of Human Services),’ and that the flow-through account would be released directly to the nurseries. Obviously, that wasn’t the case,” she said.

* From the original, June 9th Illinois Times article…

For the 2008 tax year, Illinois workers donated a total of $1.4 million to 10 different funds. But, with the approval of the General Assembly, Gov. Pat Quinn authorized $434,300 in sweeps from seven of the funds in Fiscal Year 2010, when the 2008 tax year donations were first available for spending. Sweeps are transfers from special funds with specific purposes to the general revenue fund, the state’s largest pool of money, which pays for basic government operations.

For the 2009 tax year, Illinois taxpayers donated $1.37 million to 10 different funds, but during the current fiscal year, FY2011, Quinn has borrowed $1,176,100 from seven of those funds as well as five other check-off funds that are no longer listed on tax forms but were holding donated money from previous years. […]

“Soon after Governor Quinn took office after former Governor Rod Blagojevich was impeached, the state needed to exercise ways to manage cash flow due to decades of fiscal mismanagement,” Kelly Kraft, spokesperson for the governor’s office of management and budget, said in an emailed response to Illinois Times’ questions about the sweeps. She says the state has not swept any funds since the FY2010 sweeps and that the governor’s office “has no intention of sweeping funds going forward.” As to the borrowed funds, Kraft says the state only tapped “excess” funds.

Though the state had not entered into grant agreements for most of the borrowed funds, at least four fund beneficiaries were told to put their projects on hold until the money was repaid.

On March 21 Gov. Pat Quinn took $134,900 from the Alzheimer’s disease research fund, leaving less than $1,300 behind. During the previous fiscal year, the state swept $112,500 from the fund. In response to the borrowing, the Illinois Department of Public Health this spring had to renege on approved grants for researchers at Eastern Illinois University, the University of Chicago and Northwestern University, which was supposed to receive two grants.

“While promises have been made that the funds will be returned, this money was already committed to Illinois researchers for their projects. Those projects now need to be put on hold and the possibility exists that the funding will not be repaid,” the Illinois chapter of the Alzheimer’s Association told Illinois Times in a written statement.

* In other awful news…

Illinois’ prepaid tuition program is facing a crisis of confidence that threatens to push it toward insolvency.

During the past three months, families have withdrawn more than $12 million from College Illinois!, according to documents obtained by Illinois Statehouse News. Families pulled out just more than $2 million during the same period last year.

Panicked parents who have asked for their money back make up a small percentage of the total contract holders, but a large contingency now are debating whether to follow suit.

The huge increase in refunds comes after scathing articles in the media, an Illinois auditor general’s report, an Illinois Secretary of State investigation and an Illinois attorney general inquiry into possible mismanagement of the program. […]

Created 12 years ago, College Illinois! allows people to pay for tuition and mandatory fees at universities and community colleges years in advance at a lower cost. The money people contribute to the program will be invested and the return on these investments will cover tuition and fee inflation over the next several years or decades.

Most of the anxiety about College Illinois! stems from its large deficit. The fund is a defined benefits program in which a person who pays in now is guaranteed a certain payout. The program went from being 7 percent unfunded for future and current contracts in 2007 to 18 percent as of May.

Adding to the crisis of confidence is a decline in new enrollments, which could dry up as soon as 2014 if recent trends continue, according to projections by Illinois Statehouse News based on Illinois Student Assistance Commission numbers.

“I don’t think there’s going to be very many people who are willing to now subscribe to this program anymore, because it’s like investing in a bankrupt company,” George Pennacchi, professor of finance at University of Illinois in Urbana Champaign.

Andrew Davis, executive director for the Illinois Student Assistance Commission, or ISAC, said he is confident the fund is sustainable and will honor all current and future contracts.

“We’ve paid all our current bills on time and in full. We have fully accounted for with an aggressive view towards what future tuition will be,” Davis said. “The fund is significantly stronger than it was two years ago.”

* Related…

* Quinn spokeswoman gets 48% pay increase: Gov. Pat Quinn’s budget office spokeswoman will be making nearly 50 percent more money after receiving an additional job title this spring. Kelly Ann Krapf, a former broadcast reporter who uses the name Kelly Kraft, received a salary boost from about $71,000 to more than $105,000. Krapf, 38, joined the budget office in 2009 after working at the Fox News television station in Chicago. Quinn spokeswoman Annie Thompson said Krapf now holds a dual position of communications director and assistant director of the office.

* College Illinois on slippery footing

* Video: Jim Durkin on College Illinois