Huge, Blind Reliance on State Exposed by Illinois Fiscal Crisis – WP Original
By: Mark Glennon*
Did you know Catholic Charities is Illinois’ largest social service provider and gets 70% of its funding from the state? I didn’t. Perhaps the most surprising aspect of Illinois’ financial crisis is the depth of its impact on social services commonly thought to be privately funded or otherwise not heavily reliant on state money. Same, to some extent, for higher education.
Was the plight most of them face today foreseeable? Definitely. Avoidable? Not so clear.
Major cutbacks loom for groups like Catholic Charities, or have been made already. Catholic Charities, with a budget of over $200 million, is now owed over $25 million by the state. Lutheran Social Services already is cutting 750 jobs and 30 programs due primarily to cuts in state funding. Smaller, similar examples abound. Universities are also screaming about cuts to their funding (though some of their claims are exaggerated, and half of the $4 billion they get goes to pensions). Hardly a day now goes by without new stories of cutbacks by charities and universities. Those cutbacks, for the most part, are genuine and severe.
Shoulda seen it coming. Fourteen years ago, I wrote about adjusting economic development efforts to reflect the “crushing reality that the state is broke.” That’s not bragging. On the contrary, the point is that inevitable austerity was apparent even to a casual observer, as I was then, who looked at the numbers. Any organization with a budget line item for state money should have done the same.
Don’t blame most of the heads of service organizations you now see talking about their budgets. Most I have seen are professional social workers. God bless them for that. Finance isn’t their thing. But boards of directors or trustees of most service organizations and universities typically include plenty of business leaders. It’s another aspect of our private sector leadership that fell down in this financial crisis. They closed their eyes.
Did they think pensions, which are the core of our problems, would be reformed before services were cut? There’s never been any basis to hope for that with the General Assembly we have. All pension “reform” bills to date have included funding guaranties of one form or another along with small cuts to benefits, prioritizing pension contributions over services.
Did they assume taxes could be raised sufficiently to end the crisis, or that our problems now are just a matter of “getting a budget passed”? Plain numbers say otherwise, which we’ve shown repeatedly.
It didn’t help, of course, that politicians, unions and the press encouraged them to keep eyes closed. “Make no small plans,” Pat Quinn told us in his 2010 budget address. Pensions aren’t a “crisis,” Senate President John Cullerton told us in 2013. Nothing “extreme” of any kind need be done, House Speaker Michael Madigan says repeatedly to this day. Unions said the pension crisis was “manufactured” and exaggerated. Leading journalists like Rich Miller and Greg Hinz backed them up with regular assurances that “the sky isn’t falling” and the like.
Nobody should be excused for trusting any of them.
But the state has largely outsourced its social service spending, as it should, and therein lies a valid reason why they could not have adjusted adequately. Illinois essentially deputized private charities for social service programs long ago, and those charities were expected to spend what was appropriated to them. Still, the question can fairly be asked whether some could have adjusted to what they should have seen coming. That’s particularly true for larger, more prosperous universities, which were already under the spotlight for fat bureaucracies and pension promises. More importantly, financial leaders should have spoken up and demanded, long ago, the fundamental structural changes for a new model of sustainable government.
That’s mostly history that doesn’t matter now, except that much of the blindness continues. We’ve now slipped into a false narrative that basically says, “get a budget passed so that spending can be restored.” No near term budget will restore much. Only long term, extreme reforms will produce the growth, jobs and revenue we need.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.