Billions in late payments strain Illinois’ safety net

St. Louis Post-Dispatch | March 4, 2009| A1

The angry phone calls pour into the office of Illinois Comptroller Dan Hynes all day long. He’s the guy who manages the state’s checkbook, and a lot of people want their money.

Bill Kreeb, head of the Lessie Bates Davis Neighborhood House in East St. Louis, has been on the phone a good deal lately. The state owes $850,000 to his organization for all sorts of anti-poverty programs. Kreeb said Tuesday that he’s not sure he can make payroll in two weeks for his staff of 230 people.

John Foppe, executive director of Community Link in Breese, has been calling, too. The state owes some $1.2 million to his agency, which provides group homes and a sheltered workshop for more than 400 developmentally disabled.

Those are just two voices in a growing chorus of social service providers with overdue state contracts. They say unless the state pays up soon, and figures out a long-term solution to its budget crunch, agencies could shut down services for tens of thousands of people ranging from after-school care to youth counseling to long-term residential programs.

“This state is extremely inept at managing the resources,” Foppe said. “I’m really worried that we could be headed for cascade failure of services in Illinois.”

Hynes’ office has more than $2.8 billion of bills awaiting payment; another estimated $1.6 billion is still being processed by the Department of Healthcare and Family Services. And by the end of June, the state has to pay back a $1.4 billion short-term loan it took out in December to ease a massive backlog of bills then.

That’s $5.8 billion owed on state contracts for services already rendered.

Carol Knowles, a spokeswoman for Hynes, said the comptroller’s office doesn’t have a detailed breakdown of overdue bills. Some of the money is owed for routine services such as copying and office supplies. Many of the overdue bills are Medicaid-related. But a significant chunk of that money is due to social service providers that offer state-contracted after-school programs, foster care, sheltered workshops, aid for autistic children and more.

“The phones do ring from the time the office opens to the time it closes,” Knowles said. “We know there are many social service agencies across the state that are really hurting because of the payment delays.”

The Post-Dispatch canvassed a dozen southwestern Illinois aid providers with state contracts; while the numbers change as money trickles in and out of state coffers, the newspaper found the state owed anywhere from $60,000 to the $1.2 million for Foppe’s organization.

And the problem is statewide; for example, Catholic Charities of the Archdiocese of Chicago has seen a payment backlog of up to $26 million.

“Capital expenditures are on hold. We have two cottages that need new roofs, vehicles in our fleet that are out of service,” said Chris Cox, the chief operating officer of Hoyleton Family Services and two affiliated nonprofits that are owed about $200,000. “How does a board of directors really deal with this? Do you still provide the same level of services? Do you fill positions that are open or not?”

The Neighborhood House is wrestling with those decisions now, Kreeb said. The organization’s line of credit is maxed out, and the board and staff are trying to decide who can afford to go for another 30 days without taking a check.

At Community Link, the problem was even worse in the fall, when the backlog rose to more than $1.4 million. The organization took out more credit, refinanced some group homes that were nearly paid off and cut vacation time for some of its 150 employees.

“We had to do a lot of crunching of numbers and some persuasive talking,” Foppe said. “Now, we’re all sitting here with bated breath. We’re wondering if we’re going to have to do this again and again.”

The agencies say the backlog creates a trickle-down of problems. As they extend their debts, they incur interest and delay payments to their own vendors. Also, their services suffer as staff spends more time focused on finding ways to pay bills.

And if the late payments forced an organization – say a sheltered workshop like as Foppe’s – to close its doors, other agencies would feel pressure as demand increases on them.

Both sides of the political aisle acknowledge a problem; the budget for the current fiscal year was out of balance from the outset, and revenue projections have continued to drop during the recession. To highlight the issue, Hynes has invited state vendors to the Capitol on Tuesday to share their concerns with lawmakers and the governor.

Democrats in charge said they’re concerned but gave no immediate solutions. New Gov. Pat Quinn called it “one of the priorities of the new budget.” Steve Brown, spokesman for state House Speaker Michael Madigan, said, “It’s a huge problem that we’ll try to do our best to fix, but we’re a long way away from being able to answer those kinds of questions.”

Both sides have predicted the state will face difficult cuts as it tries to reduce the deficit.

The social service agencies say it’s time to look at raising the state’s 3 percent income tax. And they are pleading for new funding rules to prevent backlogs.

“We need to look at this as a systemic issue – not bringing attention to one account that’s late or one agency – but how to solve the problem for the long term,” said Phillip Jimenez, director of development for Lutheran Child and Family Services of Illinois, which is currently owed more than $137,000.

Sidebar: A sampling of Illinois’ overdue bills

$60,000: Alcoholic Rehabilitation Community Home, Granite City. Residential substance abuse treatment programs.

$66,000: Illinois Center for Autism, Fairview Heights. School, vocational programs and a referral service.

$137,000: Lutheran Child and Family Services of Illinois. Foster care, residential services, home-based family programs statewide.

$200,000: Hoyleton Youth and Family Services and two affiliated organizations. Foster care, teen pregnancy programs across Southern Illinois.

$220,000: Riverbend Head Start and Family Services, Alton. Infant home visits and youth counseling.

$270,000: St. Clair Associated Vocational Enterprises, Belleville. Group homes, a sheltered workshop for the developmentally disabled.

$850,000: Lessie Bates Davis Neighborhood House, East St. Louis. A variety of anti-poverty programs.

$1.2 million: Community Link, Breese. Group homes, sheltered workshop and other programs.

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