Illinois Public Media News

AP - Illinois Public Media News - February 16, 2011

Quinn Proposes Oft-defeated School Consolidation

Illinois Gov. Pat Quinn wants to increase public school spending slightly in the coming year. But he would save state money by consolidating schools and cutting spending on regional offices of education.

The Democrat outlined his budget proposal for the coming year Wednesday.

Elementary and secondary education spending would be up about 3 percent.

But the governor is proposing mergers to reduce the 868 school districts across the state - an emotional issue that has failed in the past.

Quinn also wants to cut $14 million the state spends on 45 regional education offices. He says the State Board of Education can take up their tasks.

And he would reduce state spending on bus transportation for students by $95 million. He says local school districts should shoulder that cost.


AP - Illinois Public Media News - February 16, 2011

Quinn Creating ‘Innovation Council’ to Create Jobs

Illinois Gov. Pat Quinn proposed a slight increase in education spending Wednesday but wants to save state money by pushing school consolidation and eliminating regional education offices, two ideas that have gone down in flames over the years.

Quinn resurrected the idea of consolidation, which has caused ll feelings since the days of the one-room schoolhouse, but didn't say how much might be saved.

His chief of staff, Jack Lavin, said he number of districts in Illinois -now 868 - "should be down significantly."

The Democratic governor also proposed cutting a $14 million subsidy to 45 regional offices of education, which conduct training and special schools, and reducing by $95 million the amount the state pays to bus students to the classroom.

Overall state support for elementary and secondary education would climb 3.2 percent to $7.2 billion, still 1 percent lower than in 2009-2010 school year.

Higher education would see just a slight increase in money, 1.2 percent to $2.15 billion.


WILL - Illinois Public Media News - February 16, 2011

Borders Files for Ch. 11 Bankruptcy Protection

(Additional reporting from the Associated Press)

Bookseller Borders, which helped pioneer superstores that put countless mom-and-pop bookshops out of business, filed for bankruptcy protection Wednesday, sunk by crushing debt and sluggishness in adapting to a rapidly changing industry.

The 40-year-old company plans to close about 200 of its 642 stores over the next few weeks. In Illinois, more than 15 stores are closing at locations across the state, including Matteson, Chicago, and Normal. There are also stores closing in Indiana at branches in Evansville, Indianapolis, and West Lafayette.

All of the stores closed will be superstores, Borders spokeswoman Mary Davis said. She doesn't expect those stores to be closed any later than the end of April, but it depends on when the stores sell out of books.

The company also operates smaller Waldenbooks and Borders Express stores.

Clearance sales could begin as early as this weekend, according to documents filed with the U.S. Bankruptcy Court in New York. Borders said it is losing about $2 million a day at the stores it plans to close.

Cautious consumer spending, negotiations with vendors and a lack of liquidity made it clear Borders "does not have the capital resources it needs to be a viable competitor," Borders Group Inc. President Mike Edwards said in a written statement.

Borders plans to operate normally and honor gift cards and its loyalty program as it reorganizes.

The company will receive $505 million in debtor-in-possession financing from GE Capital and others to help it reorganize.

According to the Chapter 11 filing, Borders had $1.28 billion in assets and $1.29 billion in debts as of Dec. 25.

It owes tens of millions of dollars to publishers, including $41.1 million to Penguin Putnam, $36.9 million to Hachette Book Group, $33.8 million to Simon & Schuster and $33.5 million to Random House.

It's significant that Borders could not reach an agreement with creditors and file a "prepackaged bankruptcy." Said Nejat Seyhun, a bankruptcy expert at the University of Michigan.

It could be a sign that creditors do not believe Borders will be a "viable operation going forward," Seyhun said.

Activist investor William Ackman, whose Pershing Square Management Co. has a nearly 15 percent stake in the company, also stands to be a big loser. Shareholders are often wiped out in a reorganization.

He offered to finance a $16-per-share Borders-led takeover bid for rival Barnes & Noble in December, but nothing materialized.

The filing was expected, but it is far from clear if it will be enough to save the company.

"They are going to have to be an entirely different company than the one that went into bankruptcy protection if they want to emerge successfully," said Jim McTevia, managing partner of turnaround firm McTevia & Associates in Bingham Farms, Mich.

It has been a long fall for the Ann Arbor, Mich., company, which 15 years ago appeared to be the future of bookselling.

Big-box bookstores have struggled as competition has become increasingly tough as books become available in more locations, from Costco to Walmart, online sales grow and electronic books gain in popularity.

Borders also suffered from a series of errors: failing to catch onto the growing importance of the Web and electronic books, not reacting quickly enough to declining music and DVD sales, and hiring four CEOs in 5 years without book-selling experience.

"Books and content just became so available at so many other locations, online and offline, the 'grow, rinse, repeat' mindset just wouldn't work anymore," said Michael Norris, senior trade analyst at Simba Information.

In addition, Americans are simply buying fewer books. Sales fell nearly 5 percent in 2010 to 717.8 million from 751.7 million last year, according to Nielsen, which tracks about 70 percent of book sales but doesn't include Walmart stores.

For book lovers who like to shop in stores, the news was worrisome.

"It's just really sad to hear that happening," said Monika Barera, 50, shopping Wednesday at a Borders store in its hometown of Ann Arbor, Mich. The downtown store she was shopping at isn't closing, but four others in Michigan are. "I just hope they can find a way through."

At its peak in 2003, Borders operated 1,249 Borders and Waldenbooks stores. Now it operates barely half that. Its annual revenue has fallen by about $1 billion since 2006, the last year it reported a profit.

Borders' rival Barnes & Noble, which has 29.8 percent of the book market compared with Borders' 14.3 percent according to IBIS World, has done better by adapting to e-commerce and electronic books more quickly and keeping management stable.

Tom and Louis Borders opened their first store in 1971, selling used books in Ann Arbor, Mich. At the time the brothers were mostly interested in offering other bookstores a system they'd developed for managing inventory.

But in 1973, the store moved to a larger location and starting selling new books. The brothers decided to focus on opening more bookstores.

The birth of the superstore was still a decade away. The Waldenbooks and B. Dalton mall chains, with small, 2,000-square-foot stores and 20,000 to 50,000 titles, were growing rapidly.

Against this backdrop, Borders opened its second location in 1986. From there, the company opened one or two bookstores a year; the pace eventually increased to 40 a year.

The new superstores, in contrast to mall chains, ran 10,000 to 15,000 square feet and offered between 100,000 and 200,000 titles and enticements to linger like comfortable chairs and attractive lighting.

Kmart Corp. saw the potential and acquired Borders in 1992, forming a book unit with Waldenbooks. It then spun the bookstores off as a separate company in 1995, the same year a company called Amazon.com started selling books online.

Analysts say a key error for Borders came in 2001, when it contracted out its e-commerce business to Amazon.com.

"Termites don't team with Orkin," said Simba Information's Norris. "Amazon had no incentive whatsoever to promote Borders. ... It really marked the beginning of the end."

That relationship lasted until 2006. By then, Borders lagged far behind Barnes & Noble, which had been selling books online since 1997.

By the time Borders' current CEO, financier Bennett LeBow, came aboard in May 2010 after investing $25 million into the company, the ship was listing badly.

Fordham University marking professor Al Greco said Borders can operate with fewer stores, but the same challenges remain, Greco said.

"This is not a good day for book retailers, book readers and book publishers," Greco said. "It's a serious problem that a major chain that did a nice job for many years could not survive."

(Photo courtesy of Ildar Sagdejev)

Categories: Business, Economics

WILL - Illinois Public Media News - February 16, 2011

Champaign City Council Unanimously Approves Buyout Plan

Champaign's city council has unanimously approved a voluntary separation program for employees.

The city will take applications beginning March 1st, and accept them throughout the month. Champaign Human Resource Director Chris Bezruki said the idea is reducing the need for layoffs, and cuts to areas like police and fire. He said there's been informal interest from about 15 workers who want to see how the program would impact their retirement. The city expects 20 employees at the most would be granted the incentive, but Bezruki said sorting out who those people are will take a while.

"There will be several positions that we've already looked at, and said that these positions probably should go," he said. "Then there will be those other positions that are trying to be backfillled by others, and then there will be some other positions that, if we have to do this next year, maybe these are the positions that we should accept."

Bezruki said the process should be completed by December. The incentive is two weeks of pay for every year of service, up to a maximum of $45,000. Employees whose applications are accepted may not be rehired for two years.

Meanwhile, a Champaign public works employee, Steve Beckman, suggests the city explore a different cost-saving option. After logging more than $4,000 in overtime removing ice and snow, he suggests giving his staff comp time would save more money than the six furlough days that public works expect to be required of them in the next year. Beckman said the savings from comp time would be greater than what the city would gain from the six furlough days he expects the city to impose on public works. Beckman also said that his union's contract won't grant them.

"We don't believe that the contract allows for it, so we have to grieve that," Beckman said. "And then there's a chance that we go arbitration, you'd have to pay us for it anyway, and we don't want to do that. So if we could open up the comp situation for even one year in a year like this and save money on it, why not do it?"

Beckman said a couple of his co-workers are seeking the buyout, and they should be allowed to pursue it. But he said there are some stipulations put on the AFSCME union that lets the workers re-organize their contract, and Beckman said they're not willing to do that. The Champaign City Council Tuesday night also unanimously backed a budget revision for up to $356,000 in snow removal costs.

Categories: Economics, Government, Politics

AP - Illinois Public Media News - February 15, 2011

Ill. Faces Tight Budget Despite Tax Increase

Just weeks after signing a major tax increase into law, Gov. Pat Quinn gets the privilege of telling Illinois lawmakers and taxpayers that the state's budget is still a mess.

Even with higher income taxes, Illinois won't have enough money to pay all its expenses for the coming year, let alone cover the billions in old bills that have been allowed to pile up.

When Quinn delivers his budget proposal Wednesday, he's likely to call for significant spending cuts in some areas. He will undoubtedly renew his call for borrowing $8.7 billion to pay old bills. And a document from his budget office indicates he wants to take another try at raising cigarette taxes.

Quinn has largely stayed out of sight in the run-up to his budget address, but in an appearance Friday the Chicago Democrat talked about the importance of money for education, health care and public safety. At the same time, he warned Illinois must be "very, very frugal."

State budget director David Vaught said Quinn will make it clear that raising taxes by two-thirds did not solve Illinois' budget problems.

"The General Assembly and the public will see the spending pressures," Vaught said in an interview with The Associated Press last week. "They'll see where we plan to spend and where we don't. We'll make clear not just that we're saying no but why we're saying no."

The Quinn administration has been studying possible cuts to human services - cuts that advocates for the poor describe as draconian.

"We're terrified," said Maria Whelan, president of Illinois Action for Children. "Our hope is the pain will be shared and the most vulnerable people in our state do not bear the brunt."

State employees and retirees may also be targeted, if not by Quinn then by the Legislature.

House Speaker Michael Madigan, D-Chicago, recently warned lawmakers of tough decisions that lie ahead and even suggested cutting pension benefits for current state employees, a move generally considered unconstitutional.

"If you come here and you don't want to cast a difficult vote, well, you ought to go back home and give the job to somebody else," Madigan said.

It's not clear just how big a deficit Illinois faces in the budget year that starts July 1. The Quinn administration has avoided direct answers to that question.

A three-year budget outline from Quinn's office shows he's counting on some revenue measures that haven't been approved yet, notably a $330 million increase in cigarette taxes.

A review of the document suggests a gap of more than $3 billion between income and expenses in the coming year. On top of that, the state owes about $8.7 billion to groups that provide services on government's behalf, to corporations waiting for tax refunds and to the program that provides medical care for government employees.

So the total deficit could top $12 billion. That's one-third of state government's total spending from general funds.

Quinn and Democratic legislative leaders want to borrow money to pay the overdue bills quickly. They argue it's more responsible for government to take on the debt directly rather than borrowing it unofficially by simply not paying what it owes.

Republicans generally oppose the idea, but Quinn has been trying to build public support. He has set up a website promoting the plan - which he calls debt restructuring instead of borrowing - and is urging vendors to demand their money.

The budget outline also counts on federal aid remaining steady even though the economic stimulus program that has propped up state budgets is ending. It's not clear how Quinn expects to avoid a drop-off that would further add to the deficit.

Vaught made the task of balancing the budget sound like playing a Whac-a-Mole game. Officials reduce employee costs but pension expenses jump. They cut drug-addiction treatment yet medical costs keep climbing.

"If you push it down over here, it pops up over there," Vaught said.


WILL - Illinois Public Media News - February 14, 2011

Former Urbana Mayor Jeff Markland Dies

Jeff Markland, who was mayor of Urbana throughout the 1980s, died Monday at his home in the city. He was 70 years old, and the Champaign County Coroner's office attributes his death to natural causes.

Markland served one term on the Urbana City Council before winning election in 1977 to the first of four terms as mayor. Some of the people he appointed are still with the city, including city comptroller Ron Eldridge.

"Jeff really had a deep, deep passion and really cared for the city of Urbana," Eldridge said. "He was very much, I think a moderate, even though he was with the Republican Party, he really did not let national politics enter into the decisions of the city."

Markland's tenure as mayor ended in 1993, when he lost a close race to Democrat Tod Satterthwaite. But Satterthwaite said despite his differences with the Republican Markland, they shared a dedication to improving Urbana's business climate and neighborhoods. He credits Markland with finding good people for Urbana's top administrative positions.

"Once you had the qualified people there, let them do their job," Satterthwaite said in describing Markland's approach. "And of course, he would direct them on what kind of projects he would like to see, but let them find out what was going on in their area, and let them bring suggested projects back to him and the council for review and approval."

In addition to Eldridge, Public Works Director Bill Grey is the other Markland appointee who is still with the city of Urbana. Grey said he was attracted to Urbana by Markland's stability and professionalism. Funeral services for Jeff Markland are pending. Renner-Wikoff in Urbana are handling the arrangements.

Categories: Economics, Government, Politics

WILL - Illinois Public Media News - February 13, 2011

Ill. Lawmaker Looks at Selling Ad Space on License Plates for New Revenue

Imagine riding in a car with a license plate that has an advertisement tacked on promoting a restaurant, soft drink, or sports team. Well, that may become a reality in Illinois.

One Chicago Democrat has introduced legislation designed to create corporate-sponsored license plates to generate revenue. It is part of an effort to help plug the state's $15 billion budget deficit.

"It's not a novel idea to have advertising on certain stadiums, or buses, or somewhere," State Sen. John Mulroe (D-Chicago) said. "But we need to start thinking of other ways to generate revenue that's going to keep recurring year after year."

The plan would give motorists the option of purchasing cheaper license plates with the advertisements. Companies interested in promoting their business would make up the cost difference, and pay an additional amount. The money would go to the state and a contractor overseeing the program, but it's unclear how much money both sides would get.

"If we took a million people that wanted to be engaged in this program, and if the state were to say get $10 a plate, it could be an additional $10 million a year," Mulroe said.

Mulroe calls this a "win-win" for the entire state because taxes would not go up, and Illinois would generate more revenue.

Texas is currently the only state to sell corporate license plates. Other states including Florida, Nebraska, and Virginia have looked at similar proposals.

(Photo courtesy of CyberDrive Illinois)


AP - Illinois Public Media News - February 11, 2011

Ill. Senator Proposes Minimum Wage of $10 an Hour

An Illinois lawmaker is pushing to raise the state's minimum wage to more than $10 an hour -- higher than anywhere else in the United States.

The Chicago Sun-Times reports that Democratic Sen. Kimberly Lightford of Maywood has introduced legislation to raise the minimum wage by 50 cents plus the rate of inflation every year until it reaches the point where it's equivalent to what $1.60 an hour was in 1968. Today, that would mean an hourly wage of $10.03.

Lightford said she wants to make sure the working poor aren't ignored or forgotten.

But opponents say the proposal could cause businesses to move to other states -- especially if it comes after a recent corporate income tax increase.


AP - Illinois Public Media News - February 09, 2011

Corn Reserves Hit Over-15-Year Low, Could Raise Prices for Food, Ethanol

The U.S. Department of Agriculture is reporting that reserves of corn have hit their lowest level in over 15 years.

The high demand for corn could put upward pressure on food prices in 2011.

Demand for corn in the ethanol industry is up 50 million bushels after record-high production in December and January, according to the USDA.

That has left the United States with the lowest surplus of corn since 1996.

Scott Gerlt, a crop analyst with the University of Missouri, said high corn prices could increase the cost on everything from ethanol to food and feed.

"The corn market is definitely a changing market," Gerlt said. "With ethanol policy we have a lot more demand and so we are going to have a lot more pressure on prices. Because even though we have a lot of supply there's just so much demand a lot of that supply is getting used up and we're just not left with much at the end of the day."

Corn prices have already doubled in the last six months, rising from $3.50 a bushel to more than $7 a bushel.

(Photo courtesy of Artotem/Flickr)

Categories: Business, Economics, Health

AP - Illinois Public Media News - February 09, 2011

State Farm Retirees Losing Some Medical Coverage

State Farm Insurance Cos. will stop providing supplemental medical coverage for its Medicare-eligible retirees next year in a cost-cutting move.

The Bloomington-based company says it will instead help them find supplemental Medicare coverage and provide them with $200 a month to help. It wasn't immediately clear how many of the company's 28,700 retirees the move will affect.

State Farm also will make changes in the availability of retirement health care for current and future employees. People hired after this year, for instance, will have to pay for all of their own retirement medical insurance.

State Farm spokesman Phil Supple told The Pantagraph newspaper in Bloomington that growing medical claims have driven up the company's health care costs.

Many companies have announced similar changes in recent years.

Categories: Economics, Health

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