Illinois Governor J.B. Pritzker has proposed a Fiscal Year 2023 (FY23) general funds state budget that provides tax relief; makes additional investments in education, health, and public safety; and shores up state finances. It directly appropriates for FY23 a small portion of remaining federal COVID-19 relief funds received by the state for general fiscal recovery, but it leaves open the question of how to appropriate several billion dollars more of such relief.

The proposed operating budget for FY23, which begins on July 1^st, totals around $44 billion. However, that is before a set of transfers out of the general funds. Those transfers, along with anticipated unspent appropriations, bring the total expenditures proposed for the next fiscal year to approximately $45.4 billion.

Source: Governor’s Office of Management and Budget

In addition to the proposed spending for FY23, the Governor is proposing additional, or supplemental, appropriations for the current fiscal year (FY22) that ends June 30^th. Those supplemental appropriations total just under $3 billion and include $898 million to pay a backlog of state employee and retiree health insurance bills, $230 million to address an unfunded liability in the College Illinois! 529 Prepaid Tuition program, and an additional $68 million for public universities and community colleges.

The Governor also proposes transferring an additional $300 million in FY22 for the state pension funds and $600 million into the Budget Stabilization Fund (or what is often referenced as the state’s “rainy day” fund)[1]. Further proposed FY22 transfers revolve around the Governor’s proposed tax relief package, which he is calling the “Illinois Family Relief Plan”[2]. Between FY22 and FY23, these expenditures would total just over $1 billion. Included is:

• A one-year freeze on the scheduled cost of living increase to the state’s motor fuel tax (saving consumers an estimated 2.2 cents per gallon). Estimated cost is $153 million.

• A one-year suspension of the state’s sales tax on groceries, which is 1% on qualifying foods. Totaling $360 million, these funds actually go to local governments (municipalities or, in the case of unincorporated areas, counties). The Governor proposes an appropriation to local governments to make up for the loss.

• A one-time property tax rebate to Illinois homeowners (beginning in July) up to $300 based on the taxpayers 2021 state income tax return. (The rebate applies only to those currently eligible for the 5% income tax credit for property taxes paid – which is for individuals with adjusted gross incomes of less than $250,000 or $500,000 for married filing jointly taxpayers). This rebate is estimated to cost the state $475 million.

• A one-year waiver of license fees for frontline healthcare workers as well as liquor license fees for bars and restaurants. Estimated cost is $38 million.

While the state, Illinois local governments, state healthcare providers, and Illinois institutions of higher learning will receive an estimated total of $51.9 billion from the the six federal COVID-19 relief packages passed since March 2020, about $8.1 billion is for the state to use on COVID-19 related expenditures and replacement of revenue lost as a result of the pandemic[3].

The FY22 budget includes $2.8 billion of that amount for government expenditures in infrastructure, violence prevention, education, health care, housing and economic recovery programs. The state also reserved about $1.5 billion to replace lost revenues. Of the remaining amount, the FY23 budget proposes use of $235 million for violence prevention grants and $200 million for COVID-19 related responses by the Illinois Department of Human Services, Illinois Department of Corrections and the Illinois Emergency Management Agency. (Expenditure of the $8.1 billion must occur before December 21, 2024).

Starting from the $8.1 billion in federal funds the state received for pandemic related expenditures and revenue replacement, that leaves an unspecified balance of just under $3.4 billion. While not designating the funds for an expressed purpose, the Governor does note in his budget that to pay pandemic related unemployment benefits the state had to borrow funds for the U.S. Department of Labor for the state’s Unemployment Trust Fund. Those borrowed funds, which the state needs to repay, currently total $4.5 billion with interest accruing on the amount. The Governor notes his administration has begun meetings with legislators, business leaders, and labor leaders to find “the most appropriate solution for repaying the federal government.[4]”

Below are some of the programs specific to children. These do not include the entire range of state programs serving residents 18 and under.

Education

Among the notable education expenditures in the proposed FY23 budget are:

• Increased funding for the state’s evidence-based school funding formula of $350 million (for a total of $7.9 billion). This formula was revised in 2017 with the goal of adding $3.5 billion into state school funding over the next ten years to help reduce inequities in school funding.

• Appropriation of remaining federal education funds received as part of the COVID-19 relief legislative measures. Illinois received $7.87 billion in COVID-19 federal Elementary and Secondary School Relief funds -most of which flows directly to school districts with high low-income populations. The state has already invested $1.82 billion of those funds.

• Increased funding for the early Childhood Block Grant of $54.4 million. According to the Governor’s budget book, this will allow the state to service an additional 7,100 children.

• An additional $68 million for public universities and community colleges (on top of the increase for FY22 noted above).

• An increase of $122 million to the Monetary Award Program, which assists Illinois residents with tuition and fees at Illinois colleges and universities (including community colleges). According to the Governor’s office, this will allow the state to increase the maximum grant award to 50% of the average cost of tuition and fees at an Illinois public university.

Department of Children and Family Services

Prior to the pandemic, the Illinois Department of Children and Family Services was working to meet the provisions of a federal consent decree on cases per worker and dealing with a surging caseload. The FY19 agency headcount was 2,758. With increases since then, the FY23 budget requests places the proposed funded headcount at 3,416 with $15.5 million proposed to hire an additional 360 staff.

Source: Department of Children and Family Services
Overall, the proposed agency budget is $253.8 million higher than the FY22 expected expenditures with the following measures included:

• $87.1 million to reform the rate structure for private sector providers to address staffing shortages.

• A 3% cost-of-living adjustment for foster caregivers. (The proposed budget also includes a cost-of-living adjustment for DCFS staff and union step increase.)

• $25 million to increase the capacity for youth placement in the most clinically appropriate settings.

• $7 million for a redesigned independent living program to better support youth transitioning out of DCFS care.

Source: Department of Children and Family Services

Department of Human Services

Compared to the current fiscal year, child care funding remains consistent with the Department of Human Services indicating the funding will support increasing provider rates (includes Center rates) of 3.5% effective July 1, 2022, and another 4.5% on December 1, 2022.

Source: Governor’s Office of Management and Budget

 

• During the last two years, the state awarded more than $750 million in Child Care Restoration Grants and Child Care Workforce Bonuses to over 11,000 providers. The FY23 budget, appropriates another $300 in childcare funding to continue what it calls restoration efforts.
• Funding for the state’s early intervention program remains level compared to FY22.
• General revenue funding for homeless youth services increases slightly from $6.28 million to $6.4 million.

Health Care

As with other states, the pandemic has strained Illinois’ healthcare system. Yet, even before the pandemic, legislators and others recognized existing racial and ethnic disparities regarding infant mortality, diabetes, strokes, and other health conditions. In April of 2021, the Governor signed legislation encompassing health care reforms put forward by the Illinois Legislative Black Caucus. Among the measures was language that creates a certification for community health workers to act as liaisons between communities and health care/social service programs. The FY23 proposed budget includes $2.5 million for the program.

The budget also has the Department of Healthcare and Family Services reinvesting $180 million to “preserve and grow the healthcare workforce, with a focus on Medicaid providers and providers in underserved areas.”[5] It notes the funding would be for recruitment, staff bonuses, and continuing education trainings.

The legislature will take up the budget with a scheduled adjournment date of April 8^th. With appropriation hearings already scheduled, Children’s Advocates for Change will be following these proceedings and providing updates on committee reviews and further proposals.

[1] The proposed budget than calls for transferring an additional $200 million above the required pension contributions for FY23.

[2] Proposed transfers include $425 million to fund property tax rebates and $285 million to fund to address the suspension of the sales tax on groceries.

[3] Unlike money the state received from the federal government for specific purposes such as health care, child care or housing assistance, there is (within the general framework) more discretion in the use of these funds awarded under the federal Coronavirus State Fiscal Recovery Fund.

[4] Proposed FY23 budget p. 58

[5] Governor’s proposed FY23 budget, p. 30