* Press release…
Interest-free loans will be available to state workers if the budget impasse means payroll checks will not be issued beginning July 15, Illinois Treasurer Michael Frerichs said today.
The loans will be issued through participating credit unions with money made available through the Treasurer’s Office linked-deposit program. Linked deposits provide financial institutions money for specific loan programs.
“The Treasurer’s Office uses tools to help our residents achieve more, such as saving for college, investing in a business, or planning for retirement,” Frerichs said. “This linked-deposit program is a tool that provides short-term loans for workers while the Governor and General Assembly resolve their differences.”
The state’s fiscal year ended June 30. The absence of a budget agreement means the state does not have the authority to pay certain bills, such as wages to some state employees.
An estimated 60,000 state workers might qualify for the loan program. Participating credit unions will decide eligibility. Loans cannot exceed 50 percent of pay. Loans are interest-free until 30 days after payroll resumes. A 9.9 percent interest rate will be charged beginning the 31st day. Frerichs’ office negotiated the rate down from 12 percent and it remains half of the typical credit card rate. The Treasurer’s Office will charge credit unions 0.01 percent interest.
As much as $50 million will be made available for the loans. The Illinois Credit Union League and Credit Union 1 were instrumental in creating this linked-deposit effort and recruiting other credit unions to participate. Their recruitment efforts continue and the Treasurer’s Office expects other credit unions to join the effort.
$50 million sounds like a lot of money, but if all 60,000 qualified workers applied, there’d be just $833.33 available to each of them.
- How Ironic - Thursday, Jul 9, 15 @ 10:46 am:
This is a nice gesture, but has it’s own poison pill in it. 50% of rate of pay, so employees will only get about half of what they typcially earn. Where is the other half going to come from? Either savings, or going into debt (or further debt). So when the impasse is over, they now owe 10% juice on money they should have been paid.
Nothing like paying interest on money owed to you by your employer.
I’m glad I was able to get out when I could. Very hard working staff, and now they are getting the shaft.
Uggh.
- walker - Thursday, Jul 9, 15 @ 10:46 am:
But it will take them a year to determine who is eligible. /snark
- Macbeth - Thursday, Jul 9, 15 @ 10:48 am:
This is dumb. 50%? And then what?
Either make it all available — or don’t do it.
What a cowardly, cowardly thing.
- Fiscal Cliff Huxtable - Thursday, Jul 9, 15 @ 10:49 am:
“A 9.9 percent interest rate will be charged beginning the 31st day.”
You would get a better rate going to Frank Calabrese.
- Rich Miller - Thursday, Jul 9, 15 @ 10:49 am:
===This is dumb. 50%? And then what?===
It’s standard.
Credit Union 1 has been offering the same program. Nobody complained on here then.
Put away your partisanship, please.
- Piasa - Thursday, Jul 9, 15 @ 10:49 am:
Well that’s a welcome gesture. I went to my local bank just yesterday and they stared at me like a lemur on Roxinol when I inquired about loans to state workers. “No we don’t have anything like that.”
- Piasa - Thursday, Jul 9, 15 @ 10:51 am:
This does make me wonder if this “gesture” is an indication of a very long protracted crisis.
- Union Dues - Thursday, Jul 9, 15 @ 10:55 am:
I would be careful taking these loans. Who knows if/when state employees would be paid back wages. State employees are still owed money from Quinn’s salary freeze.
- Secret Square - Thursday, Jul 9, 15 @ 10:57 am:
The credit union I belong to announced about a week ago that it would provide 90-day loans at a 1% interest rate for up to 100% of any member’s GROSS pay for a single pay period. If not paid off within 90 days, the loan converts to a standard personal loan with an interest rate of anywhere from 8% to 15% based on your credit score and other factors. Interestingly, the announcement said these loans would be available for any interruption in pay including “a strike or lockout” as well as a budget impasse.
- Juvenal - Thursday, Jul 9, 15 @ 11:00 am:
Cliff Huxtable:
I think you skipped over the part where the loans are interest-free for as long as the budget impasse continues.
- Purple Bear - Thursday, Jul 9, 15 @ 11:03 am:
Union Dues says
===I would be careful taking these loans. Who knows if/when state employees would be paid back wages.===
But the payback is not due until after payroll resumes. So it’s a no-lose proposition.
- Macbeth - Thursday, Jul 9, 15 @ 11:04 am:
—
The credit union I belong to announced about a week ago that it would provide 90-day loans at a 1% interest rate for up to 100% of any member’s GROSS pay for a single pay period.
===
Which credit union is that? I’ve inquired at several and they all said (a) that I can take out a loan, but that (b) the process would take 1-2 months before I would know for sure if I could get the loan, and that (c) you would have to be a member of the credit union in the first place.
- Ferris Wheel - Thursday, Jul 9, 15 @ 11:06 am:
This is a nice gesture, but if it follows the Credit Union 1 model employees already have to be members of the credit unions to even qualify.
Half of your pay isn’t much (unless you think were all making $95k just to play tic tac toe all day) but at least it will feed you and put gas in the car.
@piasa oh this is absolutely going to be a while. This is a pretty wide spread program. Seems like they wouldn’t go through all this if they thought payroll was likely to continue.
- Clodhopper - Thursday, Jul 9, 15 @ 11:06 am:
Just wondering if the state will be paying interest on the delayed paychecks when they are finally paid. Please pardon my ignorance if that is a stupid. Obviously not stupid to me.
- Langhorne - Thursday, Jul 9, 15 @ 11:07 am:
My hunch is, it will be single income households, and those at the lower end of the pay scale, taking advantage. Credit unions arent limited to the state money. They can add their own funds. Its a good program.
- Secret Square - Thursday, Jul 9, 15 @ 11:11 am:
It’s the Illinois Educators Credit Union in Springfield (serves mainly teachers and college students — I joined while attending UIS). You do have to already be a member to qualify, but I was thinking that it would make sense for other financial institutions, particularly in Springfield, to offer something like this.
- Midstate Indy - Thursday, Jul 9, 15 @ 11:14 am:
One Constitutional trying, at least trying, to help those negatively impacted by a budget breakdown.
- Union Dues - Thursday, Jul 9, 15 @ 11:21 am:
Purple Bear, just because the budget impasse is resolved doesnt guarantee back pay.
- Purple Bear - Thursday, Jul 9, 15 @ 11:27 am:
Union Dues: What do you think is the probability of no back pay in the ultimate budget resolution?
- Jaded - Thursday, Jul 9, 15 @ 11:28 am:
Secret Square, other Springfield financial institutions are offering similar plans to their state employee customers and have done so in the past.
- Union Dues - Thursday, Jul 9, 15 @ 11:30 am:
Dunno. Its been many years since Quinn’s underpayment and its still not paid in full. Just something to consider before taking out a loan.
- Johnnie F. - Thursday, Jul 9, 15 @ 11:32 am:
Yesterday, didn’t Rauner say he was just waiting for a continuing appropriation bill from the Legislature to pay state employees. Have any in the GOP sponsored this bill yet?
- ihpsdm - Thursday, Jul 9, 15 @ 11:39 am:
Clodhopper- The Illinois Pay Act states that interest is required on payments delayed in excess of 90 days. For example, tax refunds start accruing interest on 7/15. This means back pay will not start accruing interest until late October if paychecks for the 7/1 - 7/15 pay period are delayed.
- A guy - Thursday, Jul 9, 15 @ 11:42 am:
I imagine the folks who take advantage of this would disagree that it’s not helpful. Everything helps. Nice move by the tall dude. Kudos.
- Precinct Captain - Thursday, Jul 9, 15 @ 11:42 am:
Gotta make lemonade out of a ____storm somehow.
- Me too - Thursday, Jul 9, 15 @ 11:44 am:
Union Dues, but state labor law and the FLSA do guarantee it, and if the state refuses to pay it, you can file for double. Federal law doesn’t guarantee timeliness, but it does guarantee pay. If you send a demand letter and your pay remains unpaid, they’re on the hook for double your back pay. Similarly, every month that passes from a missed check tacks on two percent to your back wages under State law, so that’ll take care of any interest charges. Even negating these laws, the prompt payment act guarantees 1% per month after 90 days. That’s a heck of a vig, and a better rate than you’d ever make investing the money. No one has to worry about not ever getting paid their normal wages. They might not get raises, but their normal pay is guaranteed by several laws.
- Union Dues - Thursday, Jul 9, 15 @ 11:50 am:
Me too, then why isnt quinn back pay paid in full with interest and penalties? Its not. Just saying something to consider. Probably will get it but its an assumption not a guarantee.
- Me too - Thursday, Jul 9, 15 @ 11:59 am:
Union Dues, the prompt payment act will apply to the raises that weren’t given, but neither federal or State labor law guarantees raises, only regular wages. They still owe a ton of interest on that money and if I were still owed it, I’d want them to wait as long as possible to pay it back with that 12% interest.
- Me too - Thursday, Jul 9, 15 @ 12:01 pm:
Just like my tax refund I still haven’t gotten. Keep that few hundred until its four I say.
- JoeBlow - Thursday, Jul 9, 15 @ 12:06 pm:
Just called over to Credit Union 1, and they had no clue what I was talking about.
- Union Dues - Thursday, Jul 9, 15 @ 12:18 pm:
No one is planning on paying interest on Quinns backpay. Its not been done on the portions paid and its not been figured into what remains to be paid.
- Thoughts Matter - Thursday, Jul 9, 15 @ 12:33 pm:
I spoke to Land of Lincoln credit union today. They hope to have a loan package in place early next week.
- gruntled employee - Thursday, Jul 9, 15 @ 12:35 pm:
My credit union knows nothing about this program. Rauner knew full well we would not get paid when he vetoed the first budget and then said he would deny an appropriation to cover employee paychecks.
- Juvenal - Thursday, Jul 9, 15 @ 12:37 pm:
Thoughts Matter:
In time for your first missed paycheck?
I hope that is some relief. Congrats.
I am sure the Springfield business community is happy with the credit unions right now.
- A guy - Thursday, Jul 9, 15 @ 1:09 pm:
=== JoeBlow - Thursday, Jul 9, 15 @ 12:06 pm:
Just called over to Credit Union 1, and they had no clue what I was talking about.===
Use a different name than Joe Blow. Would you loan money to a guy by that name? /s
- Me too - Thursday, Jul 9, 15 @ 1:13 pm:
Union Dues, my dad got interest on his back pay. I’m not sure why one would get it and another wouldn’t, but regardless, you are entitled to it. If you don’t receive it, file with the court of claims. You are entitled to 1% per month every month past 90 days. It is the law. Just because they don’t appropriate it, doesn’t mean it isn’t owed, it is still a debt.
- Dog - Thursday, Jul 9, 15 @ 1:51 pm:
And just what does this do for those that are not a
credit union members?
- Harold Hill - Thursday, Jul 9, 15 @ 2:24 pm:
Do the laws (Federal and/or State) regarding interest due on late pay apply to expenses as well, or just salary?
- Right Field - Thursday, Jul 9, 15 @ 2:41 pm:
== And just what does this do for those that are not a credit union members? ==
You can open an account at most credit unions for $50 or less to become a member. There are enough of them around that you would likely qualify for membership in multiple ones. Presume a list is being compiled by the Treasurer’s office.
- Emily Booth - Thursday, Jul 9, 15 @ 2:50 pm:
I remember CU1 offering loans in an earlier stalemate and seeing news stories showing photos of state employees standing in line to apply. It affected employees w/ an earlier pay date. My agency was not affected because we had a later pay date and the budget was passed before then. We’ve been thru this so many times in the past 25 years but this FY is a little different.
- gruntled employee - Thursday, Jul 9, 15 @ 5:55 pm:
CU1 said the offer of loans was to people who were members prior to May 1.