September 09, 2013

Moody's: Illinois Economy Finally In 'Recovery'

Illinois has been one of the slowest states to recover from the Great Recession, but at least one analyst says things are getting better.

Illinois is no longer at immediate risk of recession, and is in fact beginning to recover. That, at least, is the assessment of economist Steve Cochrane, with Moody's Analytics.

"The housing market is picking up in Chicago," Cochrane said. "The large service- and finance-based economy in Chicago also seems to be picking a little bit, and hiring is improving."

Much of the improvement in Illinois' economy is pegged to Chicagoland, but he says Downstate manufacturers could also soon see an improvement in exports overseas.

Cochrane, however, said there will continue to be problems related to state government. There are the larger, structural budget issues, like the massive pension liability. But he said the decline in government employment makes a difference, too.

"And whether we like it or not, that is a weight on the economy," he added. "It takes away from the spending power of those folks who are state government employees."

The latest unemployment numbers show Illinois is ranked 49th in the nation, just three-tenths of a percentage point ahead of Nevada.

September 04, 2013

Pension Panel Could Be Nearing Agreement

Legislators writing an overhaul of the state's pension systems could be nearing the end of their work. 

Feedback's been plentiful since late last month, when a draft of a pension plan drawn up by a bipartisan legislative committee was leaked. Unions hate it, saying it overreaches in cutting retirement benefits.

Meanwhile, business groups say it does not go far enough to save the state money. Not to mention complaints, including from the governor, that the committee is taking too long.

Now a key member of the panel is responding.

In a statement, Sen. Daniel Biss (D-Evanston) said the leaked plan is not the final version. He said "our conversations remain in a state of flux" but adds he is hopeful the committee is entering "the late stages" of deliberations.

Biss encourages more feedback on the leaked plan. Under it, state employees', teachers' and public university workers' pensions would still get cost-of-living increases, but instead of going up 3-percent automatically each year, it'd be a fraction of the consumer price index.

Employees would also have less taken out of every paycheck for pensions.

dual language teacher at Leal Elementary School
(Sean Powers/WILL)
August 20, 2013

State Senate Panel Looking At Education Funding

State funding for education in Illinois has dropped by hundreds of millions of dollars in the past several years. A group of state senators is looking at updating the education funding forumla. 

Illinois ranks 50th among the states in its share of money going to schools. The formula used to distribute those dollars dates back to the 1990's.

Some say Illinois doesn't spend enough on schools. Others say it just needs to allocate the money more fairly. But almost all of them agree Illinois is not where it needs to be in its level of support for schools.

"That is a problem," said the Illinois Association of School Boards' Ben Schwarm, who spoke during a Senate panel. "The number of teachers that have been let go over the last two years is amazing. That does not help education."

The amount of money Illinois says should be the minimum per student has remained flat several years in a row, and the state isn't even paying the full amount — money is so tight, it could only pay 89 percent last year.

"Our own advisory council says that we're behind by about $2,500 a child," said Robin Steans, who's with the advocacy group Advance Illinois.

Steans was referring to the amount Illinois says should be spent per student. Wealthier districts can easily exceed that level with local property taxes, but the state has to help poorer districts meet the target.

Except Illinois' figure has been flat for several years -- and it has not been able to afford the full amount anyway. Steans said it will take a long time to get funding where it should be.

"We can't think of it as a 1- or 2-year solution, we are going to have to have a 4- or 5-, 6-, 7-year strategy in mind for how we're going to do that," Steans said. "And we're going to have to have the political will to not only aspire to that, but then actually see it through."

Senators say their focus is not on how much Illinois spends on education, but rather how that money is divvied up among Illinois' 862 school districts.

The committee is supposed to report back to the Senate leaders by February of next year.

August 01, 2013

39 Jobs Cut At Vermilion County Nursing Home

Thirty-nine people at the Vermilion Manor Nursing Home located west of Tilton are losing their jobs.

Vermilion County Assistant State’s Attorney Bill Donahue confirmed the announcement Thursday shortly after the nursing home was sold to a private equity firm for $3.4 million.

Premier HealthCare Management, which is partnering with FNR Healthcare Group, is now overseeing Vermilion Manor. Donahue said Premier did an assessment of the nursing home’s operations, and determined that it could stand to lose those employees.

“No one’s pleased when people are not employed because in this community we need employment,” he said. “We’re hopeful that’ll change over time as the resident population grows.”

Donahue said people losing their jobs have been notified, while around 130 existing nursing home jobs are still in place.

The Vermilion County Board sold the nursing home after struggling to maintain it.

A call seeking comment from the owner of Premier Healthcare Management was not returned.

Bill Brady
(Seth Perlman/AP)
July 29, 2013

Illinois Legislative Committee Nearing Pension Compromise

A member of the Illinois legislature's special committee on pensions says the group is closing in on a compromise. It remains to be seen whether the measure will have enough support in the full General Assembly.

The 10-members of the bipartisan conference committee have been meeting for more than a month.

A good chunk of that time has been waiting for actuaries to analyze the various proposals -- seeing how much of Illinois' nearly $100 billion in unfunded pension liabilities might be eliminated.

"We sent a -- hopefully -- a final round of scoring back to the actuaries to come up with some solution," said State Sen. Bill Brady (R-Bloomington).

Brady said there has been "a great deal of compromise" among his fellow pension committee members.

"I'm hopeful that our work and effort will bring the conference committee to a consensus resolution, and then we can employ the legislative leaders to help us pass a bill," he added.

Brady said he has not heard from Gov. Pat Quinn -- or anyone on the governor's staff -- since Quinn vetoed lawmakers' salaries as punishment for not passing pension legislation.

A class at the University of Illinois at Springfield.
(Jeremy Wilburn/flickr)
July 25, 2013

Illinois Tuition Law Helps Families, But Hurts Schools

As the Illinois Truth-in-Tuition law reaches its 10th year, experts say it helps families plan for college, but it makes it harder for public colleges to be strategic.

The law allows Illinois undergraduate students at public universities to attend school for four years without tuition increases. An amendment passed in 2010 extended it to six years, though allowing the school to increase tuition rates for fifth or sixth year students, as long as the price matches that of the students that came immediately after then.

Although the law provides some stability to students, it has hurt universities, according to Allan Karnes, accounting professor at Southern Illinois University Carbondale and member of the Illinois Board of Higher Education.

For example, when a university needs to increase tuition due to rising costs, inflation or decreasing state support, the incoming class has to shoulder the entire increase because their counterparts cannot pay higher fees.

‘It appears we’re raising tuition much more than we actually are, and so that cast us in a bad light,” Karnes said.

Moreover, the binding law requires public universities to guess what their budget will be for the next couple of years, said Thomas Hardy, executive director for media relations at the University of Illinois.

“It requires that the university take a bit of foresight in terms of where cost may go, and then reading a bit of a crystal ball, set tuition that will be fixed for a four year period,” Hardy said. “It locks us in for a four-year period.”

He adds that this comes at a time of decreasing state support. Since 2002, the University of Illinois has lost about $1 billion in spending authority, leading to tuition hikes and cuts. For example, the university shut down its Institute of Aviation in July 2011.

Having to predict future costs is also difficult, said Kinga Mauger, the bursar at Northern Illinois University. For example, the school did not expect the recession. Although the school faces rising costs, Mauger said it doesn’t want to simply ask incoming students to shoulder the burden. As a result, budgeting is far more difficult.

A new survey of 800 undergraduates and parents nationwide from student loan company Sallie Mae found that since 2010 and the recession, parents have paid less for college, relying more on loans, grants and scholarships. Overall, high and low-income families have paid less for college since 2010, but middle-income families have paid more.

Spending on college overall has fallen since the recession. That, along with the Illinois requirement to fix tuition for four years, makes budgeting difficult for state universities.

Spending on college overall has fallen since the recession. That, along with the Illinois requirement to fix tuition for four years, makes budgeting difficult for state universities. (Sallie Mae)

Beyond Illinois, a federal Truth in Tuition proposal has been sent to a House committee.

It requires schools to give students a multi-year fee schedule upon admission, but allows for changes.

Karnes of the Illinois State Board of Education said lawmakers are not in the best position to draft tuition policies.

“There’s not a general understanding at that level (of) what the budgetary pressures are,” Karnes said. “Every school is different. We determine what tuition should be by what our costs are. We’re not trying to make money. We’re just trying to break even.”

Foellinger Auditorium a the University of Illinois at Urbana-Champaign.
July 25, 2013

Student Loan Deal Faces An Easy Path In House

A bipartisan Senate compromise on student loans is heading to House, where lawmakers already have voted to link interest rates with the financial markets.

If lawmakers can iron out the relatively small differences between the House'sstudent loan bill and the version the Senate passed Wednesday, students andtheir parents will find interest rates lower than the ones they faced last year.

President Barack Obama is encouraging the House to vote quickly on the legislation so returning students can enjoy lower rates.

The compromise would be a good deal for all students through the 2015 academic year. After that, interest rates are expected to climb above where they were when students left campus in the spring.

The White House says the deal would save the average undergraduate $1,500 in interest.

college campus at Columbia University
(Mario Tama/Getty Images)
July 09, 2013

Congress Still Squabbling Over Student Loan Rate Increase

The Senate is planning to vote Wednesday on a plan to bring interest rates on subsidized federal student loans back down to 3.4 percent for one more year.

The rate doubled on July 1 when the chamber failed to agree on a plan.

While the Senate prepares to take the issue back up, college students are left staring at several competing proposals.

This fight has been all about what's best for those students. To make that point, House Republicans recently gathered more than 100 of them to sweat and squint under the summer sun for a press conference on the Capitol steps. The guys were wrapped in wool suits and ties — most of them congressional interns plucked from offices just that afternoon.

One of them was Wes Hodgin, who said he kept thinking one thing while he waited 45 minutes for House leaders to arrive: Do not faint.

"I'm just going to try to stand out here, sweat all I can, and just not faint today," he said.

Hodgin's going to be a junior at the University of North Carolina at Chapel Hill this fall. He has student loans, but not the subsidized kind, so the rate doubling on July 1 technically didn't affect him.

Nevertheless, House Republicans had one central message: The Senate still hasn't passed a student loan plan.

"They've been more involved in internal bickering rather than actually addressing the issue," said Rep. Cathy McMorris Rodgers, chairwoman of the House Republican Conference. "And the students that are surrounded with us today — they're all suffering because of it."

Well, not quite yet. Most student loans are issued in August and September — a couple of weeks before classes begin — so as long as a deal goes through before then, the only students affected are the small group who borrowed money for summer school, and anything the Senate passes will likely retroactively apply to them anyway.

The holdup now in the Senate is where exactly to set interest rates and whether there should be a cap on those rates. The House plan has a cap. President Obama's plan doesn't. But Senate Democrats insist on a cap. So do student advocates, like Rory O'Sullivan of Young Invincibles.

"We don't believe that the federal government should be charging students higher interest rates to pay down the federal deficit," O'Sullivan says. "In that case, you're essentially trading government debt for student debt."

But there's a catch with a cap: It's expensive. You have to factor in the added cost if market rates exceed that cap one day. And if you want to make sure the federal student loan plan is budget-neutral, you'll have to set student loan rates a little higher.

Chris Lindstrom of the U.S. Public Interest Research Group compares the federal student loan program to a balloon filled with air. "If you squeeze the balloon in one part to make it thinner, it expands and gets fatter in another part of the balloon," Lindstrom explains. "It's a zero-sum game. You're not putting any air into it."

No lawmaker wants to be accused of setting rates too high. But every long-term proposal pegs rates to the 10-year Treasury note. So that means the rates under almost all of those plans is expected to exceed 6.8 percent before 10 years, based on projections from the Congressional Budget Office. That 6.8 percent figure is what the rate for subsidized loans became after rates doubled on July 1.

As for what proposal offers the lowest interest rate — whether it's the House plan, the president's plan, or one of the Senate proposals — the differences come down to 1 or 2 percentage points at most.

Jason Delisle of the New America Foundation says it makes sense to care about those percentage points when you're talking about home mortgage rates, "but a home mortgage is $200,000, $300,000, $400,000. So moving the interest rate a little bit lower makes a big difference in your monthly payment. That's not so on a $20,000 student loan.

Delisle says in that case, you're talking about a difference of $10, maybe $20, a month. He says what people are really worried about is how unaffordable college is — and how much you actually have to borrow in the first place has a lot more to do with that problem than what your interest rate is.


Michael Madigan
(Seth Perlman/AP)
June 12, 2013

Madigan Plans New Vote On Pension Plan

Illinois House Speaker Michael Madigan is planning a fresh vote on his own plan to reform public-employee pensions despite a request from the governor for compromise with the Senate.

The Chicago Democrat filed legislation Wednesday identical to a bill the House OK'd last month but failed in the Senate.

It doesn't mention a rival proposal by Senate President John Cullerton. Gov. Pat Quinn wants both ideas in one bill in case a court rejects one.

Quinn has called the General Assembly into a June 19 special session to deal with the $97 billion pension debt.

Madigan has said Quinn's idea for hybrid legislation could be too complicated.

The new version delays implementation until June 2014 so it takes fewer votes to pass it.

Illinois House Speaker Michael Madigan, with Senate President John Cullerton
(M. Spencer Green/A{)
June 10, 2013

Gov. Quinn, Leaders Meet on Pension Proposal

Ill. Gov. Pat Quinn is asking lawmakers to approve a plan that has previously stalled in the state senate.

Gov. Quinn has called legislators back to Springfield next week for a special, one-day session to address pension reform after they adjourned for the summer without sending a bill to the governor’s desk for approval.

Quinn met privately for two hours on Monday with Senate President John Cullerton and House Speaker Michael Madigan, both Chicago Democrats. Quinn’s plan is one Cullerton had supported, in which two rival pension reform plans are attached to the same bill. That way, if one plan is found unconstitutional by the courts, then the second plan would be put into effect.

“We put one idea after another before both houses of the legislature,” Quinn said. “There’s a way to accomplish it if the two leaders work together as they have over and over again over the last several years.”

Cullerton said he’s willing to try Quinn’s idea. Cullerton had pitched the plan of putting both pension reform bills on one single piece of legislation months ago, but the plan stalled earlier this year. On Monday, Cullerton blamed The Civic Committee headed by former Illinois Attorney General Ty Fahner, for taking votes away from the plan.

“They’re the ones that killed the original Senate Bill 1, so they’ve gotta make a decision whether or not they want to support this new proposal that the governor’s asked me to try to pass,” Cullerton said.

But Speaker Madigan wouldn’t commit to calling the bill for a vote, telling reporters repeatedly that the governor can make the differences between the two pension proposals simple or complex. Madigan said he wants the governor to meet with individual state senators to pass the bill approved by the House, something labor unions oppose. He said that is the simple choice.

“When we passed the House pension bill, we didn’t have 60 votes to pass the bill until I had personal conversations with about 20 House members, persuaded them vote for the bill,” Madigan said. “That’s what we need the governor to do.”

The bill Madigan passed in the House of Representatives calls for a variety of cuts to retirement benefits for state employees, including raising the retirement age and reducing cost of living increases. Cullerton’s plan offers some state employees a choice between health care in retirement or cost of living increases. Many labor organizations favor Cullerton’s bill and have said Madigan’s plan is unconstitutional.

After Monday’s private meeting, Quinn suggested to reporters that Cullerton and Madigan may not be motivated to pass a pension reform bill.

“John Cullerton and Mike Madigan have known each other for 34 years. They’re close friends. They’re family friends,” Quinn told reporters Monday. “And when they want to put a bill on my desk that’s one of their priorities, they know how to do it.”

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