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Re: Question of the day

Bruno_Behrend — Fri, 06 Feb 2009 11:16:36 -0000

RJW,

Good points. Let me approach it from another direction then.

The state spends about $7 bn on k-12. Cut $2.5 bn. Apportion the remaining to the most needy children - again, focusing on getting money directly to those children, and not Bus companies, architects, builders, Adminisitrators (any title with coordinator, assistant, director, should go)

If you are correct (and it sounds like you are close to the target), then what DO they spend the money on? I can tell you from my experience pulling data on districts that most easily avoid the 5% cap by hiding such spending the labyrinth of mandates and regulations that they carp about to the electorate even as they lobby for them in Springfield.

Here is my definition of "administration." If it doesn't put a kid in classroom, outfit that room, and then put a teacher in that room, it's "admin."

I realize that it is over broad, but it's time we focused in a little bit. Your critique, while valid, only begs the question...

"Is there ANY real accounting of that $7,000,000,000?

You all know my view. Abolish the district, convert every school district to a charter, and raise state taxes by about $9 billion and cut education property taxes by about $12 bn. (zero them out)

Steve,

"Not bad" coming from you is quite the "compliment". You are, of course correct about me arguing for my solution whether a crisis or not, but these are the folks who caused the larger part of this crisis, so it is only fair they bear the largest brunt.

Re: Question of the day

jerry 101 — Fri, 06 Feb 2009 09:31:27 -0000

This is a really good exercise...I got nothing beyond what I originally prescribed.

I would like to engage this process a bit deeper though. So, I downloaded the fiscal 2009 budget to read through over the weekend (if I have time...)

If you want it, here it is.
http://www.state.il.us/budg...

Re: Question of the day

RJW — Fri, 06 Feb 2009 00:31:18 -0000

Bruno:

You don't come close to cutting anything significant in your budget cuts. Most districts are foundation districts, which means that they spend less than the state guaranteed level. I agree that those above should be cut, but that only saves you $20-$30 million. Sending home the State Board of Education staff is also a red herring. That will get you about $15 million in general funds. So, you've only cut about $45 million. School districts are already limited to a 5% admin cap, so you don't get any savings there. As for EAV calculations, the formula already discounts districts as their EAV increases. Again, no savings.

Re: Question of the day

steve schnorf — Thu, 05 Feb 2009 23:54:42 -0000

Not bad, Bruno. However, I think you would like to do most of those things whether or not there was a budget crisis.

Re: Question of the day

Arthur Andersen — Thu, 05 Feb 2009 22:51:10 -0000

AA cut payroll, focusing on higher ed and K-12 admin.

I'm stuck.

From reading comments, seems like the more real experience a blogger has with the state budget, the harder it is for them to identify viable cuts.

Re: Question of the day

Marianne North — Thu, 05 Feb 2009 21:00:27 -0000

I would cut the Healthy Women program and the Health Benefits for Disabled Workers programs. The feds are expanding Medicaid to cover single adults with no children as part of the stimulus package. I would cut all Medicaid programs that could be covered by the feds.

Re: Question of the day

Bruno_Behrend — Thu, 05 Feb 2009 20:43:44 -0000

First, we may be operating in a more constrained atmosphere than truly exists, but this is an excellent intellectual exercise.

Since I missed yesterday's post, I'll start with first $1 billion.

Education hands down. Here is how to cut that billion.

1. The money should be cut from any and all state funding to building projects. (Start them again when you have some money)

2. No district that spends more than the state average (per child) should get a dime of state money. Cut it.

3. Calculate the HONEST Administration Budget. Any District spending over 3-5% Admin gets a haircut. (using honest numbers, that is most districts)

For the next three billion...

$1 Billion from state payroll, starting with elected officials and the top of the pay grade. Offer them 75% percent of pay (until things improve) or leaving. Remind them that they still get their pension.

$.5 billion from pensions, but NOT to reduce what is already promised. Merely abolish ALL end-of-career bumps from pension calculations (all bumps already need to be gone - they are immoral). Reduce benefits for all those not yet vested.

The remaining 1.5 Billion. Hack education again, starting with district EAV calculations. The higher the EAV of the district the less state money. As an aside, let's do FOIA and see just how deeply the IL taxpayer subsidizes the Chicago Teacher's Pension fund. Cut it. Mayor Daley can sell Wacker Drive or Grant Park to some Australians.

Next, send the entire State Board of Ed bureaucracy home, save a skeleton crew to determine the poorest served kids in Illinois. Re-apportion the remaining ed dollars as a scholarship to each child and tell every district left receiving money to cut even more payroll. Offer them a choice of steep cuts in pay or going home.

Re: Question of the day

Six Degrees of Separation — Thu, 05 Feb 2009 20:27:36 -0000

Once a pension benefit is given, it cannot be taken away. It can only remain the same, or enhanced, under our state constitution which was resoundingly re-ratified by the voters last year, other federal protections notwithstanding.

Re: Question of the day

Six Degrees of Separation — Thu, 05 Feb 2009 20:24:27 -0000

I do, however, think the rule of 85 needs to be reconsidered.

This, the rule that allows a state employee to retire when his/her age and years of service total 85. Let's say a law is passed that affects 5,000 employees who coud've retired at 55 with an average pension of $3,000 per month under Rule of 85. Now, they will have to take a cut in their retirement if they retire at the same age, some with a penalty, so their collective pension will average $2,500 per month. $500 per month diminishment. Class action suit. IL Constitution. Game, set, match.

You might be able to eliminate this rule for new hires, or at best employees who aren't yet vested in the state pension. Doesn't do much for this year's budget, or 2019's.

Re: Question of the day

jimbo — Thu, 05 Feb 2009 20:20:03 -0000

Well folks, looks like we are going to have to raise taxes.

Re: Question of the day

Six Degrees of Separation — Thu, 05 Feb 2009 20:11:39 -0000

Donâ€™t look at it as selling a treasured assetâ€“look at gaining a landlord who can offer free language lessons.

Ah, so.

Re: Question of the day

Abu Jibril — Thu, 05 Feb 2009 19:50:09 -0000

Structure a long-term (99 year) lease between UIUC and Beijing University (Baida) that would earn the state $25b upfront and $500b per annum (50% premium above total state approps). Take $3b to the current deficit, lockbox the rest in a trust solely for pre-K-20 education capital investments.

(If $25b sounds high to value UIUC, University of Phoenix has a market cap of $13.5b--without a real "campus".)

Maybe look at a 3% discount for holding on to license income from tech transfers (though this may be a sticking point).

Follow up with raising personal and corporate income taxes to 4 and 6.4% respectively, but have graduated levels of standard deduction to introduce progressiveness into the tax system. Increasing income taxes shows bond markets political stability and maturity--leading to lower interest costs.

Don't look at it as selling a treasured asset--look at gaining a landlord who can offer free language lessons.

(Hey, Daley said think "outside the box")

Re: Question of the day

steve schnorf — Thu, 05 Feb 2009 19:27:06 -0000

and the pension catch-up bill was an Edgar initiative, along with AFSCME

Re: Question of the day

Six Degrees of Separation — Thu, 05 Feb 2009 19:07:48 -0000

It was in the middle of Edgar's admin that the GA passed the "catch up" bill to make the pensions 90% funded in 45 or so years. And it was during Blago's admin that the law was written to sidestep it for a few years. Not aware of an IL SC mandate.

Re: Question of the day

Jechislo — Thu, 05 Feb 2009 18:58:11 -0000

Someone help me out here - but didn't the Illinois Supreme Court rule that the State had to catch up on the Pension payments that Edgar/Thompson (and other past Governors)let get in arrears? Wouldn't the legislature be going against the courts if they didn't live up to their paying their mandated pension obligations?

Re: Question of the day

Six Degrees of Separation — Thu, 05 Feb 2009 18:56:39 -0000

IMHO-

There are really only 2 ways out of this mess I can see. One, to somehow dramatically grow the state's economy so that revenues are humming along with that growth. Two, to hike fees and taxes to a level commensurate with keeping one's head barely above the water. Of course, there is a point of diminishing returns where you're going to kill new sources of revenue by going to the well one too many times, and finding a dry hole there.

Is Quinn going to turn into a rah-rah developer to try to accomplish #1? Or is he going to turn into a tax raising, big government manager to try to accomplish #2? Somehow, he doesn't seem to fit either mold.

I'm sure there are also cuts to be made, but how far can we go, and what do we want our government to look like as a result? These are the tough questions.

Re: Question of the day

Budget Watcher — Thu, 05 Feb 2009 18:53:13 -0000

I couldn't even get to a $1 billion in cuts yesterday. I think through reduction in high-end agency reductions, maybe on the order of 300 - 400 "at-will" staff, you could get $50 million and if you push hard, enough furloughs & staff reductions to add to another $250 million. That's $300 million in payroll.

There's probably $200 million in non-entitlement grant dollars out there that could be trimmed, but you have to be careful with federal maintenance of effort issues. $200 million is pretty ambitious, but let's say it's possible.

Elimination of agencies, boards, and commissions...I don't know...maybe $250 million.

Medicaid is tough because you only get $0.50 in state savings for every dollar you cut and there's not much more you can do with rates. Mandatory managed care might save some dollars, but not right away. I don't see any way to cut eligibility groups, but maybe we could eliminate some optional services. HFS has been good at Medicaid cost containment, but actual savings would be hard to accomplish.

I would never advocate short-funding pensions. It's been bad policy everytime it's been done. I do, however, think the rule of 85 needs to be reconsidered.

Bottom line, I can get close to $1 billion, but I can't see how you cut $4 billion. Therefore, I expect to be deleted.

Re: Question of the day

Anon3 — Thu, 05 Feb 2009 18:34:39 -0000

47th and Steve I dont believe there is much will in the General Assembly on both sides to make the cuts. The whole sale elmination of entire programs and reduction of benefits would take the kind of courage which does not exist in Springfield and Chicago.
10% here and 5% there does not take care of it. Really who of this group is going to lead the state in that discussion? Lets face it there are many downstate Repulicicans who receive lots of state benefits and don't even realize it and when they are withdrawn they will have a fit.
Entire agencies like DNR and AG should be closed. And DHS would really have to start rationing benefits. And to all the people who think that just laying off over paid middle managers in state agencies will do the trick they live in an universe disconnected from reality.
The state employee unions, who is going to confront them? I have never seen any inclination from them to even consider surrendering any of their hard faught for benefits.
Sorry Rich I may be off the topic.

Re: Question of the day

47th Ward — Thu, 05 Feb 2009 17:53:56 -0000

Thanks Steve, we agree. As bad as Pate could be, especially to an eater like me, he kept the state disciplined financially. I think Madigan attempted to play that role, but the nature of my party got in the way too many times.

I admire the role you played in the Edgar admin as well. And I know it was difficult to say no, so I am thankful that you and your boss had the (deleted) to do it.

Re: Question of the day

steve schnorf — Thu, 05 Feb 2009 17:48:12 -0000

47th, I'm not blaming Ds, its just the nature of things. Unlike under previous Govs, there was no equivalent of Pate to say "no". How is a D going to say no to expanded healthcare for children and working poor families? How is a D going to say no to expanded early childhood education? I am an R, but I liked most of Blago's agenda, he just sometimes went about it poorly, and at that point in time we couldn't afford it.

Think about Edgar: he spent three years saying no to things, many of which he would have liked to do. He took dental care away from Medicaid adults. Think that was fun?

But, when the state got back on its feet financially, he started kid-care, expanded early intervention programs, started subsidized child care for the working poor, doubled funding for DCFS, etc. And, he left the state with a 16 day Medicaid payment cycle and a billion and a half in the bank.

That's the difference.

Re: Question of the day

TaxMeMore — Thu, 05 Feb 2009 17:33:33 -0000

Hmmm, if only we could get a detailed item by item lists of every expenditure budgeted and everything spent over the past few years in order to try to answer that question with any real knowledge.

How much would we save if we went through the campaign donor lists and found everyone getting state government money and then we stopped giving them state government money? Lets do that.

Re: Question of the day

47th Ward — Thu, 05 Feb 2009 17:09:24 -0000

Well said Steve Schnorf. I'd normally object to your characterization of this being the fault of Democrats in control, except it's mostly true.

From Full Metal Jacket: "What we have here is a big (deleted) sandwich, and we're all gonna have to take a bite."

Re: Question of the day

steve schnorf — Thu, 05 Feb 2009 16:44:46 -0000

six degrees, the interest payment on pensions in '10 would be more than 4 billion. Most people don't understand that we are not even paying the full interest payment yet, much less cutting into the principal.

Re: Question of the day

steve schnorf — Thu, 05 Feb 2009 16:42:19 -0000

Yesterday, I cut a billion by taking bits and pieces from different places, the largest chunk from education (assuming I would be able to find a way to use the [non-existent] stimulus money to replace it).

Today I say nothing significant additional can be cut.

So Rich has flushed out all the bit____s who have derided the state for shorting the pensions who are now doing exactly what Govs did in tough budgets, short the pensions. Hypocrites.

The battle we are fighting here, one in which we had some chance of victory, was lost when the Blagojevich administration paid its first pension payment out of one-time revenues. There was no way to recover after that. They needed to freeze spending (effectively, cut it) for at least two and probably three years except for pension contributions and Medicaid payment cycle. With 3 years of a billion +/- in revenue growth we would have gone into this current downturn in decent shape.

But that was predictably not possible for a D Gov with 2 D houses in the GA to do. Who was going to be the bad guy who said "no"? No one.

More than five years ago I told a group of eaters,"The good news is we are going to have an income tax increase in the future. The bad news is all the new money will already be spent." Here we are.

Re: Question of the day

Six Degrees of Separation — Thu, 05 Feb 2009 16:20:06 -0000

Yesterday I cut $1 bil from payroll.

Today, I reluctantly skip a pension interest payment - what is it, about $2 bil this year? As others mention, avoids pain today for more pain tomorrow. Halfway there.

The other $3 bil has to come equally from the remaining 3 items - Medicaid reimbursements to private and not-for-profit providers, Medicaid benefits to participants, and K-12 education (state portion of state/federal/local funding mix).

Schools and property tax payers will feel the K-12 cut. Some doctors will just refuse more Medicaid patients, but there will always be physicians who carry out their Hippocratic oath regardless of their finances, which generally are generous. The hardest cut is the bennies to recipients, cause its gonna discourage some from seeking medical attention when they need it.

Such is the lot of an imaginary budgeteer, who makes the hard decisions and whose pain is felt by many.