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* Last year around this time, I celebrated my 50th birthday by throwing a fundraiser for Lutheran Social Services of Illinois. We raised about $60K for the group, but I wish I could’ve raised $60 million…
Chicago social worker Frank Harris and his staff have felt the pain of turning away even more people seeking treatment for their drug addictions as Lutheran Social Services of Illinois has taken steps to deal with funding cuts and chronic payment delays from state government.
“Who wants to be known as the state that can’t help those who need help the most?” he asked.
As the Kenmore Center treatment facility Harris supervises was forced to lay off 20 percent of its staff over the past few years, Lutheran Social Services reduced the number of substance abusers it was able to treat in the Chicago area by almost 1,200 a year.
The 5,630 people served in fiscal 2008 dropped to 4,464 in the fiscal year ending June 30, 2012.
It’s likely that many people turned away by Kenmore haven’t been able to find timely treatment elsewhere.
Ugh.
…Adding… To donate to LSSI, click here.
* In other news, the Wall Street Journal ran a story recently about how vendors facing mountains of past-due bills can get most of their money up front via a new company. The article is behind a subscriber firewall, but Illinois Review sums up some points…
Vendor Assistance is funded by a small investor group and has secured a revolving credit facility totaling $320 million, with Citigroup Inc. as the lead lender, WSJ reports. The company currently has 12 employees. […]
Vendor Assistance pays vendors 100% of what the state owes them—90% initially, and then the vendor is paid the remainder in two installments. Vendor Assistance makes its money from the late fees, which in Illinois are 1% a month on the balance owed after a 90-day grace period. Last year, Illinois paid a total of more than $85 million in late fees.
As IR notes, the worse off the state becomes, the more this politically connected company is paid. But at least something is being done.
posted by Rich Miller
Monday, Mar 25, 13 @ 12:18 pm
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When you spend deacdes providing services closer to a NY or CA and tax mopre like TX and you don’t have a printing press you will end up in a sorry state and we are
Comment by RNUG Fan Monday, Mar 25, 13 @ 12:31 pm
A good argument for the state issuing bonds to pay a lower rate of interest. It is a win/win for the vendors and taxpayers.
Comment by John Parnell Monday, Mar 25, 13 @ 12:32 pm
If I remember correctly, one issue with using that program, is it can’t be done for Medicaid matched receivables…maybe its been changed where that is the case.
Comment by Waffle Fries Monday, Mar 25, 13 @ 12:56 pm
Isn’t it $85mil a month? $9bil at 1% a month.
Comment by RetiredStateEmployee Monday, Mar 25, 13 @ 12:59 pm
–Lutheran Social Services reduced the number of substance abusers it was able to treat in the Chicago area by almost 1,200 a year.–
What’s the over/under on how many of those are in much-more expensive county or DOC?
Comment by wordslinger Monday, Mar 25, 13 @ 1:06 pm
Man, a bunch of us here were commenting on this idea back when the Senate GOPs first put the kibosh on borrowing to pay past due bills. It doesn’t take a financial genius to figure out the business model for Citibank, just an astute (and deep pocketed) reader of comments right here at Capfax.
Too bad none of us had $300 million to put up. We could have been rich.
Comment by 47th Ward Monday, Mar 25, 13 @ 1:15 pm
Try this link for the WSJ article, it should be free: http://on.wsj.com/YxtwNz
Comment by Downfall Monday, Mar 25, 13 @ 1:15 pm
@RetiredStateEmployee:
The answer is no. Your calculation assumes that there was $9B in outstanding bills that went unpaid for 12 months after the 90 day timeframe when interest starts to accrue.
Comment by Demoralized Monday, Mar 25, 13 @ 1:16 pm
Most of that backlog is not accruing interest.
However, if you use the last two budgets as an example of a plan to pay the backlog down over a number of years, yes, it does make since to do a 7 or 10 year bond sale…you may be paying less annually that way.
Comment by Waffle Fries Monday, Mar 25, 13 @ 1:17 pm
@ my previous link - my mistake, I was able to see it a few times, but not free.
Regardless, a win for vendors. Surprised they could find the financing. I could see legal issues if they pay this firm ahead of municipal bondholders. Then this would just be an end run around the creditor in front of you.
Comment by Downfall Monday, Mar 25, 13 @ 1:19 pm
LSSI is truly doing God’s work — and the state’s work — with so many programs. Thank you.
Comment by Dan Bureaucrat Monday, Mar 25, 13 @ 1:20 pm
As noted the backlog to Universities, schools and other government agencies do not accrue interest. I’ve never understood why the measure to issue bonds to get current didn’t pass, it would have solved so many problems and saved the State so much in interest. I also do not understand why the State hasn’t amended the statue to bring the interest more in line with today’s lower interest rates. A simple bill to lower the interest to 1/2% per month would cut the State’s cost in half.
Comment by Robert0117 Monday, Mar 25, 13 @ 1:24 pm
“A simple bill to . . . ” In Illinois, there is no such thing as a simple bill.
Comment by Anonymous Monday, Mar 25, 13 @ 1:45 pm
Not a bad receivables management plan. I suspect part of the plan is that the folks using the service are going to use it more and the state is going to get worse in time to pay.
Comment by OneMan Monday, Mar 25, 13 @ 2:19 pm
Downfall, they aren’t getting paid ahead of “municipal bondholders.” Where did you get that?
Comment by Arthur Andersen Monday, Mar 25, 13 @ 2:21 pm
my sense was that a lot of creditors weren’t actively pursuing the late fees to keep good relations with their agency customers and not risk continued business. Using this system, they can use the excuse that it was that they needed to sell the receivables for the cash flow, and it wasn’t them that made the state pay the late fees.
Comment by park Monday, Mar 25, 13 @ 2:38 pm
Our vendors need this, but….isn’t it factoring, and isn’t factoring public debt illegal?
Comment by Publius Monday, Mar 25, 13 @ 3:09 pm
Finances aside this is painful to watch - I worked at Kenmore as the fitst program director in 1976 with decriminalization of public intoxication - we were always busy, always needed - LSSI was one of my most favorite places to work - although the pay was really low - the staff were amazing 24/7 365 - it was great when folks came back to thank us
Comment by Elise Monday, Mar 25, 13 @ 3:24 pm
Isn’t it something that human service providers have to reduce services or close down programs in an under-funded system and yet Vendor Assistance can get involved and make a profit out of that same system? It reinforces Big Jim’s comments about doing everything short-term without thinking about resolving the system problems long-term.
Comment by Earnest Monday, Mar 25, 13 @ 5:03 pm
Publius, I think when factoring is involved the vendor takes less than the full amount owed That’s not the case here as I read the story. Correct me if I’m wrong.
Comment by Arthur Andersen Monday, Mar 25, 13 @ 5:40 pm
==my sense was that a lot of creditors weren’t actively pursuing the late fees to keep good relations with their agency customers and not risk continued business. ==
If that was the case for vendors at any agency, then it was in direct violation of the Prompt Payment Act…
“(30 ILCS 540/6) (from Ch. 127, par. 132.406)
Sec. 6. A State official or agency may not request any vendor or contractor to waive his rights, under this Act, to recover a penalty for late payment as a condition of, or inducement to enter into, any contract for goods or services.
(Source: P.A. 87-773.)”
http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=539&ChapterID=7
Comment by Anonymous Monday, Mar 25, 13 @ 6:06 pm
Times are tough for sure but in any event you should be lauded for your efforts…God bless.
Comment by Just The Way It Is One Monday, Mar 25, 13 @ 6:27 pm
‘I have a state receivable, and I NEED CASH NOW!!’
Comment by Happy Returns Tuesday, Mar 26, 13 @ 12:09 am