This is a presentation done by Dr. Richard Voltz, IASA Associate Director. It is an analysis of the finances in the State of Illinois as of March 12, 2010 based on the budget proposal presented by Illinois Governor Patrick Quinn.

1. Hot Topics
Dr. Richard Voltz, IASA
March 12, 2010

2. Budget, Budget, Budget

5. State of the State
• Illinois is estimated to be $11B to $13B in
debt
• Federal Funds via ARRA replaced $922M of
state funds per year for the last two years
• ISBE presented a flat budget for FY 2011
• In order to fund this flat budget Illinois needs to
generate $1B in additional revenue
• Current political climate may not allow for
additional revenue generation

7. State Revenues
Down
Income tax
Sales tax
CPPRT

8. Expenses Keep
Climbing
Pension costs, for instance, will
jump by about $1.7M

10. Governor Quinn’s
Budget Proposal
• $2B across the board cut in state spending
• $1.3B from K-16 schools, an 17% decrease
• GSA Foundation Level estimate $5,669
• Cannot fall below 2006 level of $5,500
due to ARRA maintenance of effort

11. • 13,000 education jobs lost
• State will still be $11B in hole
• $4.7B FY 2011 operating deficit
• $6.3B from FY 2010
• Proposed 1% Income Tax Surcharge
• "He's not included a tax increase in this budget, and
that's a conversation that has to happen," Jerry Stermer,
Quinn's chief of staff, said of the governor's plan. "The
General Assembly has not acted on a tax increase and
have given signals they don't want to act on a tax
increase."

12. • Quinn’s Five Pillars of Recovery
• Cut spending
• Strategically borrow
• Get more federal $ to Illinois
• Encourage new jobs
• Increase state revenues

15. Foundation Level History
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18. Problem with Illinois

20. Quinn Budget
• GSA cut by $613M
• Foundation Level at $5,669
• Flat Grant ???
• GSA Hold Harmless -$16M (-100%)
• MCATS cut $402M
• Early Childhood -$54M (-16%)
• Extraordinary Sp Ed -$66M (-20%)
• Reading Improvement -$36M ( -53%)
• Regular Transportation -$65M (-19%)
• Textbook Loans -$40M (-100%)
• Billingual Education -$20M (-30%)

21. ISBE & IASA Estimates
• 12,400 employees
• Remember this is based on flat budget
• 6,000 teachers
• 6,000 support staff
• 400 administrators

22. Less state support to
local governments
• Governor is proposing to take away part of
sales tax to cities
• -$300M
• Increase pressure on local taxing
authorities to raise taxes

23. More State Borrowing
• Quinn will propose borrowing billions of
dollars to pay off long-overdue bills

24. Still Leaves $5B Hole
• Raise taxes
• or
• Borrow more

25. Income Tax Increase
• Not likely
• Polls show voters are angry
• Senate President Cullerton and Speaker
Madigan have advised Governor to
introduce a budget without a tax hike.

26. Possible Solution
• “Get out of Springfield quick”
• May 7, 2010
• 6 month budget possible

27. Will this happen?
• Iowa
• New Jersey

28. IASA Services

37. MCATS
• For FY 2010
• Received two due in FY 2009
• Received one for FY 2010
• Anybody’s guess about second payment for
FY 2010

38. Equalization Formula
• There is a chance that both “flat rate” and
“alternative” formula funding will be
eliminated
• Hold Harmless probably eliminated

39. Superintendent Salaries

42. HB5188
Killed in Committee
5-11

43. Why give to IPAC?

44. HB 5188 Details
• Bill prohibits districts from paying any staff
member more than State Superintendent of
Schools (currently $190,000)
• No General State Aid if salary exceeds limit
• What’s next, no superintendent can make
more than mayor of town?

45. Arguments Against
• Sunset legislation on salaries (salaries have
to be posted on the district website)
• Usurps local control
• Caped salary bumps for pensions several
years ago
• Local school boards seek the most qualified
candidate, local community elects school
board members

46. Pension Reform
• It will happen!
• Two tiered system likely
• Employee contribution likely to increase

47. Illinois State Pension
Legislation
• Look at handout
• Civic Foundation proposal
• Decreases employee contribution to 7%
• Implementation date is 7/1/11 for both
future and current employees
• Current employees based on A + B

48. Future Employees
• Max credit is 35 years, no use of sick or vacation leave
• Age is Social Security based
• Reduced annuity for five years less than Social Security age
• Pension calculated on 96 of final 120 months (8 out 10 years)
• Capped at lessor of $100,000 or SS base
• 2% retirement annuity instead of 2.2%
• COL at the lesser of 3% or 1/2 CPI

49. Pension Reform
Analysis
• Pension Protection Clause of Illinois
Constitution ...”shall be an enforceable
contractual relationship.” “Benefits shall not
diminished or impaired.”
• Supreme Court - “Pension benefits earned
in the past cannot be reduced, while
benefits that the employee hopes to earn in
the future can be reduced.”

50. Other Issues

51. Interim
Superintendents
• ISBE wants to stop Interim Superintendents
• Each school district should have a full time
superintendent

53. More Stimulus Money?
• There have been rumors that President
Obama is considering another stimulus
round.
• Payoff for Illinois is $922M
• Interesting????
• You draw your own conclusions...

54. IASA Resources

57. http://thecapitolfaxblog.com/

58. Miller reaction to Quinn
• Final budget will not look like the Quinn
proposal
• Madigan still says tax increase will not
happen this year
• Cullerton said his chamber will not take
the lead on a tax hike
• GOP says no to all tax hikes

59. January 2010 Window
• If Governor Quinn is elected then...
• if some Republicans cross over and vote for
income tax increase...
• then possible revenue generation

60. Illinois School of
Advanced Leadership

62. Principal Preparation
and Certification
• Task Force has redesigned principal
preparation programs
• Internship required
• Curriculum revised
• Limit enrollments
• Start new “Teacher Leader” program

63. Principal Evaluation
• State must develop
• Teacher evaluation will probably be based
on Danielson if no local agreement
• Must include culture (climate)
• RTTTP provisions
• Rubric based on ISLLC 2008 Standards

65. SyfrSpace
http://www.syfrspace.org/