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Capitol Report for May 28, 2010

Double Overtime!

It appears that the General Assembly may be trying to take a page out of the Chicago Blackhawks playbook. While the Hawks were able to claim victory in overtime in a critical game last week, it’s unclear whether the Illinois General Assembly will be as fortunate.

The arbitrarily scheduled legislative adjournment date of May 7 came and went.  We anticipated the GA when it returned this week, would resolve the key issues; what funding for public education would look like, what new revenue might be adopted and how the pension payments to the systems might be resolved.  To date, we have little or no resolution on these issues.  Now, lawmakers have recessed, with plans to come back at some uncertain date to address the state budget and pension payments to the systems.

The question is ”Will they come back prepared to address the needs of the state or just come back and create more uncertainty?”

The Budget

The House and Senate concurred on a budget, a budget implementation bill and an emergency budget powers bill for fiscal year 2011.  This is the money we expect to go to schools as grants from the various agencies (Illinois State Board of Education, Illinois Board of Higher Education and the Illinois Community College Board).

For K-12 schools, the appropriation for FY10, for all grants, according to the ISBE, was $7.2 billion.  The combination of bills this year gives us flat funding for GSA ($4.615 billion) and for mandated categorical funding ($1 billion).  An additional $371 million is appropriated to ISBE for grants to schools in SB 1215.  That comes to a total of $6.9 billion for FY11, $367 million less than the total grant money for FY10, or about the approximate $300 million we’ve been expecting the cut to be for FY11.

For higher education the appropriation (for operations) is the same for FY11 as it was for FY10, $1 billion.

Much is still uncertain, given that Gov. Quinn can withhold money from various state agencies to manage the state’s cash flow.  The governor can hold back approximately 20% of the total appropriations.  We don’t yet know how this will play out for education.

Budget Legislation

HB 859 (Currie, D-Chicago/Trotter, D-Chicago) contains the state budget. It has passed both Houses and will now go to the Governor’s Desk.

SB 3660 (Cullerton, D-Chicago/Currie, D-Chicago) contains the Emergency Budget Act, which gives the Governor broad authority on how to implement the budget, allows the Governor the use of interfund transfers, except for funds that have a continuing appropriation, and includes the tobacco securitization. The tobacco securitization provision will allow the state to borrow $1.2 billion against future tobacco settlement money.  In essence, the state forgoes those contributions/payments for a lump sum payment of an estimated $1.3 billion that will be used today to fund the state budget. This is a one-time payment and will make next year’s budget even more difficult to create unless new revenue is found. The bill has passed both houses and will now go to the Governor’s desk.

SB 3662 (Trotter, D-Chicago/Currie, D-Chicago) is the Budget Implementation Act.  IEA opposed Amendment #3 of this bill because, if the appropriation is insufficient, the Illinois State Board of Education can short the GSA grant and make the full poverty payments.  While this provision may benefit some districts with high concentrations of poverty, it would hurt ALL school districts, as everybody else would get shorted. The bill has passed both houses and now goes to the Governor’s desk. 

SB 44 (Schoenberg, D-Evanston/Yarbrough, D-Maywood) is an additional $1 per-pack tax on cigarettes. The revenue from this new tax would be used to fund mandated categorical aid payments to school districts. The bill is expected to generate an additional $175 million in revenue for Fiscal Year 2010 and an additional $175 million in revenue for Fiscal Year 2011, for a total two-year gain in cigarette excise and use tax of $350 million.  The legislation has run into resistance in the House and it is uncertain whether it will be acted upon to assist with the education budget.  IEA supports this legislation.

Pension Payments

SB 3514 (Schoenberg, D-Evanston/Currie, D-Chicago) is the pension bond legislation that would make it easier for the state to make its payment to the state retirement systems (TRS and SURS included) this year by allowing the State to borrow an estimated $4.1 billion at a low interest rate (4.1%-4.5%). The alternative, legislating a pension payment holiday (delayed payment), would cost the taxpayers $58 billion according the bipartisan Commission on Government Forecasting and Accountability (COGFA).

The IEA supports this legislation.  The House passed this bill, but the Senate did not act on this legislation before adjourning on Thursday night.

Pension Continuing Appropriation

If SB 3514 never makes it to the governor’s desk, the state retirement systems (TRS, SURS, SERS, JRS and GARS) may still receive their required pension payment. This is due to a law called the State Pensions Continuing Appropriations Act (SPCAA). The threat is that the legislature may still decide to change this section of the law and appropriate a lower amount than the current law requires.  There may simply not be enough money in the state’s coffers to make a payment to the retirement systems without creating tremendous hardships for education funding. The required pension payment for this new fiscal year is an estimated $4.5 billion, which is an increase of $500 million from last year’s payment of $4.0 billion.

This could be the third consecutive year where the SPCAA is used to enact pension funding.  State Comptroller Dan Hynes made all payments required of TRS last year as directed by the Act.  SURS received smaller payments initially, but did end up receiving all of its contributions for last year.  We are concerned that this year may be more difficult for the comptroller to manage this task.

The IEA has been successful in preventing a change to the State Pensions Continuing Appropriations Act and will continue to vehemently oppose any attempts to legislate a pension payment holiday as contained in HB 543Please contact your state representative and voice your opposition to the pension payment holiday contained in HB 543.

Special Education Hold Harmless

HB 2270 (Forby, D-Benton/Bradley, D-Marion) appropriates $17 million to the State Board of Education for school districts who qualify to receive special education–hold harmless funds.  This legislation appropriates funds for the current fiscal year.  This IEA-supported measure passed both houses this week and is now before the Governor.

Vouchers

The Illinois House adjourned Thursday without taking another vote on SB 2494, the voucher bill.  House sponsor Rep. Kevin Joyce (D–Chicago) filed a fourth amendment to the bill which called for a gradual sunset and a provision requiring state testing.

The sunset would allow the voucher program to continue through the 2026-2027 school year.  After the 2019-2020, only the parents of students who had previously received a voucher would continue to be eligible to receive vouchers for those students until they are out of the 8th grade.

All students in a private school which enrolls voucher students would be state-tested if voucher students exceeded 20% of the school’s enrollment. The IEA believes the State would be responsible for the cost of these tests.

The IEA opposes SB 2494 in any form, because of the diversion of public funds to any private school or any other private education institution.  This bill would further erode state support of an already underfunded public education system.

Thank you for your calls to members of the House of Representatives in response to the IEA Calls to Action on the voucher issue.  Since the House could vote on this bill if they reconvene, please take the time over the next few days or next week to call or email your State Representative about this issue.  If your State Representative voted no on the voucher bill the first time it was called, please thank them and reconfirm their no vote. Though the vote was unofficial, click this link to see a video showing how the House members voted.

Principal Preparation Endorsement

IEA supported SB 226 (Demuzio, D-Carlinville/Smith, D-Canton) which provides that individuals wanting to become principals before July 1, 2014, must earn a “principal endorsement” through a program at a university or through a not-for-profit organization in a program approved by ISBE and the Board of Higher Education. The individual also would be required to serve a one-year internship if the principal candidate goes through a not-for-profit organization rather than a university. Current principals holding the general administrative endorsement prior to July 1, 2014, shall have their general administrative endorsements converted to a principal endorsement upon request to ISBE if specified conditions are met.  SB 226 was passed by both houses.

Legislation Sent to Governor

Freedom of Information Act

The IEA has sent a letter to the Governor asking for his signature on HB 5154, which prohibits the disclosure of performance evaluations of ESPs and higher education faculty and staff under the Freedom of Information Act.

Health care management in schools

The IEA has sent a letter to the Governor to encourage him to use his amendatory veto power to make changes to HB 6065, which would require a school employee to administer insulin to a student.

HB 6065 creates the Care of Students with Diabetes Act and allows self-administration of medication by a pupil with diabetes and requires teachers and school personnel to volunteer to administer medication to pupils with diabetes. (Download HB 6065 fact sheet).

IEA issued a “call to action” on this legislation and we encourage you to still take action. All IEA members are urged to:

  1. Call the Statehouse at 217/782-2000 and ask to be connected to the governor’s office.
  2. Once connected, please state your name and the school where you work.
  3. Ask that the following message be given to the governor:

“I would like the governor to use his amendatory veto to remove the section of House Bill 6065 that requires ‘Delegated Care Aides’ to administer insulin to students. Thank you.”

Higher Ed Borrowing

SB 642 (Haine, D-Alton)/Bradley, D-Marion) allows all public universities to borrow money to fund operations and improve their cash flow position.  The state is far behind in payments to all public universities and the bill allows them to borrow against future tuition revenue and future payments from the state.  The bill is supported by IEA and needed to help universities make payroll.  The bill is currently before Gov. Quinn for his action.  He has said that he will hold the university borrowing bill until the pension borrowing issue is resolved. The Governor is considering expanding the pension borrowing bill to include university borrowing.

G.A. Glossary

Continuing Appropriation

A continuing appropriation is a provision in Illinois law that guarantees a payment from the state for a specific purpose. For example: the state of Illinois has a continuing appropriation for pension funding (State Pensions Continuing Appropriations Act.) This appropriation can be changed by a simple majority vote during the regular legislative session but would require a three-fifths vote in overtime. If there is no appropriation made for pension funding in the state budget, the continuing appropriation provision kicks in and ensures that the state retirement systems (TRS, SURS, SERS, GARS, and JRS) receive full funding as required by law, regardless if there was an appropriation or not. This could be the third consecutive fiscal year where the continuing appropriation provision is implemented due to either no appropriation for pensions in the budget or an appropriation that is insufficient to make the required pension payment.