Introduction: Pension reform, spending prioritization are key to ending Illinois’ budget crisis

The COVID-19 pandemic and the associated economic recession created new fiscal challenges for Illinois, which already had the worst fiscal health of any state. Without the significant financial assistance Illinois state and local governments received from the federal government, the state’s decades-long fiscal crisis might have reached a breaking point. However, neither the $10.8 billion in state and local aid already granted nor the $13.7 billion on its way will solve Illinois’ problems without significant policy reforms.

Unsustainable levels of public debt and chronic budget deficits still threaten to bring economically damaging tax hikes and harm vulnerable Illinoisans – from abused children to adults with disabilities – who rely on government services that remain at risk of further cuts.

Yet transformational fiscal policy reforms, starting with a constitutional amendment to allow pension reform, have the power to bring Illinois back from the brink of financial collapse and put the state on a path towards a brighter, more prosperous future.

Illinois Forward 2022 offers a five-year fiscal plan to immediately balance the budget and responsibly pay down state debts, based on four pillars:

1. Constitutional amendment and structural pension reform

  • Hold harmless pension reform that preserves earned benefits but slows future growth in benefits for existing workers and retirees
  • Realigning pension costs and responsibility

2. School district efficiency

  • Improving student outcomes by targeting education dollars to classrooms through reduction in duplicative and wasteful layers of district-level bureaucracy

3. Affordable state union contracts starting in 2024

  • Upon the expiration of the current contract with the American Federation of State, County and Municipal Employees Council 31, adopt reforms to bring the cost of state worker health insurance more in line with average costs for private sector working families

4. Budgeting for results: Prioritizing program spending using outcome metrics

  • Reducing appropriations for most state agencies, constitutional officers and boards by 5% would save nearly $950 million in the first year. Reductions targeted based on data about program need and effectiveness can help balance the budget while preserving critical services.

Compared to the $41.6 billion budget Pritzker proposed Feb. 17,1 Illinois Forward 2022 spends $177.9 million more on K-12 education. It includes none of the accounting shell games or other gimmicks Pritzker’s budget uses to conceal the structural deficit. It relies on lower revenue estimates issued in November 2020 to account for continued economic uncertainty, rather than possibly overly optimistic projections in the governor’s proposal.2 It would allow the General Assembly to reject all nine tax increases Pritzker proposed.

Those tax increases would be damaging to Illinois’ economic recovery from the pandemic, harming state residents’ ability to find jobs and higher wages. Businesses still struggling with their own financial challenges during the pandemic would bear the brunt of the nearly $1 billion tax hike burden, and several proposals specifically target tax incentives for the pro-growth investments the state will need for a strong recovery. Tax increases after the Great Recession contributed to Illinois’ poor economic performance in the decade that followed, relative to the nation and most other states.3 State leaders should learn from those mistakes.

An expected $7.5 billion infusion of federal funds from the state and local aid bill recently signed into law by President Joe Biden gives Illinois breathing room to improve its fiscal condition without any tax increases or cuts to programs that serve low-income and vulnerable residents. However, as Pritzker acknowledged in his budget address,4 “Congressional action will help us today, but it won’t solve Illinois’ remaining fiscal challenges.”

Without transformative reforms, Illinois’ financial condition and the consequences for state residents will be even worse when federal aid expires.

Illinois Forward 2022 offers a five-year plan to structurally balance the budget, pay down debt and preserve funding for the most vital and impactful budget items in the long term. It would eliminate the unpaid bill backlog and create structural surpluses by fiscal year 2025. Those surpluses could be used first to bolster the state’s virtually empty rainy-day fund – preventing future fiscal crises with smart emergency planning – and then for tax relief that would enhance economic growth.

Notably, this plan includes no cuts to education, either K-12 or in state universities. It also preserves all funding for the Department of Children and Family Services, which has been plagued by high-profile service failures and already struggles with its critical mission to protect
children. A report found 123 children died in 2019 after coming into contact with DCFS, the most since 2005.5 Illinois Policy Institute research found DCFS funding fell 15%, adjusting for inflation, between fiscal years 2010 and 2020, as pensions crowded out other spending.6

All spending reductions should follow a targeted approach, taking into account evidence about program effectiveness and necessity.

Repairing Illinois’ finances will be a difficult task that requires years of fiscal discipline. But that work cannot even begin until state leaders decide it is time for a fundamental break with the status quo. Policymakers must be willing to embrace new and transformative ideas, rather than simply looking to take more from taxpayers who are already overburdened.

How Illinois’ fiscal health became the nation’s worst and why there’s hope for change

Illinois’ financial health has been on the decline for at least two decades, but its current fiscal condition is as bad as it has ever been and the worst of any state in the nation. The state’s credit rating is just one notch above non-investment grade “junk” status from all three major rating agencies, meaning Illinois is dangerously close to being the first state in history to receive a junk rating.7 Its backlog of unpaid bills – essentially a high-interest form of debt used to carry budget deficits from year to year – is projected to rise to more than $33 billion without reform, nearly double the $16.68 billion record set in 2017 during the two-year budget impasse.8

However, a change in leadership in Springfield and voters’ rejection of a constitutional amendment to institute a progressive tax give reason to believe transformational change is now more possible than ever. The additional federal aid gives the state an opportunity to make those changes and balance the budget without harmful tax hikes or service cuts.

The Prairie State’s budget problems are primarily self-inflicted, and lawmakers can solve them by charting a new path forward. While the COVID-19 pandemic and measures taken to combat it have reduced economic activity and therefore government revenue projections in many places across the nation, Illinois was particularly ill-prepared for a recession and the state’s fiscal policy has responded especially poorly to date. Reversing course requires following best practices for sound public budgeting that many other states have used to successfully manage their budgets during the pandemic.

Moody’s Investors Service in May 2019 reported Illinois and New Jersey were the only two states without sufficient reserves to weather a recession.9 Most states spent the decade after the Great Recession shoring up their financial health, while Illinois dug its hole deeper. When COVID-19 hit, the median rainy day fund balance nationally was a healthy 8% of annual expenditures.10 Illinois had a rainy day fund in name only, with just over $1 million saved – enough to operate state government for only 15 minutes.11

Worse, after COVID-19 was declared a global pandemic and government revenue projections fell, Illinois lawmakers actually increased general funds spending by almost 6%, rather than reducing spending to match the lower revenues.12 Increasing spending when revenues are declining inevitably creates a large deficit. Rather than truly closing the gap, Pritzker and
lawmakers included in their budget phantom revenues from a never-realized federal bailout and a tax hike voters never approved.

Illinois would have no budget deficit had Pritzker and lawmakers in the General Assembly done just two things differently in the budget passed last May: 1) reformed pensions for $2.4 billion in structural savings, and 2) kept spending flat, rather than increasing it by nearly $2.4 billion. The savings from those two measures would have more than offset deficits this year and made a huge dent for fiscal year 2022.13

Unrealistic budgets, revenue gimmicks and deferring costs to the future have become commonplace in Illinois.

For the past decade, Illinois politicians responded to chronic budget deficits and an ever-growing debt burden primarily with higher taxes. Raising taxes failed to improve government balance sheets while harming the state’s economy and contributing to its consistent population loss.14 Lawmakers in Springfield have yet to enact serious structural spending reforms and are running out of time and alternatives.

Multibillion-dollar budget deficits have persisted since the Great Recession, and the last time the state ended a fiscal year in the black was 2001.

Unsustainable growth in the cost of public pensions is the primary reason the state has spent more than it brings in for two decades. But despite leading the nation in pension spending,15 Illinois also leads the nation in pension debt.

Illinois’ total debt burden is the second highest in the nation relative to the size of its economy. Pensions alone account for 57% of that burden.16 Unfunded health care liabilities for retired state employees accounts for another 22% of state debts, meaning nearly 80% of Illinois’ debt is related to public worker retirement benefits.

Pritzker and a supermajority of Democratic lawmakers proposed a plan to deal with these problems by amending the state constitution to replace Illinois’ flat tax with a progressive tax system. An initial set of tax rates attached to the amendment would have raised more than $3 billion in new revenue from small businesses and individuals making more than $250,000 a year but would have failed to close the fiscal gap. Progressive tax powers make it easier to raise taxes on everyone over time, and voters were rightly worried about future tax increases on the middle class and retirees if the “fair tax” passed. Without changes to reduce spending and debt, more tax increases were virtually inevitable under a progressive tax.17

Illinoisans sent a strong message that they are ready for transformative change by rejecting the “fair tax” amendment. Despite a more than $60 million campaign in favor, the tax hike received just 46.7% of the vote, far short of the approval needed.18

Another sign that Illinois is ready to upend its failing status quo of public policy came in the two months following the November elections. Illinois has a new speaker of the House for the first time in decades. Michael J. Madigan was ousted as speaker and then resigned his House seat. Madigan opponents within his party cited his most recent corruption scandal as rationale for a change in leadership.19

The end of the Madigan era can be the beginning of undoing his dual legacies of debt and corruption. Madigan is more personally responsible for Illinois’ failing finances than anyone else. Since he was first elected speaker in 1983, Madigan was heavily involved in irresponsible budgets and unfunded pension benefit enhancements that brought the state from a perfect AAA credit rating to just one notch above junk – the worst of any state in history.20 Budgets under Madigan were made through a top-down process that limited input from independent budget watchdogs as well as rank-and-file lawmakers.

Madigan’s successor, House Speaker Emanuel “Chris” Welch, promoted changes to House rules that take the first step towards diminishing the power of the speaker to procedurally stall legislation.21 This is an opportunity for new ideas to be heard that Madigan was previously able to block from being debated or voted on.

Lawmakers should take the opportunity to go in a new policy direction. Continuing the budget gimmicks, debt and tax hikes proposed in Pritzker’s budget would harm both taxpayers and vulnerable state residents who rely on government services.

Importantly, COVID-19 has been devastating for many Illinois businesses and private sector workers. The state saw its worst job losses in history in 2020, with nearly half of the 432,300 job losses occurring in the leisure and hospitality sector.22 A December survey by the National Restaurant Association found that across the nation the average full-service restaurant had lost 36% of its sales revenue.23 It found 17% of restaurants have already closed permanently or long-term as a result of COVID-19 and measures taken to limit its spread.

A recession and global pandemic are the worst time to increase tax burdens.

Asking Illinoisans to pay more in taxes to receive less in services, meaning less support for families in need, has been the trend in state government for the past decade, driven by the ever- growing cost of Illinois’ worst-in-the-nation pension crisis.24 Largely as a result, Illinois lost population for seven consecutive years because more people were leaving the state than moving to it. Illinois saw the nation’s worst population loss during the past decade, more than triple any other state.25 The state lost nearly 80,000 residents from July 2019 to July 2020 for its worst single-year drop since World War II.26

That record population loss came after Pritzker signed off on 20 new or higher taxes and fees as part of his first-year budget and capital plan.27 The nine tax increases worth nearly $1 billion in his latest proposed budget threaten to exacerbate population loss and other economic challenges.

Pension reform, starting with a constitutional amendment, is key to any serious plan for digging Illinois out of its pit of debt.

Only by attacking the root cause of Illinois’ fiscal crisis – its worst in the nation pension crisis – can lawmakers deliver a balanced budget that protects both taxpayers and vulnerable residents who rely on government services. Attempting to balance the budget solely through blunt spending cuts or further tax increases ultimately would be a self-defeating strategy because of the economic harm it would cause.

Pension amendment: Ending the pension crisis and protecting services through hold harmless reform

Illinois’ pension crisis is the worst in the nation and the most severe public policy issue facing the state. Pension debt can be directly linked to high taxes, low home values, cuts to public services that weaken the social safety net and lagging economic growth.

Any realistic plan to fix state finances must start with a constitutional amendment to allow for reforms that make the pension system more sustainable and affordable for taxpayers. The Illinois Policy Institute’s “hold harmless” pension reform plan would do just that while also preserving public retirees’ earned benefits and protecting them from the prospect of insolvent retirement funds.28

Pension debt across the five state retirement systems equaled $230 billion at the end of fiscal year 2019, according to credit rating agency Moody’s Investors Service. That was equal to nearly 26% of gross domestic product, giving Illinois the worst pension debt-to-GDP ratio among all 50 states for the fourth consecutive year.

Virtually all of the debt is for “Tier 1” workers hired before 2011, while “Tier 2” workers hired later receive significantly lower benefits to the point that some are actually subsidizing older workers’ benefits with their payroll contributions.29

Tier 1 employee contributions account for an average of between just 4% and 6% of the expected lifetime benefits that a “career employee” with the maximum years of service credit can expect to receive.30 Benefits are sweetened by an annual increase of 3% each year regardless of inflation, which doubles the size of a retiree’s initial pension after 25 years. Average total payouts for these Tier 1 career employees during retirement typically exceed $2 million, ranging from $2.3 million in the Teachers’ Retirement System up to $3.6 million for judges. State workers receive a lower but still generous average of $1.7 million, because more than 96% also receive Social Security.31

Moody’s reports Illinois’ state pension debt rose to an all-time high of $317 billion at the end of fiscal year 2020. The official state estimate of the debt is less than half that, $144.4 billion in fiscal year 2020,32 based on much more optimistic – and less realistic – assumptions about investment returns.

In 2020, the five state pension funds assumed their pension fund investments would generate returns between 6.5% and 7%. Those return assumptions are used to discount future debts. A higher rate of return makes the debt look smaller and reduces required contributions relative to a lower rate of return. Actual 2020 rates of return in the pension systems ranged from 4.5% to just 0.5%, significantly missing fund targets.33 When investment returns come up short, taxpayers have to make up the gap in the form of higher employer contributions through the state.

Illinois’ state and local governments already spend the most in the nation on pensions as a percentage of their revenues at 10.38%, about double the national average of 5.16%, according to the National Association of State Retirement Administrators.34 Still, it is not enough to keep the debt from growing under currently promised benefit levels.

Looking at state spending alone, the story is the same. Despite its highest-in-the-nation pension spending, Illinois also has the largest gap between what it currently pays and what would be required to fully fund the retirement systems without reform. Moody’s calculates Illinois would need to pay an additional 5.6% of its revenues towards the pension system, on top of the current 16.1%, just to “tread water” or prevent the debt from increasing each year.

Michael Cembalest, chair of market and investment strategy at J.P. Morgan Asset and Wealth Management, found in 2018 that Illinois would need to double its spending on retirement benefits to 51% of the state budget to eliminate the debt without reform.35 Or, a 50% increase in the state income tax – taking over $1,800 from a median family’s income – would need to be entirely dedicated to pensions to eliminate the debt.36

Simply put, Illinois cannot solve the pension crisis by throwing more money at it. Pension reform is the only responsible answer.

Attempts to keep up with this unsustainable debt burden without reform have already caused disinvestment in higher education, public safety, public health programs, and vital services for vulnerable Illinoisans and low-income families. Since fiscal year 2000, a 533% increase in inflation-adjusted pension spending was accompanied by a 14% decline in spending on a range of core services.

Crowd-out of spending on services will worsen without reform. Pensions are set to consume nearly $11.6 billion, or 29% of the state’s general revenues, in fiscal year 2022 under current law.37 Every dollar spent on pensions and debt, particularly in the midst of revenue challenges, means less money for critical programs Illinoisans want and need.

Lawmakers have passed no significant legislation to deal with the state’s pension crisis since a 2013 law to slow the growth in Tier 1 benefits was overturned by the state Supreme Court in 2015.38 The court’s ruling means no structural reforms can take place without an amendment to the pension clause in the state constitution.

Amending the pension provision requires a resolution passed by three-fifths of both the Illinois House and Senate, followed by voter approval in the next general election.39

The Illinois Policy Institute has proposed a constitutional amendment to allow for reductions in future benefit growth for current workers and retirees, which would still preserve benefits earned for work already performed. Such an amendment was filed in the General Assembly in 2020 as House Joint Resolution Constitutional Amendment 38, but was not voted on or even debated in a committee hearing, in part because the legislative session was cut short by COVID-19.40

Recent polling from the Paul Simon Public Policy Institute found 51% of Illinoisans support “an amendment to the Illinois Constitution that would preserve state retirement benefits already earned by public employees but would also allow a reduction in the benefits earned in the future, whether by current or future employees.”41

Illinois politicians in 2020 were eager to ask voters for a constitutional amendment so they could hike taxes. Voters’ rejection of Pritzker’s “fair tax” proposal should be read as a demand for a new strategy to control spending. It is past time to let Illinoisans vote on an amendment to fix the pension crisis that is at the root of many of the state’s fiscal and economic challenges.

Hold harmless pension benefit reform

While an amendment is needed to unlock any substantive reforms, lawmakers should also consider the type of changes that should be made upon approval of the amendment.

Solving Illinois’s pension crisis requires accomplishing three policy objectives. First, stabilizing state and local government finances to reduce the cost burden on taxpayers and businesses. Second, freeing up scarce taxpayer resources to invest in the most important and effective areas of spending, such as education or the beleaguered DCFS. Third, keeping core promises to public workers by replacing the empty promise of the pension status quo with a financially secure retirement system.

The goals of reducing spending while making the system more solvent may initially appear to be in conflict, but both can be accomplished simultaneously with thoughtful policy.

Importantly, lawmakers do not need to wait until the amendment receives ballot approval to realize pension reform savings. The General Assembly should pass statutory benefit reforms that become effective when the amendment is approved. But lawmakers can also change the state’s contribution schedule preemptively, basing it on the reforms, to begin realizing savings in fiscal year 2022. Failure of the amendment should result in contributions automatically “snapping back” to previous levels. This would also give voters a clear understanding of the consequences of voting “yes” or “no” at the polls.

The Illinois Policy Institute’s hold harmless benefit reform plan, based loosely on the bipartisan 2013 reforms, demonstrates how much impact even modest changes can have. The plan would save the state roughly $2.4 billion the first year and more than $50 billion through 2045. It would also fully eliminate the state’s pension debt during that time, after which pension spending could drop dramatically back to about 5% of state revenue annually.

These are results of an original actuarial analysis of the Illinois Policy Institute’s pension reform proposal.42 The plan would raise retirement ages for workers under 45, replace 3% compounding post retirement increases with a measure pegged to inflation and cap the maximum pensionable salary for workers hired before 2011. Tier 2 workers hired after 2011 already have a pensionable salary cap.

Benefit changes would apply to existing workers and retirees, but only to future benefits. No retired person would see the size of their current check decrease and no current worker would see their currently promised monthly annuity shrink.

The Institute’s reform plan would actually increase the cost-of-living adjustment for younger workers to full inflation from the current one-half of the consumer price index. This change could potentially prevent a lawsuit against the state over Tier 2 benefits.43

The plan’s average $2 billion in annual savings are achievable even though the state would be subjecting itself to stricter funding requirements – targeting 100% funding rather than the 90% it now pursues – while simultaneously adding a new expense in the form of a defined contribution system for new employees. This shows just how powerful even modest pension changes can be.

Adopting hold harmless pension reform would mean billions more could be spent on debt relief and core government services that have been hollowed out by rising pension costs for the past two decades.

There is no fairer solution for both taxpayers and those relying on Illinois’ pension systems for their retirement security.

Aligning responsibility for payment with accountability for benefits

A second way Illinois can see immediate pension savings would be to align responsibility for new annual pension costs with responsibility for setting salaries, which determine pension benefits. Currently K-12 school and university administrators negotiate salary and health benefits, which form the basis for pension payments and retiree health costs, but the state pays all of the employer contributions. That breaks the relationship between responsibility and accountability, reducing pressure to keep compensation affordable for taxpayers at the local level.

In other words, realigning future pension costs for schools and higher education would both save money for the state and encourage administrators to control the costs of pensions in the long run through more responsible collective bargaining. The state would maintain responsibility for paying off existing pension debt, while asking schools to gradually assume the “normal cost” of pensions, which means the new costs added by a year of additional work.

High-ranking Democrats and Republicans have supported pension realignment over the years.44

The COVID-19 pandemic has created new and significant challenges for schools, but those schools have also received significant federal financial assistance. Illinois has received $2.93 billion in federal aid for K-12 education and $241.64 million for public universities.45

To make the transition financially manageable for local leaders, realigning pension costs should be phased in during the course of four years, with schools and public universities assuming 25% of the normal cost each year. Pension realignment would save the state more than $400 million in the first year of implementation and $1.5 billion by fiscal year 2025.

On average, realigning responsibility to pay for pension normal costs would only increase each district’s payroll costs by about 2.5% per year.46 The state would remain responsible for making payments on the unfunded portion of the pension liability so schools would pay only the new annual cost of pensions.

These factors considered together with the substantial federal aid provided mean schools should be able to pay for these normal costs without seeking to raise new revenue from property taxes. However, while the impact to each district would be relatively small, some districts would need to make changes to accommodate the new costs.

An easy opportunity for budget savings for many school districts would be ending the practice of “pension pick-ups,” in which the employer pays some or all of what is supposed to be the employee’s contribution to their own pension. Nearly 60% of school districts pick up at least a portion of the employee contribution, and 52% as of 2020 covered the entire portion teachers are by law supposed to contribute.47

For example, Chicago Public Schools historically picked up 7 percentage points of the 9% employee contribution. As a result, the average retired teacher in the city recoups every penny they paid into the pension system just five months into retirement.48 Chicago ended teacher pension pickups for employees hired after Jan. 1, 2017, in its latest contract with the Chicago Teachers Union.49 That policy should be extended everywhere in the state and applied to all current workers.

No government employee should be able to receive a generous taxpayer-subsidized pension for life without ever having paid into the system.

School district efficiency: Improving student outcomes by targeting education dollars to classrooms

Finally, the state can assist local school districts in finding savings by helping to consolidate unnecessary layers of administration, freeing up resources to cover the normal cost.

The COVID-19 pandemic created new challenges for Illinois schools, all of which were temporarily closed for in-person instruction. Many teachers and students are now attempting full- time remote schooling for the first time ever or trying to navigate hybrid models. It has never been more important to ensure Illinois’ spending on education flows where it can best help every student achieve his or her full potential.

Congress already provided more than $67 billion in direct aid to K-12 schools though a series of relief and stimulus bills with $130 billion more coming from the recently signed American Rescue Plan. Illinois K-12 schools received $619 million in funding under the first round of funding in April 2020,50 including grants directly to schools and those at the governor’s discretion,51 and $2.25 billion more under the package passed in December.52

With the influx of federal aid, now is the optimal time to begin the process of reducing bureaucratic waste in education. Students and teachers should receive a larger share of education funding.

Illinois’ educational outcomes, ranked by 8th grade proficiency in math and reading, are close to national averages.53 But Illinois’ per pupil spending of $15,741 is high relative to its neighbors and the national average of $12,612,54 indicating taxpayers do not get a good return on their investment.

Several of Illinois’ neighboring states spend less per student and get better results. In 2017 for example – the most recent year for which concurrent data is available on spending and outcomes – Wisconsin, Iowa and Indiana spent between $3,369 and $5,332 less per student than Illinois. All three states received better proficiency scores on the Nation’s Report Card for both reading and math.55

A key reason Illinois’ spending has not translated into better student outcomes is that too many dollars are diverted from classrooms and wasted on excessive administration.56 From 2014 to 2018, student enrollment at Illinois K-12 public school districts fell by 2%, reflected by a nearly identical percentage drop in those districts’ total teachers during that time.57 Despite Illinois school districts losing both students and teachers, their administrator ranks grew 1.5% during the four-year period.

Illinois is the only state that spent more than $1 billion on district-level administrative costs in 2018, the most recent year of data available from the U.S. Census Bureau.58 Total general administrative spending was $1.19 billion. California has three times as many students but spent nearly 34% less than Illinois on district administration at $780.5 million. This spending only represents costs of the superintendent and school board. It does not include administrative spending within the schools, such as on guidance counselors or principals.

Illinois spends $598 per student on district-level administration, more than two and a half times the national average of $237.59 If Illinois reduced its general administrative spending to the national average per student, it would save $716.6 million in unnecessary costs that could be reinvested in the classroom to improve student outcomes or returned to overburdened property taxpayers.60

The reason for this overspending is simple: Illinois has too many school districts serving too few students. Illinois recently dropped just below the 2-million student mark. Four other states have student populations above 2 million, and each of them serves significantly more students than Illinois for each administrative body overseeing its schools.

If Illinois matched California’s number of districts per student, Illinois would have just 364 districts, or 488 fewer than it has today.

Illinois must consolidate school districts to reduce unnecessary administrative spending. Each district comes with highly paid superintendents, support staff and costly facilities. If each district served more schools and more students, they could achieve economies of scale and greater efficiency without losing services or local schools’ identities.

Nearly half of Illinois school districts currently manage just one or two schools. The rest are comfortably overseeing three or more and 12% manage at least seven.

Consolidating school districts is an easy way to improve the quality of education while saving taxpayers money, both in the state budget and in the 58% of property tax collections that go to schools.61 District consolidation does not reduce either the number of schools or teachers.

The Classrooms First Act – House Bill 3053, introduced by state Rep. Rita Mayfield, D-Waukegan – unanimously passed the Illinois House of Representatives in a bipartisan 109-0 vote in 2019.62 It never received a full vote in the Senate, but has been reintroduced by Mayfield and chief co-sponsors Rep. Avery Bourne, R-Raymond, and Rep. Blaine Wilhour, R-Effingham.63

The Classrooms First Act would create the School District Efficiency Commission, tasked with making recommendations for consolidating districts, with the goal of at least a 25% reduction in bureaucracy. The commission’s recommendations would go directly to voters as a ballot question, putting control in the hands of parents, teachers and local taxpayers living within the school districts. Voters in each affected school district would have to approve the consolidation by a majority vote, so one district could not force another to merge unless residents in each separately agreed.

The bill would require all newly formed districts to be unit districts, meaning they’d serve both high schools and elementary schools. Unit districts are the most efficient in terms of spending per student.64

Academic research has consistently found more efficient school districts improve educational outcomes for students. A 2018 study found increasing the size of a district to 1,000 students improves the average SAT score by 48 points; increasing the size again to 2,000 students can increase the average SAT score by an additional 14 points.65

In Illinois, a 10% increase in student enrollment is associated with a 0.04 to 0.06-point higher composite ACT score on average. The results are more extreme for smaller school districts. For districts with fewer than 1,000 students, a 10% increase in district size is associated with up to a 0.09-point higher average composite ACT score.66

By investing in classrooms through reprioritizing spending, Illinois can grow state spending at the rate of inflation rather than the mostly arbitrary $350 million increases in the state’s new funding formula. School district efficiency thus enables hundreds of millions in annual savings while actually increasing resources for students and teachers.

Affordable state union contracts starting in 2024

In 2019, Pritzker signed a new contract with the American Federation of State, County and Municipal Employees Council 31, the state’s largest public employee union. The contract included 12% automatic raises, retroactive $2,500 bonuses for raises not given under former Gov. Bruce Rauner, and the continuation of platinum health insurance benefits at little cost to the employee. Illinois Policy Institute analysis found it would cost state taxpayers $3.6 billion more than a taxpayer-friendly contract.67

When the pandemic first hit, Pritzker would not even discuss canceling or delaying $261 million in raises that ultimately took effect on July 1, 2020.68 Other governors, including Democrats in New York and Virginia, used emergency powers to delay scheduled raises.

But in the midst of a largely self-inflicted budget crisis, Pritzker’s administration in December 2020 announced it was seeking $75 million in personnel cost savings that it hopes to negotiate with AFSCME and other public unions.69 However, the prospect of federal aid is likely to make near-term reductions unnecessary to balance the budget. Changes to the current contract will be nearly impossible to achieve in light of Illinois’ union-preferential collective bargaining laws.70

The contract Pritzker negotiated with AFSCME expires in June 2023. Illinois should pursue cost savings in the state’s group health insurance plan for the next contract, beginning in fiscal year 2024, for $528 million in first-year savings.

Illinois state workers are already the second-highest paid in the nation, after adjusting for regional costs of living, with the average worker in 2019 making $67,432 in annual salary.

Oregon, which was not even among the top 10 states in 2017,71 vaulted into first place after 15% raises were granted in 2019.72 Illinois’ second-place ranking has remained constant in recent years.

Moreover, total compensation for Illinois state workers, including both wages and benefits, is much higher than the average compensation of private sector workers and is growing faster. From 1998 to 2019, average state worker compensation grew 60% faster than Illinois’ average private sector wages.

State workers also currently receive platinum level health insurance benefits at heavy taxpayer expense. The most recent data available, received pursuant to a Freedom of Information Act request, shows state workers paid just 19% of their own health care costs in fiscal year 2020.

This data reflects both premiums and out-of-pocket expenses, such as deductibles and co-pays, to present a comprehensive picture of taxpayer costs.

By contrast, the typical family pays more than double what AFSCME pays – 40% for individual coverage and 43% for family coverage – according to the 2020 Milliman Medical Index.73 AFSCME’s average cost is consistent across family and individual coverage. That means the average taxpayer who funds AFSCME benefits is subsidizing a benefit they almost certainly don’t enjoy at their job. Moreover, platinum level coverage is not even available for Illinoisans purchasing health insurance on the individual market exchanges.74

The state’s final offer to AFSCME before Pritzker’s election would have right-sized group employee health insurance costs by bringing them more in line with the private sector.75 The plan would have created three tiers of insurance: one with higher premiums, one with higher out- of-pocket costs and a mixed plan. Each of the plans would have increased the total employee share to 40% on average, with a mix of higher out-of-pocket or higher premium costs, depending on the plan selected.76

A bill proposed in the 100th General Assembly, Senate Bill 2680, would have removed health care coverage from the subjects of collective bargaining as long as average employee costs remained below 40% annually.77 Lawmakers should pursue similar reforms that better align state workers’ health care costs with affordability for the private sector taxpayers who fund them.

Budgeting for Results: Prioritizing program spending using outcome data

Pritzker directed state agency heads in September 2020 to prepare proposals to reduce agency appropriations by 10%.78 With additional resources from pension reform and with the additional federal aid, Illinois should reduce this goal to 5% reductions.

If 5% cuts were extended to the legislature and constitutional officers, while exempting DCFS and higher education, it would result in $946.7 million in savings for fiscal year 2022.79 Those budget cuts should not be made evenly across the board. Lawmakers should insist that cuts be made with a scalpel, not a hatchet, to best prioritize funding for the most essential programs.

The Pew Charitable Trusts has been a leader on what they call “Results First” budgeting, a process for making spending decisions based on evidence about effectiveness and need. Pew has recommended results-based budgeting as a strategy for prioritizing scarce resources during the pandemic and making strategic budget cuts to balance public budgets amid declining revenues.80 Policymakers should “resist the temptation to make indiscriminate, across-the-board budget cuts” and instead rely on data to make spending decisions, according to Pew.

Outcome-based or evidence-based budgeting contrasts with the baseline budgeting method governments have historically used to prepare budgets in Illinois and across the country. Line- item or baseline budgeting typically treats prior year appropriations as a floor and assumes most spending will grow each year. This means spending is partially on “auto-pilot” and programs may continue to receive spending increases even when they are ineffective or the need for them has diminished.

Pew also recommends looking for cost savings by moving to virtual delivery models where possible, such as for some health care and counseling services. Such changes have potential to reduce program costs without reducing the quality or quantity of services provided.

Other states have already ramped up their efforts to use program data and evidence to make strategic spending reductions. Colorado recently strengthened the state standard definition for “evidence” while Tennessee is using program data to achieve a goal of 12% spending reductions in fiscal year 2021.81

Illinois already laid the foundation for evidence-based budgeting when it created the “Budgeting for Results” initiative in 2010.82 The initiative is overseen by a commission including members of the governor’s office, state lawmakers and private sector leaders. Each state agency also has a chief results officer responsible for tracking program metrics, establishing program outcome goals and acting as a liaison to the commission.83

The first annual report of the Budgeting for Results Commission in 2011 stated the goal of the initiative was “to institute a results-based budgeting process that will end the automatic funding of programs.” Further, it established a goal for the state to “fund only those programs that can demonstrate effectiveness and help the State achieve its stated outcomes and goals.”84

Unfortunately, Illinois lawmakers have largely ignored program results data and continued to make spending decisions using a “line item” approach in the years since.

“Building a performance-based budget system for a state the size of Illinois, which operates on a line-item budget, has been a challenge,” said Curt Clemons-Mosby, director of the Budgeting for Results Unit in the Governor’s Office of Management and Budget, according to a 2019 article from Illinois Public Media about the program’s success.85

Budgeting for Results only received dedicated funding beginning in fiscal year 2020 and has largely been ignored in the General Assembly during the annual budget-making process.

While executive officials working directly on the initiative have made progress in building more effective measurement tools than Illinois previously had, Illinois’ systems still need significant improvements. For example, Illinois has established measurements linked to every form of spending, partnered with Pew to create a data clearinghouse that offers insight on spending and outcomes in other states, and established a standardized framework for scoring program effectiveness from 0 to 100.86

However, many of the measurements currently used by agencies need to be replaced or refined to provide the type of information needed to make targeted spending cuts. Additionally, the standardized framework for scoring programs has only been applied to a small handful of programs to date.87

Some examples of metrics that do not currently provide sufficient information include those for the Illinois Department of Financial and Professional Regulation and the Abraham Lincoln Presidential Library.88 IDFPR provides no data on the activity or output of agency staff and the only measurements for outcomes are based on percentages, such as the percentage of regulatory or investigation cases closed within a particular time frame, which says nothing about the volume of the cases and amount of resources needed. IDFPR has also yet to report any data for fiscal years 2019 and 2020 for their regulatory enforcement program.

Similarly, the Lincoln Library’s metric for the operation of its museum complex is a percentage- based cleanliness survey, a poor indicator of the need for more or less funding.

An example of activity metrics done well can be found in the Illinois Department of Agriculture. Their meat inspection program includes eight different output indicators, including counting heads of livestock inspected and the weight of inspected livestock in millions of pounds. Their metrics also include cost-effectiveness measures, such as the cost to the state per livestock inspection, which provide valuable information for budget making.

Still, while Illinois’ current Budgeting for Results program needs improvement, it is already full of useful data that lawmakers can use for budgeting.89 For example:

  • The Department of Commerce and Economic Opportunity has seen the number of households using its heating assistance program fall by 32,429, an 11% drop from 2018 to 2019, at the same time it requested that its community service funding more than double to $586.2 million from $246.6 million. Its actual funding increase was 11%, the inverse of the drop in usage. This divergence warrants a closer look and may indicate the programs’ resources are outstripping its demand.
  • The Department of Labor’s prevailing wage program has seen a steady drop in both the number of cases completed and the amount of back wages collected for workers, while its funding and headcount have increased. It completed 237 cases and collected $450,000 in back wages in 2018, but in 2019 completed only 58 cases and collected $157,000. The program could be a prime candidate for cuts.

If lawmakers fully dedicate themselves to improving and better utilizing the initiative, Budgeting for Results can be an effective way to find the spending reductions half the size of Pritzker’s original request while minimizing service reductions. Illinois should have no problem making improvements in time for the fiscal year 2022 budget. Tennessee, with a higher spending reduction goal of 12% compared to Illinois’ 5%, only established a process for evidence-based budgeting in 2019.

Illinois has had nearly a decade of preparation. It is time for Budgeting for Results to live up to its goal of funding “only those programs that can demonstrate effectiveness and help the State achieve its stated outcomes and goals.”

Budget assistance from the federal government is an opportunity for reform

On March 11, President Biden signed legislation granting $350 billion in unrestricted federal aid to state and local governments, including tribal governments and the territories.

The bill prohibits the aid from being used for pension contributions or tax cuts, but otherwise allows states broad flexibility to spend the aid as they see fit by Dec. 31, 2024.

Illinois will see $7.5 billion in federal aid go to the state and $5.9 billion to local governments, with $1.98 billion of that reserved for the city of Chicago. All told, the bill would add $13.7 billion to the $10.8 billion in state and local government aid received by Illinois to date.

Pritzker and other top Democrats have been calling on the federal government to provide generalized budget assistance since the early days of the pandemic. Illinois Senate President Don Harmon wrote a letter to Congress in April requesting more than $44 billion in assistance, including $10 billion in direct pension bailouts.90

Pritzker has continued to push for no-strings-attached bailouts, while blaming Republican resistance in Congress for the budget crisis he helped create.

“Let me repeat that every state in the nation has suffered, every municipality in the nation has suffered from the fiscal effects of COVID-19,” Pritzker said in September.91 “However, until Republicans in Washington decide otherwise, middle class, working class and poor families across our state and across the nation will likely suffer from cuts to public safety, education, human services and environmental safety, and the potential layoffs will make the economic recession worse.”

The situation is not quite how Pritzker paints it. State revenue collections beat earlier expectations across the country in fiscal year 2020. In fact, Illinois was one of a handful of states that actually saw revenues increase, by 1.8% from fiscal year 2019 to fiscal year 2020.92 Illinois revenue collections for fiscal year 2021 have exceeded expectations in the budget, leading Illinois to be one of just nine states to revise its estimate in a positive direction mid-year.

Including all types of federal stimulus spending, across the private and public sectors, $108.4 billion in federal aid has been disbursed in Illinois (see Appendix A for details). While most of that sum is for health care spending, business loan programs, direct checks to individuals and other private sector stimulus, such stimulus nonetheless bolsters government revenue collections.

Illinois revised its fiscal year 2021 revenue projections up by $2.2 billion from April 2020 to November 2020.93 Income and payroll support for the private sector meant more consumer spending and worker earnings, leading to higher-than-expected income and sales tax receipts. In fact, the $7.5 billion in flexible aid Illinois is expected to receive from the latest COVID-19 legislation from Congress more than offsets the state’s total expected revenue losses over three years.

Closing the deficit without tax hikes or cuts to core government services will now be significantly easier. To close the deficit, Pritzker’s administration had previously threatened across-the-board tax hikes and service cuts. Specific proposals included a small business tax hike worth as much as $1 billion,94 up to a 20% increase in state income tax rates95 and 15% reductions in all program spending.96

State policymakers should use federal aid to pay down Illinois’ persistent multibillion-dollar bill backlog, to prevent cuts to critical areas of funding, and cancel all tax hikes for businesses and individuals hard hit by the pandemic recession.

Lawmakers should use this opportunity to address the pension crisis. The only realistic path to balancing Illinois’ budget while protecting programs for the state’s most vulnerable residents starts with a constitutional amendment to allow pension reform.

This is the path to ensuring federal aid promotes a more effective state government and a more sustainable recovery.

Conclusion: Illinois must embrace new budget strategies for a brighter future

Illinois’ fiscal crisis was built through decades of bad fiscal policy. It will take several years of commitment to fiscal discipline and transformational changes to repair it.

Madigan deserves much of the blame for creating Illinois’ pension crisis and institutionalizing a broken budget process.97 His departure from office, as well as voters’ rejection of the progressive tax amendment, offer hope that Illinois can break with its failing status quo and embrace a new direction.

The most important step on that new path is to amend the Illinois Constitution to allow for benefit reforms that will solve the pension crisis at the heart of so many of Illinois’ worst fiscal and economic challenges. Lawmakers should also commit to an open legislative and budget- making process in the post-Madigan era.

An open budgeting process with input from outside groups and lawmakers outside of leadership positions will also allow for a more fruitful discussion of how to use the state’s Budgeting for Results program to identify 5% spending reductions.

To ensure future Illinois elected leaders deliver better budgets, taxpayers should push the General Assembly to adopt a spending cap and fix the currently ineffective balanced budget requirement. Spending and revenue caps can be found in some form in 27 U.S. states,98 but not Illinois. These rules prevent government spending from growing faster than a measure of economic growth, such as gross domestic product or personal income. The goal is to make sure politicians cannot spend more than the taxpayers who fund government can afford.

Additionally, lawmakers should strengthen the state’s balanced budget requirement. While Illinois already technically requires a balanced budget, the law is toothless. The state constitution reads: “The General Assembly by law shall make appropriations for all expenditures of public funds by the State. Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year.”99

The problem is that revenue projections can easily be inflated so that “estimated” funds are significantly higher than actual collections. The Illinois Constitution does not create a requirement to match actual expenditures and actual revenues at the end of a fiscal year. That
makes Illinois one of just 11 states that permit a deficit to be carried from one year to the next, according to the most recent survey of the National Association of State Budget Officers.100 The other 39 states have true balanced budget requirements.

While taxpayers would be best served by enshrining a spending cap and true balanced budget requirement in the Illinois Constitution so they could not be easily overridden by any given General Assembly, a good start would be to at least put these rules in state statutes.

Only with better budget rules can taxpayers be assured Springfield will responsibly spend their money.

Illinois’ economy has been held back by an excessive tax burden, mountains of public debt, and perpetual budget deficits that make residents and businesses worry about future tax increases. Fixing the pension crisis through constitutional reform and better prioritizing state spending across the board offer a path to a new, better future for state residents.

Endnotes

1. Adam Schuster, “Pritzker’s Budget Pushes 9 New Taxes Worth Nearly $1 Billion,” Illinois Policy, Feb. 24, 2021.

2. Ibid.

3. Adam Schuster, “Illinois Forward: A 5-year Plan for Balanced Budgets, Declining Debt and Tax Relief,” Illinois Policy Institute, February 2020.

4. Full Text: Gov. J.B. Pritzker’s State of the State and Budget Address.

5. Sophia Tareen, “Report: 123 Children Died in 2019 Despite Contact with DCFS,” ABC News, Jan. 6, 2020.

6. Adam Schuster, “Illinois Public Services Being Cut to Pay Unsustainable Pension Cost,” Illinois Policy Institute, Fall 2019.

7. Adam Schuster, “Illinois Moves Closer to Becoming First ‘Junk’ State with Negative Credit Outlook,” Illinois Policy Institute, April 12, 2020.

8. Illinois Comptroller, Backlog Voucher Report.

9. Moody’s Investors Service, “All but two US states have sufficient reserves, financial flexibility to weather next recession,” May 20, 2019.

10. Jared Walczak and Janelle Cammenga, “State Rainy Day Funds and the COVID-19 Crisis,” Tax Foundation, April 7, 2020.

11. Brad Weisenstein, “Illinois’ Rainy-Day Fund Can Operate State for About 15 Minutes,” Illinois Policy Institute, March 16, 2020.

12. S&P Global Ratings, “Illinois Fiscal 2021 Budget Anticipates, And Needs, Additional Federal Aid,” June 1, 2020.

13. Adam Schuster, “Expected $7.5 Billion in Federal Aid Won’t Fix Illinois Budget Crisis Without Structural Reforms,” Illinois Policy Institute, Feb. 16, 2021.

14. Adam Schuster, “Illinois Forward: A 5-year Plan for Balanced Budgets, Declining Debt and Tax Relief,” Illinois Policy Institute, February 2020.

15. Adam Schuster, “Illinois State and Local Governments Spend Most in Nation on Pensions,” Illinois Policy Institute, Feb. 22, 2019.

16. Truth in Accounting, “Financial State of the States,” Sept. 22, 2020.

17. Adam Schuster, “Official Illinois Progressive Tax Explainer Ranges from Misleading to Wrong,” Illinois Policy Institute, Sept. 18, 2020.

18. Ballotpedia, “Illinois Allow for Graduated Income Tax Amendment”, accessed Jan. 26, 2020.

19. Brad Weisenstein, “After 50 Years in Illinois House, 36 Years Ruling It, Mike Madigan is Quitting,” Illinois Policy Institute, Feb. 18, 2021.

20. Adam Schuster, “Madigan’s Fiscal Legacy: How the Longest-Serving State House Speaker Built Illinois’ Mountain of Debt,” Illinois Policy Institute, August 2020.

21. Ben Szalinski and Dean Olsen, “Illinois House Adopts New Rules Under Welch,” State Journal Register, Feb. 10, 2021.

22. Bryce Hill, “2020 is Worst Year for Jobs in Illinois History,” Illinois Policy Institute, Jan. 25, 2021.

23. National Restaurant Association, “COVID-19 Restaurant Impact Survey V,” Dec. 2, 2020.

24. Adam Schuster, “Illinois Public Services Being Cut to Pay Unsustainable Pension Costs,” Illinois Policy Institute, Fall 2019.

25. Bryce Hill, “Illinois Sees Worst Population Decline Since WWII,” Illinois Policy Institute, Dec. 22, 2020.

26. Ibid.

27. Adam Schuster, “20 Tax and Fee Hikes Totaling $4.6 Billion Coming Soon for Illinoisans,” Illinois Policy Institute, June 14, 2019.

28. Adam Schuster, “Pension Apocalypse? COVID-19 Exposes Long-Running Fragility of Illinois Public Pensions,” Illinois Policy Institute, September 2020.

29. Adam Schuster, “Illinois Forward: A 5-year Plan for Balanced Budgets, Declining Debt and Tax Relief,” Illinois Policy Institute, February 2020.

30. Adam Schuster, “Illinois Pensions 101: Paltry Contributions Yield Million-Dollar Payouts,” Illinois Policy Institute, Jan. 17, 2020.

31. Ibid.

32. Commission on Government Forecasting and Accountability, Special Pension Briefing, November 2020.

33. Ibid.

34. National Association of State Retirement Administrators, “State and Local Government Spending on Public Employee Retirement Systems,” December 2020.

35. Michael Cembalest, “The ARC and the Covenants 4.0,” J.P. Morgan Private Bank, Oct. 9, 2018.

36. Adam Schuster, “Illinois Forward: A 5-year Plan for Balanced Budgets, Declining Debt and Tax Relief,” Illinois Policy Institute, February 2020.

37. Adam Schuster, “Pensions Set to Consume 29% of Illinois’ Budget Amid $7 Billion Debt Increase,” Illinois Policy Institute, Dec. 17, 2020.

38. Adam Schuster, “Tax Hikes vs. Reform: Why Illinois Must Amend Its Constitution to Fix the Pension Crisis,” Illinois Policy Institute, Summer 2018.

39. Ill. Const. Art. XIV, Sec. 2.

40. Illinois 101st General Assembly, Bill Status of House Joint Resolution Constitutional Amendment 38.

41. Paul Simon Public Policy Institute at Southern Illinois University, Annual Simon Poll 2020, March 3, 2020.

42. Adam Schuster, “Illinois Forward: A 5-year Plan for Balanced Budgets, Declining Debt and Tax Relief,” Illinois Policy Institute, February 2020.

43. Ibid.

44. Ibid.

45. Adam Schuster, “Expected $7.5 Billion in Federal Aid Won’t Fix Illinois Budget Crisis Without Structural Reforms,” Illinois Policy Institute, Feb. 16, 2021.

46. Ted Dabrowski and John Klingner, “Illinois’ Regressive Pension Funding Scheme: Wealthiest School Districts Benefit Most,” Wirepoints, March 9, 2018.

47. Illinois State Board of Education, Teacher Salary Study 2019-2020.

48. Adam Schuster, “Chicago Teachers Recover Pension Contributions 5 Months Into Retirement,” Illinois Policy Institute, Oct. 29, 2019.

49. Chicago Public Schools, 2021 Budget Documents: Pensions 2021.

50. Congressional Research Service, “CARES Act Education Stabilization Fund: Background and Analysis,” Aug. 6, 2020.

51. Illinois Office of the Governor, Press Release: Gov. Pritzker Announces $108.5 Million COVID Funding for PreK-12, Higher Education with Equity Focus, July 14, 2020.

52. U.S Department of Education, Elementary and Secondary School Emergency Relief Fund (ESSER II), CRRSA ESSER II Methodology and Allocation Table.

53. The Nation’s Report Card, 2019.

54. U.S. Census Bureau, 2018 Annual Survey of School System Finances.

55. Adam Schuster, “Illinois Forward: A 5-year Plan for Balanced Budgets, Declining Debt and Tax Relief,” Illinois Policy Institute, February 2020.

56. Orphe Divounguy, Adam Schuster and Bryce Hill, “Bureaucrats Over Classrooms: Illinois Wastes Millions Of Education Dollars On Unnecessary Layers of Administration,” Illinois Policy Institute, September 2019.

57. Adam Schuster, “Illinois K-12 School Districts Losing Students, Gaining Administrators,” Illinois Policy Institute, Aug. 27, 2019.

58. U.S. Census Bureau, 2018 Annual Survey of School System Finances.

59. Ibid.

60. Calculated based on difference between 2018 total general administrative spending ($1,187,562,000) and general administrative spending of $237 per student at 2018 enrollment of 1,987,286 ($470,986,782).

61. Illinois Department of Revenue, Property Tax Statistics 2019, Table 03 – Property Taxes Extensions by Type Of District, 2018 and 2019.

62. Illinois 101st General Assembly, Bill Status of House Bill 3053.

63. Illinois 102nd General Assembly, Bill Status of House Bill 7.

64. Orphe Divounguy, Adam Schuster and Bryce Hill, “Bureaucrats Over Classrooms: Illinois Wastes Millions Of Education Dollars On Unnecessary Layers of Administration,” Illinois Policy Institute, September 2019.

65. Srikant Devaraj, Dagney Faulk, and Michael Hicks, “School District Size and Student Performance,” Journal of Regional Analysis & Policy 48.4 (2018): 25-37, Nov. 9, 2018.

66. Orphe Divounguy, Adam Schuster and Bryce Hill, “Bureaucrats Over Classrooms: Illinois Wastes Millions Of Education Dollars On Unnecessary Layers of Administration,” Illinois Policy Institute, September 2019.

67. Adam Schuster, “Pritzker’s AFSCME Deal Gives 12% Automatic Raises, $2,500 Bonus to State Workers,” Illinois Policy Institute, June 26, 2019.

68. Mailee Smith, “Despite Economic Crisis, Pritzker Won’t Consider Postponing $261 Million in State Raises,” Illinois Policy Institute, April 24, 2020.

69. Illinois Office of the Governor, “Gov. Pritzker Outlines Spending Reduction Plan For Fiscal Year 2021,” Dec. 15, 2020.

70. Mailee Smith, “Rigged: How Illinois Labor Laws Stack the Deck Against Taxpayers,” Illinois Policy Institute, Winter 2017.

71. Adam Schuster, “Pritzker’s AFSCME Deal Gives 12% Automatic Raises, $2,500 Bonus to State Workers,” Illinois Policy Institute, June 26, 2019.

72. Ted Sickinger, “Oregon’s State Workers Could Get Up To 15 Percent Raises Over Two Years,” The Oregonian, July 17, 2019.

73. Milliman Research Report, “2020 Milliman Medical Index,” May 2020.

74. Louise Norris, “Illinois Health Insurance Marketplace: History and News of the State’s Exchange,” Dec. 16, 2020.

75. Governor’s Office of Management and Budget, Proposed Operating Budget, Fiscal Year 2019.

76. State of Illinois, Department of Central Management Services, and AFSCME Council 31, Administrative Law Judge’s Recommended Decision and Order, Case Nos S-CB-16-017 and S-CA-16-087 before the Illinois Labor Relations Board, Sept. 2, 2016.

77. 100th Illinois General Assembly, Bill status of Senate Bill 2680.

78. Jerry Nowicki, “Pritzker Instructs Agency Leaders to Prepare for Cuts of 5-10 Percent,” Capitol News Illinois, Sept. 15, 2020.

79. Author’s calculations based on Illinois Governor’s Office of Management and Budget report, “Enacted Appropriations by Line Item FY20 and FY21,” accessed January 2020.

80. Sara Dube, “How Public Officials Can Use Data and Evidence to Make Strategic Budget Cuts,” The Pew Charitable Trusts, Sept. 8, 2020.

81. Ibid.

82. State of Illinois, Budgeting for Results Commission, 2011 Annual Report.

83. Budgeting for Results Commission, 2020 Annual Report.

84. Ibid.

85. Brian Mackey, “Illinois Issues: Will Illinois Ever Embrace ‘Budgeting for Results’?” Illinois Public Media, July 5, 2019.

86. Budgeting for Results Commission, 2020 Annual Report.

87. Budgeting for Results Commission, Results First / SPART Program Assessment Reports.

88. Illinois Comptroller, Public Accountability Report, fiscal years 2017 to 2020.

89. Ibid.

90. Adam Schuster, “Why Congress Should Reject Illinois’ $44 Billion Bailout Request,” Illinois Policy Institute, April 23, 2020.

91. Jerry Nowicki, “Pritzker Instructs Agency Leaders to Prepare for Cuts of 5-10 Percent,” Capitol News Illinois, Sept. 15, 2020.

92. Jared Walczak, “New Census Data Show States Beat Revenue Expectations in FY 2020,” Tax Foundation, Sept. 18, 2020.

93. Adam Schuster, “Expected $7.5 Billion in Federal Aid Won’t Fix Illinois Budget Crisis Without Structural Reforms,” Illinois Policy Institute, Feb. 16, 2021.

94. Adam Schuster, “Pritzker Wants $500 M Tax Hike on Illinois Small Businesses,” Illinois Policy Institute, Jan. 13, 2021.

95. Cole Lauterbach, “Pritzker, Illinois GOP Respond to Threat of 20% Tax Hike if Voters Reject Progressive Income Tax,” The Center Square, Sept. 25, 2020.

96. Dan Petrella and Jamie Munks, “Pritzker Warns ‘There Will Be Cuts and They Will Be Painful’ After Graduated-Rate Income Tax Proposal Fails at the Ballot Box,” Chicago Tribune, Nov. 4, 2020.

97. Adam Schuster, “Madgian’s Fiscal Legacy: How the Longest-Serving State House Speaker Built Illinois’ Mountain of Debt,” Illinois Policy Institute, August 2020.

98. National Association of State Budget Officers, “Budget Processes in the States,” Spring 2015.

99. Ill. Const. art. VIII, § 2(b).

100. National Association of State Budget Officers, “Budget Processes in the States,” Spring 2015.