Week in Review - October 7-11

Chicago – Schools

·         Chicago Public Schools receive $235 million in overpayments from Illinois taxpayers; Rep. Pihos files reform package to hold Chicago accountable.  In response to recent revelations that Illinois taxpayers overpaid Chicago Public Schools (CPS) by $235 million in block grant funds for the 2011-2012 school year, Representative Sandy Pihos has filed a package of bills that would repeal the preferential block grant funding for CPS and require CPS to submit claims for reimbursement of special education costs, just like the other 859 school districts throughout Illinois are required to do.

According to Pihos, the root of the problem can be traced to a lack of accountability with how grant money is sent to CPS and a failure within CPS to comply with reporting mandates required within the Illinois School Code.  Whereas every other public school district in the state gets reimbursed for services delivered, current law allows CPS to receive their block grant money up front.  For 2011-12, CPS received $483.7 million in block grants, but provided only $249 in student benefits.  Nearly 30 percent of special education funding was earmarked to CPS, which only had 16 percent of the special education student population in the state.



For the last 18 years, CPS was not obligated to report Block Grant spending, which made it very difficult for the State Board of Education to track the efficiency of how CPS was spending the money.  Two years ago the General Assembly ordered CPS to begin reporting grant expenditures, but CPS failed to comply with reporting mandates.  It was only recently that the report was received and the discrepancy was discovered. 

Pihos’ Chicago Public Schools accountability and reform package includes:

HB 3690 - Make CPS Funding Requirement Procedures the Same as All Other School Districts

Repealing the preset allocation that CPS receives in Block Grants would require them to submit claims for spending to the State Board of Education, thus mirroring the requirements of every other district in the state.

HB 3691 – Make CPS Submit Claims for Special Education Funding

Removing special education services from the Chicago Block Grant would require the district to submit claims for annual reimbursement just like every other school district in Illinois. CPS received $222.8 million more for Special Education than actual claims in 2011-2012.

HB 3692 – Hold CPS Accountable for Refusal to Submit Claims in a Timely Manner

This proposal would withhold all federal and state funding due to CPS in the event that the district does not comply with the reporting procedures outlined in PA 97-238, which created the reporting requirements for Block Grant funding. Funding would be restored when compliance is achieved. CPS was not compliant with the disclosure requirement, forcing the State Superintendent of Education to threaten the withholding of funds and a designation of non-recognition status for the district.

Concealed Carry

·         State Police describe record number of FOID card, concealed carry instructor applications.   Approximately 60,000 Illinois residents per month are applying for new FOID cards, which are the cards held by 1.6 million Illinoisans that are required to legally purchase and own a firearm.  As of Tuesday, October 8, almost 1,000 people statewide had been legally approved to instruct FOID cardholders in how to apply for the right to carry a concealed weapon.  These 959 instructors will offer courses, ranging in length from 8 hours to 16 hours, to certify an applicant as qualified to apply for a concealed carry permit.  Most instructors will charge a tuition fee for these instructions. 

Instructional work should begin in the near future, as the State Police have set forth guidelines for the instructional curriculums that the instructors will follow; but the State is not required to actually open its concealed carry application window until January 2014.  Organizations that represent gun owners are pushing to open this window.  Concerned gun owners may want to look up the State Police’s website for further concealed carry information at http://www.isp.state.il.us/firearms/ccw/ and Frequently Asked Questions (FAQ) at http://www.isp.state.il.us/firearms/ccw/ccw-faq.cfm.

Downstate

·         Archer Daniels Midland ups stakes in proposed headquarters move.  The global food processor, which reported $85 billion in sales in 2012, is talking to large U.S. cities about moving its headquarters location from Decatur, the firm’s 40-year home, to a locality with substantial passenger air service.   A Minnesota official reported on Tuesday, October 8 that ADM had met with state executives to learn about a possible incentive package that would entice the firm to move from Illinois to the Minneapolis-St. Paul area.  The Twin Cities, home of the former Northwest Airlines, has significant passenger plane service to Europe and Asia.  St. Louis is reported to have also submitted a bid.  Both cities, as well as an unknown number of additional competitors, are competing with Chicago for this Fortune 500 prize.

ADM executives have told Illinois House lawmakers that they would like to see a substantial State income tax giveback, funneled through the Economic Development for a Growing Economy (EDGE) tax incentive law, in order to give their firm an incentive to retain its headquarters in Illinois.  ADM’s move out of Decatur follows the move of a rival in the corn-based sweetener market, formerly Decatur-based Tate & Lyle, which moved its North American headquarters to Hoffman Estates in 2010.

Economy

·         Washington, D.C.-based Tax Foundation again downgrades Illinois’ business climate.   In a report, “2014 State Business Tax Climate Index”, released on Wednesday, October 9, the nonpartisan Tax Foundation ranked Illinois’ business tax climate at the below-average level of 31st among the 50 states.  This was a downgrade from 30th in the preceding year.  Neighboring Indiana was ranked 10th best. 

The Tax Foundation looked at the varying tax policies of the 50 states meant to cover their budgets for FY14, which is now underway in almost all states (Illinois’ fiscal year begins on July 1 of the preceding calendar year).  Other nearby states with high-ranking business climates include Michigan (#14) and Missouri (#16). 

States ranked poorly by the Tax Foundation include some of America’s largest states; these states often have inner-city social spending needs and a graduated income tax rate schedule.  California is ranked #48 and New York is ranked #50.  The Tax Foundation’s summary can be found at http://taxfoundation.org/article/2014-state-business-tax-climate-index.

Gambling

·         “Poker run” reform language filed in Illinois House.  A “poker run” is a fundraising event, especially popular in suburban and rural areas, where a group of people with common ties come together to progressively visit five or more goal locations.  At each location they buy or are awarded a game token, such as a playing card, and at the end of the poker run the player or team with the best poker hand or bunch of game tokens wins a prize. 

Under current law, poker run organizers have to register and get licensed under the time-consuming rules administered by the state Department of Revenue under the Charitable Games Act.  Two House Republicans, Rich Brauer and Chad Hays, have filed bills (HB 3689 and HB 3694) to remove poker runs from this State law.

·         Video gaming underperforms revenue expectations.  Truck stops, social and fraternal organization meeting halls, and places where alcohol is served have been authorized starting in early 2013 to set up video games (similar to slot machines) for customer play.  A “gold rush” was expected.  Individual gaming location hosts told central Illinois’ WICS-Channel 20 on Monday, October 7 that they were happy with game turnover, but the State’s Commission on Government Forecasting and Accountability (CGFA) indicated that electronic reporting of game play and tax receipts were coming in below expectations.  While CGFA had estimated that video taxes would yield as much as $1 billion in the first year of licensed play, the true figure for calendar year 2013 will be closer to $200 million.

CGFA noted that a significant number of additional license applications remain in the hands of the Illinois Gaming Board, awaiting approval.  It is possible that as fewer licenses are awarded, video gaming total revenues and the tax “take” may rise further.         

General Assembly

·         House Republican Leader-elect Jim Durkin announces new leadership team.  After Leader Durkin took on his new responsibilities in late September, he consulted with his colleagues to name the men and women who will serve as Deputy Leaders and Assistant Leaders.  David Leitch, the dean of the House Republican caucus, and Patti Bellock, the caucus leader on Medicaid and many other issues, will serve as Deputy Republican Leaders. 

The six Assistant Republican Leaders will be Dan Brady, Chad Hays, Bill Mitchell, JoAnn Osmond, Dennis Reboletti and Mike Tryon.  Mike Bost will serve as the Conference Chair.  Ron Sandack and Chad Hays will join Dennis Reboletti and Ed Sullivan Jr. as the Floor Leaders for the Illinois House Republicans.

Health Care

·         Warnings go out that 15,000 Medicare-eligible state retirees must leave Health Alliance, find new insurer by January 1.  The Champaign-Urbana-based Health Alliance told the Champaign News-Gazette on Tuesday, October 8 that they were not likely to appeal the decision last week by the Quinn administration not to include their firm on the list of health insurers admitted to the Medicare Advantage program.  This decision, if it stands, will require an estimated 15,000 retirees from state government and institutions of higher education to select from a short list of plans offered by three nationwide health giants: Aetna, Humana, and United Healthcare.    

Especially affected are approximately 6,000 Champaign-Urbana-based retirees who have established doctor-patient relationships with the Carle health care system through Health Alliance.  The Carle system is not currently on the Medicare Advantage preferred provider lists of the three short-listed firms; and persons in this category – including persons with multiple diagnoses and challenging medical conditions – are expected to be required to find new physicians or physician teams before January 1. 

State Government

·         State workers, retirees get letters urging them to obtain IRS tax transcripts.  The new documentation will be required to verify a State worker, university worker, or State/university retiree’s status as the head or co-head of a household that contains one or more persons who are dependents.  A person in these categories will not be allowed to continue to enroll a dependent in his or her State health insurance account unless the dependent is accepted by the IRS as a dependent.  The IRS operates a website that accepts applications for tax transcripts at http://www.irs.gov/Individuals/Order-a-Transcript‎.

News reports have indicated that request fulfillments for IRS tax transcripts may be delayed due to the current federal government partial shutdown.  Under the revised deadline, retirees will be given until December 6, 2013 to submit these tax transcript documents.

·         Widespread criticism in response to Quinn executive order.   Last week, Governor Pat Quinn quietly signed an executive order that removed a previous section from the applications used by most job hopefuls applying for employment with the State.  The section requested applicants to disclose convictions for serious criminal offenses.   Attempts to remove the criminal offense section via legislative action have repeatedly failed in the General Assembly.  Lawmakers and State executives have traditionally felt that a job applicant’s criminal history is important hiring information to consider for any office of public trust and expense.

The decision by Governor Quinn to stop asking job applicants for their conviction history has puzzled many Illinois opinion leaders.  For example, the Champaign News-Gazette editorialized against Quinn’s decision on Wednesday, October 9.  Many believe that the State and its agencies should not take any steps to send the wrong message to Illinois taxpayers about who has been hired to collect a public paycheck and perform essential work for the common good.  Individual agencies will continue to have the authority to conduct criminal background checks on job applicants, including background checks performed at taxpayers’ expense, if these State agencies have the budgetary means to do so. 


Suburbs

·         CMAP votes against Illiana toll highway; project remains alive pending further discussions.  On Wednesday, October 9, the Chicago Metropolitan Agency for Planning (CMAP), a key planning board that has been deputized by the federal government to oversee the future transportation needs of the greater Chicago area, voted 10-4 not to support construction of the $1.3 billion Illiana toll highway.  Supporters say the 47-mile-long Illiana Corridor will be a way for motor vehicles, particularly cargo trucks, to move back and forth from Illinois’ Interstate 55 near Wilmington to Indiana’s Interstate 65.  The Will County area is a growing base for North American truck traffic and logistics.


CMAP’s “no” vote could have been decisive had this been a project requiring federal aid, because of CMAP’s role as an oversight authority over federal aid to local planning needs.  The Illiana Corridor’s backers, however, which include the Illinois Department of Transportation (IDOT), are planning the proposed highway as a public-private partnership that will be built with funds from the private sector, along the manner of key toll roads in Texas and Virginia.  Another vote on the Illiana project is expected to be taken soon by a different Chicago-area planning body, the Metropolitan Planning Organization Policy Committee.