* Gov. Rauner said several times last week that he expected the Illinois State Board of Education to finish running the district numbers on his school funding reform plan by today. He explained to reporters today that the process is “very complicated,” and said he hoped they would be out very soon.
The governor then repeated his claim he made again and again last week that ISBE won’t run numbers unless there’s a specific piece of legislation in front of them, so he couldn’t get ISBE that language until the Senate sent him SB1 and he was able to formally issue his amendatory veto. And, of course, he’s upset that the Senate waited so long to send him the bill because that caused an unnecessary delay in getting the numbers out of ISBE.
PEARSON: Why didn’t you have Sen. Brady just introduce a bill that had the language of your amendatory veto since much of the debate that’s been going on was about what you were going to be proposing in your amendatory veto? It could’ve been scored already, we would’ve already had the numbers and then you could have a back and forth discussion where everybody knows where they stand instead of trying to cherry pick numbers?
RAUNER: Well, Rick if your argument is trying to defend what the General Assembly did…
PEARSON: I’m not trying to defend anybody… You say you couldn’t score the numbers and you accuse the Democrats of holding the bill so that they couldn’t score the numbers. You said if it was in legislative form it could be scored. You could’ve asked Sen. Barickman, you could’ve asked any of the Republicans to put your AV… in legislative form and it could’ve gotten scored. That’s all I’m saying. It’s a process question, it’s not a political question.
RAUNER: [Takes deep breath, maybe says “Fair,” moves along to next question.]
PEARSON: I’m sorry! Couldn’t you have done that?
RAUNER: [Takes next question.]
Oof.
*** UPDATE 1 *** The Chris Kennedy campaign asked that I post this update, which they entitled “Kennedy campaign response to Rauner’s mess” to either “the CPS thread or the Pearson thread,” so I put it here…
How much more time does Springfield need to fix the state’s broken school funding formula? How many more setbacks will it take before Governor Rauner stops using children as political pawns? This is not an abstract budgeting exercise. The governor has failed our state on an epic level. We need change now - for the sake of students across the state.
*** UPDATE 2 *** Video…
.@rap30 asks @GovRauner to explain why he didn’t introduce school funding plan earlier
It has been more than a month since the General Assembly authorized Gov. Rauner to offer up to $6 billion in General Obligation bonds, which would allow the state to lower the interest rate it pays on its debt.
That high interest rate – up to 12 percent a year – is costing Illinois taxpayers $2 million a day in late payment interest penalties for every day the Governor does not move on putting together the bond issue.
Minutes after the General Assembly voted to override the Governor’s budget veto July 6, Comptroller Mendoza sent a letter (see attached) to the Governor’s Office of Management and Budget, seeking a meeting to talk about getting started on the bond issue. Our staff met with the budget office July 14. No timetable for a bond offering was provided.
We sent a follow-up letter (see attached) to the Governor on Friday, July 28, but have heard nothing back. It will take several weeks to put the bond deal together and the longer the wait, the more taxpayers will pay in higher interest rates.
Comptroller Mendoza released a video Monday morning to help familiarize Illinois citizens with the importance of refinancing the state’s debt through a bond offering. “You should know that this debt is costing you, the taxpayer, $2 million dollars a day, at up to 12% interest in late payment interest penalties. 12%. That’s brutal,” Comptroller Mendoza says on the video. “But just like you at home, if you had the opportunity to refinance your debt at a lower interest rate, and save money, you would. People do it all the time with their home mortgages. That’s just common sense.”
The bonding will be used to start to tackle the state’s bill backlog, which reached a record peak of $15.4 billion in June. It will give some relief to providers and businesses awaiting payment from the state. Over the past two years without a budget, they have had to exhaust their lines of credit, lay off employees and, in some cases, turn away Illinois citizens in need of services.
“Approximately 90% of our mental health and addiction treatment providers’ bills have gone unpaid over the last 12 months,” Sarah Howe, CEO of the Illinois Association for Behavioral Health, said. “We strongly urge Governor Rauner to move forward on the authorized bonding to pay for services for which the state is obligated to pay under contracts that the governor’s Department of Human Services signed. This action would help bring stability to a system faced with potential closures.”
“Since the budget impasse has ended, many people believe human service providers’ financial woes are over,” Sherrie Crabb, Executive Director of Family Counseling Center in Vienna, said. “This couldn’t be further from the truth. The fact remains that human service providers, like Family Counseling Center, are still owed hundreds, and some even millions, of dollars. Agencies like ours have had to reduce programming, cut employee jobs and benefits, and some have even closed their doors.”
“While we are feeling some relief now that a budget is in place, we are still operating week to week,” Cathy McClanahan, Executive Director of the Women’s Center in Carbondale, said. “Releasing bonds would guarantee that our services to domestic violence and sexual assault survivors will continue.”
I’ve asked the governor’s office for a response. I’ll post it when I get it.
*** UPDATE 1 *** From Laurel Patrick in the governor’s office…
Rich,
Comptroller Mendoza isn’t telling the whole story. She has the authority to immediately use over $600 million from fund transfers and inter-fund borrowing to pay down bills. This $600 million can be used to reduce the backlog of bills by as much as $1.2 billion if she prioritizes Medicaid payments, which will allow the state to capture federal matching dollars.
The Comptroller should act now. Our office contacted hers last week identifying potential fund transfers and inter-fund borrowing options to begin paying down the backlog. This would reduce the backlog of bills, reduce interest costs, and provide clarity for bonding options.
The Governor’s final decision on bonding requires us to first know how much of the bill backlog can be addressed through means other than bonding. That is why we ask the Comptroller to begin reducing the backlog of bills immediately. We have worked cooperatively with the Comptroller to achieve this critical first step, and ask that she take action to help the state. This will not only reduce the backlog of bills, it will advance the analysis necessary to make a final decision on bonding.
We are additionally working to save taxpayer dollars by reducing spending and reforming government not only to pay down the backlog of bills but also to keep the state from building more debt in the future.
Thanks,
Laurel
Interesting points. I’ll be following up with Mendoza’s office.
*** UPDATE 2 *** From the comptroller’s office…
We’d like to thank the Governor’s Office for validating the work that we have already been doing, in paying down the $15 billion backlog of unpaid bills that has more than tripled since Governor Rauner took office. Now it’s time for the Governor to do his job.
The Office of the Comptroller has utilized funds from inter-fund transfers to access millions of dollars in federal funds. Ironically, the budgetary tools we are using now were vetoed by the Governor, who has come around and is now apparently encouraging their use.
What we need right now is movement by the Governor’s Office and a solid timetable for refinancing the debt so that our office can establish a comprehensive cash management plan for the remainder of Fiscal Year 2018.
Interfund utilization was never envisioned as a substitute for refinancing the debt. They are supposed to work in tandem. Our office has been working effectively on this with GOMB and our communications (see attached) show that.
The fact remains that $600 million is a drop in the bucket compared to the nearly $15 billion backlog of unpaid bills. Our office is appropriately managing our responsibilities, but until the Governor does his job, taxpayers will continue to be on the hook for $2 million a day in late payment interest penalties.
I’ll post the correspondence when I receive it.
…Adding… The paper trail referenced above is here and here.
*** UPDATE 3 *** A commenter wondered where the state treasurer was on this issue. Ask and ye shall receive…
As the state’s chief investment officer, Illinois State Treasurer Michael Frerichs today urged Gov. Bruce Rauner to act on the authority given to him and refinance the nearly $15 billion bill backlog.
The backlog, which has tripled since the Governor took office, represents loans from unwilling employers doing business with the state at the outrageous interest rate of 12 percent.
“There is not a financial advisor worth his salt who would urge a family to keep a 12 percent loan when better interest rates are available,” Frerichs said. “Taxpayers paying $2 million in interest each and every day defies common sense and borders upon malpractice.”
Despite going nearly two years without a budget, there still is appetite in the financial markets to refinance Illinois debt because the state guarantees repayment. Indeed, that repayment guarantee is another argument supporting refinancing.
“Refinancing isn’t enough, of course, and difficult decisions remain,” Frerichs said. “But why in the world would we not do this?”
Illinois has endured eight credit downgrades since Gov. Rauner took office in January 2015. The bill backlog was considered with each downgrade.
