Illinois’ Fiscal Future: Projected Deficits

The Illinois Governor’s Office of Management and Budget (GOMB) has looked at current economic projections, state revenue trends, and the impact of the major federal tax and spending bill enacted this summer and reached the following conclusion: Under current state statutes and spending trends, the state of Illinois is facing a fiscal deficit of $267 million for the current fiscal year and approximately $2.2 billion for the next fiscal year (which begins July 1, 2026). The deficit trend continues upwards in succeeding fiscal to a projected deficit of nearly $5.3 billion by fiscal year 2031.

#3 references decoupling, which is explained below.

Last year’s GOMB report also projected a deficit, which the legislature eventually closed by cuts to health care for undocumented residents ages 42-64, other spending cuts, and a set of revenue measures totaling more than $800 million. (See CAFC’s blog post on the approved state budget.) However, recent federal activity has created deep cuts in projected federal revenue to the state as well as additional uncertainty in the economy. Adding to this uncertainty, as of this writing, is a partial federal government shutdown.

Medicaid
Chief among the changes are federal cuts to Medicaid. In H.R. 1, which some refer to as the One Big Beautiful Bill that was signed into law on July 4th, there are major changes to Medicaid resulting in a 14% reduction in expenditures over 10 years or $911 billion.[1] The non-profit KFF estimates that when broken out by reimbursements to states, it could result in Illinois loosing $46 billion in Medicaid federal funding during the next decade – possibly as much as $57 billion.[2] The largest reductions in the program result from the following:

  • Starting January 1, 2027, Medicaid recipients ages 19-64 will need to document at least every six months 80 hours per month of work, community service, or attendance at school. (States that can document they have undertaken a “good-faith effort” to comply with the law could receive an exemption until 2029.) There are exceptions to this requirement that include parents/guardians of children under age 13 or disabled, disabled veterans, foster youth under age 26, and medically frail individuals.

The Illinois Department of Healthcare and Family Services estimates 270,000-500,000 Illinois Medicaid enrollees could lose coverage.[3] (Such individuals could still go to a hospital emergency room, which is still required to treat them, potentially resulting in uncompensated care for the hospital.) Furthermore, effective next October, refugees, parolees, asylees, victims of trafficking, and other groups currently considered qualified to receive Medicaid benefits would no longer qualify for the program. There are exceptions for individuals from certain countries.[4]

  • Changes to permitted provider taxes that allow states to tax hospitals and other healthcare providers to secure matching federal Medicaid funds. The maximum allowable rate is now 6%. Under H.R. 1, that maximum rate is reduced for states – including Illinois – that enacted Medicaid expansion. Starting in October of 2028 the rate drops from 6% to 3.5% by October of 2032.[5]
    GOMB estimates that using general revenue funds to make up for the overall lost revenue would require $304 million in Fiscal Year 2028 and nearly $1.7 billion in Fiscal Year 2031.
  • Caps on state directed payments, which allow states to direct Medicaid managed care organizations to make payments to providers. H.R. 1 requires states to reduce such payments starting in 2028 by 10% per year until they are no greater than 100% of Medicare payment levels.

Over three-quarters of the Medicaid reductions occur between 2030 and 2034, meaning the entire impact is not reflected in GOMB’s projections. As noted above, hospitals would still be required to provide emergency room care. If not compensated, along with the other Medicaid changes, it could place rural and urban healthcare facilities with a heavy Medicaid-patient caseloads at risk of closing or discontinuing certain services.

Tax Law Changes

Calculating payments under Illinois’ individual and corporate income tax rates generally begins with the taxpayer’s federally determined income level. Thus, unless Illinois reverses (or “decouples” from) these tax provisions, they impact the total revenue collected by the state.

H.R. 1 provides corporate tax changes that could reduce state revenue collections by more than $830 million in the current fiscal year unless reversed. Chief among these are corporate provisions allowing for:

  • A new temporary 100% tax write-off for the cost of manufacturing structures.
  • Immediate full expensing for domestic research and development costs (versus amortizing the costs over five years as outlined by a 2022 tax bill).

(H.R. 1 also continued a 2017 tax provision allowing for immediate and full expensing of qualified investments in machinery and equipment.)

As of this writing, Illinois legislative leadership has discussed the possibility of decoupling from federal tax code provisions but has not yet enacted any legislation.

Supplemental Nutrition Assistance Program

Two major changes in the Supplemental Nutrition Assistance Program (SNAP) would shift costs to the state. States now pay half of the administrative cost of the SNAP. That changes under H.R. 1 to 75% of costs in October 1, 2026. The state estimates the measure will cost Illinois $80 million annually. (SNAP currently covers approximately 1.9 million residents with an average household benefit of $370 per month.)

Currently, the federal government pays 100% of SNAP benefits. H.R. 1 establishes a new cost sharing model in October of 2027 for states with a payment error above 6%. Essentially, an error payment could be an overpayment or underpayment of benefits set when calculating an individual’s eligibility for the program. The 2024 Illinois error payment rate was 11.56%. Based on the established schedule, unless Illinois reduces its payment error rate, it would need to pick up 15% of the overall benefit costs. That could cost the state more than $700 million annually.

Source: Governor’s Office of Management and Budget

H.R. 1 also imposes a new work requirement for SNAP recipients. Under federal law prior to H.R. 1, there was a work requirement for abled-bodied adults ages 18-54. There were exemptions for parents/guardians with children under age 18, veterans, people experiencing homelessness and young adults aging out of foster care.  For a number of years, Illinois had a federal waiver from the work requirement. However, that waiver ends next month (November 1, 2025).

Furthermore, H.R. 1 increases the work requirement for abled-bodied adults to individuals ages 18-64. (Also, similar to Medicaid, it requires 80 hours per month.)  An exemption will apply to parents/guardians of children under the age of 14. However, the program will no longer exempt veterans, homeless individuals, and young adults transitioning out of foster care from the work requirement. Anyone who loses eligibility is limited to three months of assistance.

However, there is a more immediate issue that could impact the current fiscal year’s picture. Because of the federal government shutdown, SNAP benefits could run out at the end of October. In a press release issued by the Illinois Department of Human Services on October 16th, the department stated: If SNAP funds are not delivered by the federal government, the State of Illinois does not have the budgetary ability to backfill these critical resources.

Such a measure could strain food banks across the state.

“We are seriously worried about if this shutdown continues to go on, the longer it goes, the more people and the more hardship and hunger this is going to create in our communities”

Man-Yee Lee, spokesperson for the Greater Chicago Food Depository[6]

All of this occurs at a time when food prices continue to remain high from pre-pandemic levels. As noted in our 2025 Data Book on the Well-Being of Illinois Children, between January of 2020 and April of 2025, prices for food consumed at home increased by 28.3%. That does not take into account the full impact of tariff’s imposed by the Trump Administration during 2025.

The projected state budget deficit for the current state fiscal year does take into account potential savings resulting from an executive order issued by Governor J.B. Pritzker in September that directs state agencies to identify immediate spending reductions with the goal of reaching a reserve of 4% of general funds appropriations for the current fiscal year.

However, the GOMB analysis does not account for any programmatic cuts that may occur in federal funding for housing, energy assistance, mental health programs, and a host of other services as the federal government not only winds its way through the shutdown but crafts a budget for federal Fiscal Year 2026. Whether it is with regards to the current fiscal year or future years, the GOMB review states: GOMB expects the State to have a very limited ability to replace lost federal funding for these specialized state grants and no funding to replace lost grants made directly to local governments and community organizations.

As noted in our data book, Illinois children have a number of economic, health, housing, and educational needs. Left unaddressed, they can impact children well into adulthood with the expense of addressing those impacts compounded. Federal activity requires the state to seriously consider raising new revenue for its current and future needs. Children’s Advocates for Change is currently advocating for the necessary revenue and will continue to do so as the Illinois General Assembly enters its 2026 spring session.

Written by Mitch Lifson

[1] https://www.kff.org/medicaid/allocating-cbos-estimates-of-federal-medicaid-spending-reductions-across-the-states-enacted-reconciliation-package/

[2] Ibid

[3] https://www.dhs.state.il.us/OneNetLibrary/27897/documents/SNAP/HHS%20Trump%20Budget%20Bill%20Briefing%20Deck_08012025_A11Y%20(1).pdf

[4] This includes Cuban and Haitian entrants, and citizens from the Marshall Islands, Micronesia, and Palau.

[5] https://medicaiddirectors.org/resource/how-medicaid-provider-taxes-work-an-explainer/

[6] https://chicago.suntimes.com/health/2025/10/17/snap-benefits-government-shutdown-trump-illinois

Message from the CAFC’s President: Meeting the Challenge of a Federal Government Shutdown

From Children’s Advocates for Change President Dr. Tasha Green Cruzat:

The situation was always serious but now it is real – a government shutdown. Pundits will take out scorecards to see if democrats or republicans are winning the political fight. Yet, in the meantime, the pain will mount for the most vulnerable and especially children needing food, housing, medical care, educational resources and other vital services.

The longer a shutdown goes on the more likely we will see funding for the Women, Infants, and Children Program and the Supplemental Nutrition Assistance Program run out. Furloughed or fired federal employees means more difficulty in processing available housing vouchers or education grants. Head Start programs would likely see disruptions.

What some might feel will be a short-term disruption is shaping up to be a long-term shutdown with potentially lifelong impacts on our children. Members of Congress need to step-up and bolster, not tear down, our communities. Our state officials also need to step up to the challenge and provide the funding for federal funding shortfalls in needed programs.

Before the shutdown, Children’s Advocates for Change recognized our children’s needs for additional economic and health resources with our efforts to increase the new Illinois child tax credit for low-income families and calls to provide more preventive health care services through local public health department.

Now, those needs – and others – are on the verge of becoming acute, and our public officials need to meet the challenge. Children’s Advocates for Change calls on them to meet this moment, and we are ready to continue working with them so that all children across the state of Illinois thrive.

New Illinois State Budget

On May 31, 2025, the Illinois General Assembly passed a $55.2 billion budget (SB 2510) for Fiscal Year 2026 (FY26). It is a budget that has more than $800 million worth of new revenue measures, makes some major cuts to programs, and has a partial contingency plan for reduced federal revenues.

Governor J.B. Pritzker signed the budget, revenue bill (HB 2755) and Budget Implementation Bill (HB 1075) into law on June 16th, but made several amendatory vetoes to the budget totaling $161.2 million.

In his amendatory veto message, the Governor stated that the budget appropriated grants for certain capital projects that appear to have been intended to replace portions of other appropriations and reappropriations that were not reduced by corresponding amounts. He went on to state that the listed dollar amounts for the latter appropriations and reappropriations evidently occurred in error and that “the General Assembly intended for the amount of the new appropriations from the Build Illinois Bond Fund to not exceed the total amount of Build Illinois bond authorization reflected in HB 3374”.

Revenue

Without various line-item decreases and fund transfers (some of which are detailed below), this budget could have been out of balance by nearly $1.7 billion.

The revenue bill authorizes a set of measures expected to generate more than $880 million. These include:

  • A tax amnesty program, where taxpayers can pay delinquent taxes without the penalties.
  • Halting the transfer of state sales tax revenue on motor fuel purchases to the Road Fund for a year.
  • Changes in the designation of corporate revenue subject to taxation – largely targeting multinational corporations.
  • Increasing the tobacco products tax from 36% to 45% and bringing electronic cigarettes and other tobacco products up to the 45% level.
  • A new sports wagering tax set at $0.25 per wager for the first 20 million of a company’s wagers and then $0.50 per wager for each wager above 20 million.
  • Extending the Hotel Operator’s Occupation Tax to short-term rentals.
  • Increasing the telecommunications tax from 7% to 8.65%.

Transfers

The Budget Implementation Bill transfers to the General Revenue Fund approximately $315 million from other state funds. The legislature also suspended for a year monthly transfers to the budget stabilization or “rainy day” fund.

The federal government has already withheld funds from the state previously approved by Congress for a variety of purposes. Court action surrounding a number of these moves is continuing. Not knowing what currently approved federal funds the state may not receive, or the financial impact of new tariffs or tax legislation during the year, the Illinois legislature approved three measures to help with financial shortfalls.

  1. Creation of a new fund called the Budget Reserve for Immediate Disbursements and Governmental Emergencies (BRIDGE) funded by transfers of just under $100 million from 57 state special funds such as the state’s Open Space Lands Acquisition and Development Fund and the Horse Racing Fund. The money is to be used in the event of “unanticipated delays in or failures of revenues when” such funding is required for budget appropriations. The authorizing legislation requires repayment of money transferred from the special funds.
  2.  Authorization for a state agency to transfer line-item appropriations from the same state treasury fund of up to 4% for operational or lump sum expenses.
  3. During the state’s budget impasse (from mid-2015 to mid-2017), the General Assembly approved a measure allowing the State Treasurer to loan up to $2 billion from the state treasury to certain funds for payment of bills pursuant to a written agreement between the State Treasurer and State Comptroller. (The measure required repayment of those loans with interest to the Treasurer.)

An amendment to the statute this legislative session allows – at the request of the Governor and approval of the Treasurer – the loaning of up to $2 billion during the fiscal year for payment of current or anticipated bills. Repayment is required.  As always, the legislature has the option to amend the state budget when it returns for its next legislative session.

Expenditures

Many of the line-items in the FY26 budget are at similar levels to FY25 appropriations.  However, as noted below, there are some significant cuts to certain programs.

Healthcare for Undocumented Adults and Welcoming Centers
In his introduced budget, the Governor proposed eliminating health care coverage for undocumented adults ages 42-64.[1] He also proposed a decrease of $99 million in General Revenue Funds from FY25 for Welcoming Centers. (The Welcoming Centers help coordinate human services for immigrants and refugees arriving in Illinois.)  While the FY25 budget increased funding for Welcoming Centers to address the arrival of thousands of asylum seekers from Texas (total approved appropriations from state funds were $169.4 million), the FY24 enacted budget appropriated $105 million.

In the final FY26 budget, the legislature concurred with the elimination of health care coverage for undocumented adults ages 42-64 and approved $40 million in state funding for Welcoming Centers.

Source: Governor’s Office of Management and Budget

Education Funding
Along with the health care and Welcoming Centers cuts mentioned, one of the other cuts was in the Evidence-Based School Aid Formula. The legislature appropriated $307 million versus the proposed $350 million for the formula – holding back $43 million that would have gone to a Property Tax Relief Grant Program. The program allows school districts to reduce local property taxes by replacing that revenue with state funds.

Funding for the Early Childhood Block Grant remained level. There is a $19.9 million increase in funding for grants related to transportation and special education.

There is a $10 million increase in the Monetary Award Program for college students.  Overall, public universities and community colleges see a 3% increase for operating expenses.

Funding for the Early Childhood Access Consortium (in which higher education institution work together to increase access and completion of needed credentials for early childhood workers) is level

A notable hold in FY25: Last year, the legislature added an additional $50 million to the State Board of Education budget for After School Programs (on top of a $25 million appropriation that was similar to FY24). However, as of this writing, ISBE never issued an RFP or guidelines for distribution of the funds. This year’s budget includes an additional $10 million (for a total of $35 million) for After School Programming. (After School Matters, which received $6 million in the FY25 budget, received $12 million in the FY26 budget.)

Early Childhood and Human Services
Funding for the new Department of Early Childhood increases by $7.7 million from the FY25  approved appropriation. (There is also an additional $3.9 million within the DHS budget for the Department of Early Childhood.)

The Child Care Assistance Program shows supplemental appropriation of $75 million in General Revenue Funds for FY25 and then the FY26 budget contains a GRF level that is $160 million above the amount initially appropriated for FY25. This will handle not only caseload growth, but rate increases for home providers.

There is a $90 million increase in General Revenue Funds for the SMART Start Program, which is designed to improve “access to preschool, increase funding to childcare providers to raise wages and quality, invest in new expanded early childhood facilities, and reach more vulnerable families with early support”.[2]

The General Revenue Fund budget line for the Early Intervention Program is level. However, the Early Intervention Services Revolving Fund shows an increase of $15 million. The fund receives monies from family fees, insurance payments, and federal reimbursements. The funding will help cover rate increases under Medicaid.

General Revenue Funding in the Department of Human Services budget for Maternal and Child Home Visiting Program,  including Parents Too Soon and the Healthy Families Program, remains level from FY25 funding.

Department of Public Health
Under the Illinois Department of Public Health Budget, there is an $8 million appropriation for its Birth Equity Initiative. That is $4 million higher than what the Governor proposed. The IDPH budget also has:

  • Appropriations of $118 million for safety net hospitals to improve health equity as well as access to quality care.
  • $40 million for the purpose of updating prospective payment system rates for Federally Qualified Health Centers. A significant increase from the FY25 appropriation of $25 million.

During the legislative session, the General Assembly also approved HB 2771. The bill updates payment rates to safety net hospitals under the Illinois Hospital Assessment Program where funds from a tax on hospitals are used to secure matching Medicaid funds that are redistributed to hospitals based on the volume of Medicaid patients served.

Department of Children and Family Services

Source: DCFS

The Department of Children and Family Services (DCFS) contains a $4 million increase for an additional 100 agency positions. There is an increase of $4.8 million for the DCFS Scholarship Program. These scholarships are awarded to current and former youth in care. Scholarship recipients receive up to five consecutive years of tuition and academic fee waivers to be used at participating Illinois state community colleges and public universities, a monthly grant to offset other expenses and a medical card.[3]

Attorney General’s Office
During the current fiscal year, Illinois Attorney General Kwame Raoul has filed a number of challenges to the federal government withholding funds to Illinois and other states. The FY26 state budget increases funding for his office’s general operations by $15.7 million.

What’s Not in the Budget

Before adjourning its spring session, the Illinois General Assembly did not approve any additional funding or reforms related to the public transportation system in northeastern Illinois. The Regional Transportation Authority has stated it is facing a fiscal cliff when the availability of COVID-19 relief funding expires that will result in a $771 million shortfall in 2026. The RTA has warned  that riders could experience a 40% reduction in transit service.[4]

The budget also does not include additional funding to address a projected shortfall facing the Chicago Public Schools that recently was put at $734 million.

The Federal Budget

Since the legislature adjourned, the federal government debated and passed a major tax and spending plan for the next decade (signed into law on July 4th) that will significantly reduce federal funds for health care and food assistance. For Medicaid alone, KFF projects the approved changes could cost Illinois $48 billion over 10 years. (See Children’s Advocates for Change’s 2025 Data Book.) However, that is not the end. Congress is still debating a federal FY26 budget that, based on proposed reductions from the President’s Office of Management and Budget earlier this year, could see significant cuts for housing and low-income energy assistance along with other areas.

The state and federal budget cycles to not run on the same schedule (the state’s fiscal year begins on July 1st and the federal fiscal year begins on October 1st.  So, even with the contingency measures described above, the legislature may have some difficult budget decisions ahead of it for the current fiscal year knowing even steeper revenue drops are ahead.

The General Assembly returns for its fall veto session on October 14th.

Written by Mitch Lifson

[1] Funding for a state program covering healthcare benefits for undocumented seniors remains.

[2] https://www.ilgateways.com/smart-start

[3] https://dcfs.illinois.gov/news/press-release.29484.html

[4] Chicago Tribune June 3, 2025

CAFC’s Review of the Governor’s Proposed Fiscal Year 2026 Illinois State Budget

Illinois Governor J.B. Pritzker has proposed a state budget for the next fiscal year that holds the line on income and corporate taxes, increases investments in K-12 public schools and higher education, makes a full pension contribution, cuts a state health insurance program that served undocumented immigrants ages 42-64, and provides a cautionary tale of what could be ahead in 2026.

The budget outlines revenues and expenditures for Fiscal Year 2026 (FY26) that begins on July 1st of this year. While not rosy, the projected $55.5 billion in general funds[1] and the $55.2 billion in expenditures is much better than the $3.2 billion deficit the Governor’s Office of Management and Budget projected in November.

Revenue

The November estimate for FY26 individual income tax revenue was $27.8 billion. It is now pegged at $28.7 billion. Corporate income tax revenue is slightly below the November projection, and sales tax revenue is listed as an increase of $326 million from the November projection.

The Governor’s proposal also calls for raising another $468 million by:

  • Offering a delinquent tax payment program where taxpayers with an outstanding tax payment from prior years can make the payment without penalty or interest

    General Funds Revenue $55.5 billion
    Image source: Office of Management and Budget

    ($198 million in anticipated revenue).

  • Changing the tax rate applied to revenue from casino table games, which is now more beneficial to larger casinos ($100 million in anticipated revenue)
  • Pausing a shift of state sales tax revenue from motor fuel purchases to the Road Fund ($171 million in anticipated revenue)

Yet, overlaying the revenue projects is the overall uncertainty of what the federal government will do in the next several months.

  • On February 1st, President Donald Trump imposed tariffs of 25% on goods from Mexico and Canada and a 10% on goods from China. He then suspended for 30 days the tariffs on Mexico and Canada.
  • On February 10th, the President announced a 25% tariff on steel and aluminum. These tariffs are scheduled to become effective March 12th.
  • The President has also stated his intentions to impose or increase U.S. tariffs to match the tax rates that other countries charge on U.S. imports[2].

The state’s budget office used a S&P Global economic forecast in its revenue projections, which took into account some tariff activity but not all of what is noted above. Depending on whether U.S. consumers switch to similar domestic products, if such items are produced domestically, it could impact consumer spending as well as business production. The following statement is in the proposed budget:

The Trump Administration’s proposed tariffs on exports from Illinois’ top trading partners like Canada and Mexico will have devastating impacts on Illinois’ small, medium, and large companies, disrupting supply chains and this progress, increasing their costs, creating chaos and wreaking havoc on their ability to operate. Anticipated retaliatory tariffs on Illinois exports will have a quieting effect on Illinois companies’ global reach, harming businesses and raising prices for consumers[3].

Expenditures

The proposed expenditures of $55.2 billion represents an increase of approximately 2.5% over estimated FY25 expenditures[4]. The bulk of the increase is due to:

  • A $350 million increase for the evidence-based school funding formula for K-12 education
  • A $436 million increase in required pension payments under the state’s pension formula to reach 90%.
  • Medical expense increases for the Department of Healthcare and Family Services ($397 million) and the Department of Central Management Services – group health insurance ($341 million).

Excluding pension payments, debt services, and statutory transfers (which total just over 23% of all proposed expenditures), the largest segment of the remaining funds (or what is termed the Operating Budget) is for education followed by human services.

Source: Office of Management and Budget


Immigrant health care and services

Yet, while there is also a significant increase for the Department of Healthcare and Family Services in medical costs, the Governor proposes discontinuing the Health Benefits for Immigrant Adults (HBIA) Program which provided insurance coverage for undocumented residents ages 42-64. A program for undocumented seniors remains in place.

Because enrollment and costs for the HBIA program were higher than expected after the state established the program, it has capped enrollment since the middle of 2023. The Governor’s Office estimates a savings of $330 million in general funds spending with the proposed FY26 HBIA elimination[5].

In addition, the budget reflects a reduction of $129 million in state funds from FY25 Enacted Appropriations, $82 million from FY25 Estimated Expenditures, for Welcoming Centers. Funding for the Immigrant Integration Services line item within the Department of Human Services is level.

PreK-12 Education

The proposed FY26 budget includes an additional $350 million for the state’s evidence-based funding formula for public schools. Illinois overhauled the formula in 2017, which addresses how the state distributes funds to local school districts, in an effort to further reduce disparities in district able dollars across the state. With passage of the revision, legislators pledge to add $350 million dollars above the prior year for each of the next 10 years.

The budget contains level funding for the Early Childhood Block Grant Program. Last year, the state added $75 million to the ECBG Program to increase the number of slots for early childhood programs. It did so as well from FY23 to FY24.

The Illinois State Board of Education (ISBE) budget also increases funding for school categorical grants by nearly $20 million. These grants are required by state statutes for specific purposes such as special education, transportation, and the school breakfast and lunch program. According to the Governor’s Office, the proposed budget fully funds the Special Education-Orphanage Tuition and Regular Orphanage Tuition budget lines.

The FY25 budget approved last May included an additional $50 million for after-school programming. This was, in part, to address a situation that occurred in 2023 with a miscalculation of available federal funds[6]. In a June ISBE memo, staff stated it would be working with General Assembly leadership and the Governor’s Office on guidelines for distributing the funds. As of this writing, ISBE has not issued a Request for Proposals or other directions for release of the funds. The FY26 budget does not contain a similar line item. However, there is level funding of $25 million in another line item for after school programming.

This budget does not address the projected Chicago Public Schools deficit for the 2025-2026 academic year of at least $508.7 million[7].

Higher Education

The Governor’s proposed budget increases funding for public universities and community colleges by a total of $46 million (or a 3% increase in general funds over FY25).

Number of MAP Awards by Fiscal Year
Source: Illinois Student Assistance Commission

The Governor proposes increasing funding for the Monetary Award Program (MAP) by $10 million bringing the total proposed expenditure to $721.6 million. The AIM High Grant Program has level funding[8]. According to the budget, approximately 162,700 students benefit from MAP and AIM High.

The budget contains level funding for the Early Childhood Access Consortium for Equity Scholarship Program.  The state created the program in 2021 to address a shortage of qualified early childhood educators. Individuals who have worked in early childhood education and who are seeking additional credentials or a degree in early childhood education may be eligible.

Finally, there is $21.7 million in the budget for the new Department of Early Childhood as it continues to build its operational infrastructure. In FY27, the Department is scheduled to house the Early Childhood Block Grant Program (now at the State Board of Education); the Child Care Assistance Program, Home Visiting programs, and Early Intervention services (now at the Department of Human Services); and day care licensing (now at the Department Children and Family Services). One of the goals of the new agency is to make it easier for families to access services.

Department of Human Services

The Governor’s proposed budget contains a request for an FY25 supplemental appropriation of $75 million for the Child Care Assistance Program and then another increase for FY26 of $85 million. In 2024, the CCAP program served 140,000 children monthly. The Governor’s Office estimates the number will be near 150,000 by the end of FY26[9].

The SMART Start line-item shows a $90 million increase. The state began the program in 2023 with the intention of providing every child access to preschool, reaching more vulnerable families with support early in a child’s life, and increasing funding for childcare providers (with the dual goals of raising wages and improving classroom qualify)[10].

According to budget documents, the increased funds are to annualize the cost of Early Childhood Workforce Compensation Contracts and replace expiring federal childcare funding. The Workforce Compensation Contracts allow providers to receive funding in advance of services to help cover the costs of higher wages and operating a classroom.

There is a $15 million increase for Early Intervention services, which helps infants and toddlers facing developmental challenges. About two-thirds of this amount is to support rate enhancements for providers.

The budget contains level funding for home visiting programs and a 3% Cost of Living Adjustment for TANF (Temporary Assistance to Needy Families) cash assistance. As note later in the blog, TANF funding could be impacted by future federal action.

Department of Children and Family Services

The budget for the Illinois Department of Children and Family Services (DCFS) includes $53.7 million funding for an additional 100 staff members to continue managing caseloads. For decades, DCFS has been under a consent decree to ensure the Department provided adequate services to youth, that children are placed in the most family-like setting possible, and that (under the last amendment to the decree) the agency maintain enough staff to so there is a maximum of 10 cases per child abuse and neglect investigator.

The budget also contains an additional and a $24 million to support salary increases for private partners and an increase of $15.8 million to, in part, support relative caregivers. Earlier this year, the Governor signed the Kinship in Demand Act (now P.A. 103-1061), which allows DCFS  to develop more flexible standards to certify grandparents and other relatives who are able to safely care for youth in DCFS’s care. The law also creates a path for more youth in care to find permanent homes through guardianship[11].

Other proposed expenditures

  • Proposed funding under the Department of Public Health (DPH) for the agency’s birth equity initiative is level.
  • The FY26 DHP budget also contains level funding for maternal and child health services
  • Within the Governor’s proposed FY26 Capital Budget is $300 million (that would fall under a new bond authorization request) to remediate and prepare surplus state property for economic development. The Capitol Budget also contains another $200 million for expanded site readiness programs.

Not included in the proposed FY26 state budget is a plan for addressing a potential transit shortfall at the Regional Transportation Authority (RTA). According to the agency, it is facing a deficit of $770 million next year. The legislature has been discussing changes to the RTA’s governance and operations structure.

Federal Activity

However, the budget approved by the General Assembly could look very different from the proposed budget depending on future activity by the federal government. As of this writing, Congress is debating a tax and budget package that could significantly impact Medicaid, TANF, the Supplemental Nutrition Assistance Program, and a wide range of other social services. It is also facing the expiration of a continuing resolution funding the federal government until March 14th.

A budget resolution approved by a U.S. House committee, and awaiting a full House vote, would provide for $4.5 trillion in tax breaks and deductions (over 10 years) and $2 billion in budget cuts – with a potential $880 billion cut to Medicaid.

While uncertain if Congress would implement this by block grant funding to states (appropriations to states capped at a dollar level versus a reimbursement percentage) or cuts to specific elements of the Medicaid program remains to be seen.

Currently, the state reimburses the state for about half the cost of the majority of Medicaid expenses. However, the Affordable Care Act opened the Medicaid program up to non-disabled adults at higher income levels and as an incentive provided for a 90% federal match rates to states that expanded the Medicaid pool. Close to 770,000 Illinois receive coverage under the expanded Medicaid program[12]. Illinois law stipulates that it would end the Medicaid expansion program if federal funding is cut.

Project 2025, a document put together by the Heritage Foundation, proposes eliminating funding for Head Start – a preschool program serving low-income children. In Illinois, Head Start funding allows providers to serve more than 28,000 children (and those providers employ more than 9,400 individuals)[13].

Other programs from child care to energy bill assistance to TANF (just to name a few) could be impacted by federal budget cuts.

The Illinois legislature’s scheduled adjournment date is May 31st. Children’s Advocates for Change will be tracking developments in Springfield as well as Washington D.C. and advocating for a state budget that meets the needs of all Illinois children.

Written by Mitch Lifson

Footnotes

[1] Under state law the general funds are comprised of the General Revenue Fund, the Education Assistance Fund, the Common School Fund, the General Revenue-Common School Special Account Fund, the Fund for the Advancement of Education, the Commitment to Human Services Fund, and the Budget Stabilization Fund.

[2] Boak, Josh, “Trump signs a plan for reciprocal tariffs on US trading partners, ushering in economic uncertainty”, Associated Press, February 13, 2025.

[3] Proposed Fiscal Year 2026 Illinois State Budget, p. 28

[4] This includes proposed FY25 general funds supplemental appropriations of $550 million.

[5] Capitol News Illinois, “Blac, Latino lawmakers criticize Pritzker’s proposed budget”, February 19, 2025

[6] Hancock, Peter, “Groups Demand Release of After-School Program Funding”, Capitol News Illinois, February 3, 2025.

[7] Civic Federation, Financial Landscape Analysis of the Chicago Public School District FY2025, January 13, 2025.

[8] Formally titled the Aspirational Institutional Match Helping Illinois Grow Higher Program (AIM HIGH), the program is designed to encourage Illinois residents to attend Illinois public universities. The grant is renewable for a student assuming he or she continues to meet the eligibility requirements.

[9] Illinois Office of Management and Budget, “Illinois Budget in Brief”, p. 18, Proposed Fiscal Year 2026 Illinois State Budget, p. 341

[10] https://www.ilgateways.com/smart-start/smart-start-workforce-grants

[11] Press Release, Office of the Governor, February 5, 2025

[12] HFS briefing on February 19, 2025;

[13] National Head Start Association, Illinois 2025 Head Start Profile

A Message from the President

A Message from Children’s Advocates for Change President Dr. Tasha Green Cruzat
January 29, 2025

As citizens of the state of Illinois, we have a basic responsibility to all residents of the state – especially our children. It is the responsibility to see that they are healthy, educated, housed, fed, and clothed. It is a responsibility to see that no harm comes to them and to see that every child – regardless of that child’s race, ethnicity, or zip code – has the resources to thrive.

A person can be forgiven for questioning how many citizens still hold that sense of responsibility after watching the events of the past week and a half. A memo issued by the President’s Office of Management and Budget, then rescinded, to freeze and re-evaluate funding for a host of federal programs that at their core seek to provide the opportunity to successfully move forward in life. The demonization of parents who hold the same goal as every other citizen to see that they provide for their children and pave the way for a better life for them. There may be more efficient ways to provide programs and services to our children but let’s not make burning down the house the starting point.

In the last several years, Illinois has made great strides in providing needed health care to children and parents, creating new enrollment opportunities in early childhood education and care, and increasing funding for our K-12 school system to promote greater educational opportunities for everyone. No matter what actions the federal government may undertake in the next 60 days and beyond, it would be a shame to let those activities curtail the progress we have made in our state.

In Illinois, we cannot stand by, point towards Washington D.C., and say “look at what they are doing”. We can’t play the blame game. We tried that from 2015 to 2017 when Illinois had a budget impasse. The result was a lot of damage to the lives of many Illinois citizens.

We need to demand from our state and local officials that we stand for the advancement of all our citizens. If that requires more revenue, then we need to find it. Stripping away funding for schools, early childhood services, health care, and housing isn’t going to clear the path forward. It will only put up more barriers that we have worked so hard to remove.

In this time of turmoil, Illinois citizens need to resolve to stand together as one community. We need to take particular care to help our children who, in some cases, may be too young to help themselves. Children’s Advocates for Change will be there every day to wage the fight for needed programs and services. Our resolve to stand together as one community, even if it will mean difficult conversations, will only make us stronger.

Sincerely,
Dr. Tasha Green Cruzat

Help Us Advocate for our Children

Make A Donation

OFFICE LOCATION

Children’s Advocates for Change
c/o Impact House
200 W. Madison Street, Suite 300
Chicago, IL 60606

Email: info@childrensadvocates.org
Main: 312-361-0101

STAY CONNECTED

SUBSCRIBE TO US

Get news and events sent directly to your inbox. Send us an email at info@childrensadvocates.org to be added to our mailing list.

ASSOCIATIONS

Children’s Advocates for Change is a proud member the following networks:

Economic Analysis and Research Network

economic-analysis-research-network


Partnership for America’s Children

Notice of Non-Affiliation:
Children’s Advocates for Change is not affiliated, associated, authorized, endorsed by, or in any way connected with Voices for Illinois Children (“Voices”). Voices is an independent advocacy organization that is powered by YWCA Metropolitan Chicago.