Week in Review for 6/8/15 - 6/12/15

Budget – FY16
Comptroller Munger warns of consequences if budget not enacted. The State’s chief cash flow manager, Comptroller Leslie Geissler Munger, reported on Wednesday, June 10 on the actions the State will be forced to take if no budget is enacted prior to the end of the State’s fiscal year on June 30, 2015.

Successive actions the State will be forced to take include delayed paychecks for State workers, unanswered billings from and no payments to new Medicaid and other State-financed health care providers, no new payments to other State vendors, and no general state aid (GSA) payments from the State Board of Education to school districts. These actions are expected to hit in different ways at different times. For example, the Comptroller reports that the first scheduled payless payday will be July 15. The first GSA payment is due no later than August 10.

Munger pointed out that some monies remain in place to pay essential bills under the “lapse period” law. This law allows leftover money appropriated for use in fiscal year 2015 (FY15) to be spent down during the first 60 days of FY16. However, funds available under this pathway fall far short of the monies required to keep all of the State’s legal commitments, such as paychecks for State workers and GSA payments to schools.

House Republicans have repeatedly called for the startup of real budget negotiations and the creation of a balanced budget, as demanded by the state Constitution.

Workers’ Compensation
Gov. Rauner and reformers call for stricter causation standards. One of the open issues facing the Illinois General Assembly is the need for real workers’ compensation reform. HB 4223, legislation sponsored by House Republican Leader Jim Durkin with the full support of Governor Rauner, contains changes in causation standards that could help eliminate Illinois’ status as one of the top 10 U.S. states with the highest workers’ compensation insurance costs in the country. Most employers are required to purchase workers’ comp insurance for their employees as a legal mandate on the employer-employee relationship.

The insurance premiums are not only tied to the actuarial danger of each workplace, but to each state’s underlying laws that impose burdens on the workers’ comp system. States characterized as more burdensome, such as Illinois, see higher workers’ comp insurance rates. As workers’ comp premiums are a mandated add-on to the cost of each employee headcount position, any increase in the cost of workers’ comp insurance will reduce the number of Illinois jobs created and maintained.

Illinois’ unemployment rate is 6.0 percent as of April 2015, higher than the national unemployment rate of 5.4 percent. Illinois job creators are placing increasing pressure on the General Assembly to enact real workers’ compensation reform. As of Friday, June 12, however, the workers’ comp reform bill (HB 4223) remained bottled up in the Madigan-controlled House Rules Committee.

Property Taxes
Property tax relief and mandate reforms needed to help middle-class families. Both the Illinois House and the Illinois Senate discussed and debated property tax issues during their sessions on Tuesday, June 9. No resolution was reached in either house. A report from the nationwide Urban Institute labeled Illinois as the state with the second-highest property taxes in the U.S.

Heads of local governments and tax reform experts agree that a freeze on Illinois property tax bills, or on the local-government property tax extensions that are used to generate these bills, could have unintended consequences. Many advocates are starting to call for real reforms in the way Illinois taxing bodies fulfill their duties. Relief that could be offered includes reductions in the unfunded mandates imposed by Springfield on local governments and school districts. Governor Rauner has renewed his call for the General Assembly to take a genuine look at these mandates and to sit down with him in real negotiations on one of the issues that faces the State and its taxpayers. House Republican Leader Jim Durkin has filed HB 4224 to enact a property tax freeze and reduction in local government mandates.

College Illinois
Illinois program to underwrite prepaid tuition contracts at Illinois colleges and universities faces long-term challenges. The College Illinois program, operated by the Illinois Student Assistance Commission (ISAC), asks contractual depositor/investors to provide money up front for a future college student named by the investor. Funds deposited in College Illinois are used to prepay tuition at an Illinois public college or university for that student. College Illinois is an approved, tax-advantaged investment vehicle under Section 529 of the federal Internal Revenue Code. Section 529 prepaid tuition programs, like College Illinois, should be distinguished from Section 529 college savings plans such as Illinois’ Bright Start program, operated by the Illinois Treasurer’s office.

Popular in the 2000s, state prepaid-tuition programs like College Illinois have come under fiscal challenge in the 2010s due to changes in public perception of governmental probity and falling rates of return on invested capital, even as tuition rates continue to increase. ISAC reported on Tuesday, June 9 that over a two-year period, they have sold too few prepaid tuition contracts to enable persons connected with the program to feel assurance that it can continue to operate indefinitely. During this two-year period 1,084 contracts were sold (438 in 2013-14 and 646 in 2014-15), well short of the 3,000 contract sales required for the program to enjoy sustainability.
Monies invested in College Illinois by existing contract holders are being invested and managed on a professional basis, and the program has partly recovered some of the unfunded deficits that appeared in the depths of the 2008-13 economic downturn. Sharp returns on monies invested in Wall Street equities have enabled College Illinois to keep its immediate commitments and partly claw back its standing. ISAC has told House Republicans that families with College Illinois contracts that are close to maturity are highly likely to enjoy a full return on their assets invested.

College of DuPage 
Continued investigation leads to administrative leave for key officials. Auditors continue to look through the books of the College of DuPage (COD) and the administrative decisions taken by departed President Robert Breuder and other top college officials. On Tuesday, June 9, two key college vice presidents of financial affairs were placed on administrative leave by interim college President Joseph Collins. Affected by the move were Thomas J. Glaser, COD’s senior vice president of administration and treasurer, and Lynn Sapta, assistant vice president of financial affairs and controller. The administrative action was accompanied by a disclosure that the College has lost $2.2 million that had been deposited in a risky investment fund.

The “Clean Slate” panel of new COD college trustees, most of whom were elected in the spring 2015 election, questioned Glaser and Sapta at the May 2015 board meeting. The trustee majority members have placed themselves on record as being in complete support of the ongoing coordination of audits and investigations that are scrutinizing the recent fiscal and administrative records of the public college.

Efforts continue to address the auditors’ recommendations prior to the start of the College of DuPage’s fall term on August 19. Continued prompt action became even more essential with the May 2015 announcement by the Higher Learning Commission, the COD’s accreditation commission, that COD’s standing as an accredited institution of higher education has been placed under review.

Economy – Craft Breweries
General Assembly approves bill to authorize expansion by craft breweries. A bright spot in the Illinois economy is the rising number of craft operations that brew unique and local beers, which are often sold on-site in brewpubs or taprooms. Many beer distributors are developing mutual arrangements with craft breweries; these contracts expand the opportunity for these beers to be consumed in local taverns and even sold in beverage stores and groceries.

While current law allows many breweries licensed as craft breweries to brew up to 30,000 barrels of annual production, this cap increasingly limits production growth and job creation by Illinois brewmasters and owners. On Tuesday, June 9, the Illinois House concurred with Senate amendments to HB 3237 to increase the craft-brewing production cap to 120,000 barrels/year, sending the measure to Gov. Rauner for possible approval.

Lincoln Library 
Fate of Abraham Lincoln Presidential Library left without resolution. One of the bills passed by partisan majorities of both houses of the Illinois General Assembly, and then stalled on the order of “Motion to Reconsider,” was SB 1728. This controversial measure would move the presidential library from the Illinois Historic Preservation Authority and make it an independent State agency. The House vote on SB 1728 as amended by the library language was 69-47-0.

However, after the Senate concurred with the House’s Lincoln Library language on May 31, 2015, Senate President John Cullerton filed a “Motion to Reconsider” on the bill. This parliamentary move effectively locked the bill in his desk drawer and left the Library and its approximately 95 headcount employees without closure as of mid-June 2015.

2015 Special Olympics 
Illinois State University hosts athletic festival. The Illinois Special Olympics are scheduled to kick off on Friday, June 12, at ISU’s Bloomington-Normal campus in central Illinois. The games are scheduled to continue until Sunday, June 14. Qualified athletes from all over Illinois were invited to compete in aquatics, bocce, gymnastics, powerlifting, soccer, and track and field events. More than 4,100 athletes are scheduled to attend with friends and family.

Athletes qualify for the Illinois Special Olympics through their participation in affiliated events. Track and field athletes qualify through gold-medal-level participation in Special Olympics Area Spring Games, while a variety of sanctioned competitions are used to qualify competitors and teams in aquatics, bocce, gymnastics, powerlifting, and soccer. The games are overseen by Special Olympics Illinois. Deputy Republican Leader Patti Bellock honored Special Children’s Charities and the Special Olympics movement in HR 503, adopted by the House in mid-May.

Wireless Phones – Do-Not-Call Status
Wireless Phones and the National Do-Not-Call List. Placing telemarketing calls to wireless phones is - and always has been - illegal in most cases. Why the confusion about telemarketing to wireless phones?

Consumers report receiving emails saying they'll soon begin receive telemarketing calls on their wireless phones. The confusion seems to stem from discussions in the wireless phone industry about establishing a wireless 411 phone directory, much like your traditional (wired) 411 phone directory. A number of email campaigns seem to suggest that if your wireless telephone number is listed in a wireless 411 directory, it will be available to telemarketers, and you will start to receive sales calls. In addition, some of these email campaigns suggest that there is a separate do-not-call "cell phone registry," which you must call to have your wireless phone number covered by the do-not-call rules. This information is inaccurate.

The facts

Even if a wireless 411 directory is established, most telemarketing calls to wireless phones would still be illegal. For example, it is unlawful for any person to make any call (other than a call made for emergency purposes or made with express prior consent) using any automatic telephone dialing system or any artificial or prerecorded voice message to wireless numbers. This law applies regardless of whether the number is listed on the national Do-Not-Call list.

The federal government does not maintain and is not establishing a separate Do-Not-Call list for wireless phone numbers.

Wireless phone subscribers have always been able to add their personal wireless phone numbers to the national Do-Not-Call list, either online, or by calling toll-free 1-888-382-1222 from the phone number they wish to register. The do-not-call rules require callers that are not exempt from the rules to stop telemarketing calls 30 days after you register a number.

There is no deadline for registering a number on the national Do-Not-Call list. There is also no longer any need to re-register a number – it will stay on the national Do-Not-Call list until you cancel your registration or discontinue service. Read more.

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