Senate Week in Review: Senate votes to repeal healthcare subsidy for state workers, Illinois ranks third in 10 worst states to do business, and more

Springfield, Ill. – As a reminder, State Sen. Ron Sandack (R-Downers Grove) has moved into a new district office location after a damaging fire in March.  Sen. Sandack’s new district office is located at 633 Rogers Street, Suite 103 Downers Grove, Illinois 60515.  The phone and fax numbers are the same as before, 630-737-0504 and 630-737-0509, respectively.

Also, Sen. Sandack’s third episode of “Capitol Agenda with Senator Sandack” with guest State Rep. Michael Connelly (R-Lisle) is now airing on Elmhurst Regional Public Access Channel 19 on Sunday nights at 8:00 p.m.  Tune in to hear Sen. Sandack and Rep. Connelly talk about what they expect to happen in the last few weeks of the spring session, Medicaid and pension reform prospects, and more. 

The Illinois Senate considered several contentious bills this week, including a measure to reduce the healthcare subsidy for retired state employees, according to Sen. Sandack.

In other news, the Auditor General has issued another critical audit of the state’s College Illinois! pre-paid tuition program, and a recent survey of the nation’s top executives highlights the need to address Illinois’ fiscal woes.

On May 10, Illinois lawmakers took what proponents acknowledged was a difficult first step to bringing the state's pension system back to solvency with the approval of Senate Bill 1313. The legislation passed on a 31-20 vote.

The measure repeals the state's health insurance subsidy, of up to 100 percent, for retired public employees with 20 years or more of service. The bill directs the state's Department of Central Management Services to issue a retiree health insurance premium payment plan for retirees in the five state pension systems, including state employees, university employees, lawmakers and judges.

The premium plan is subject to approval by the Legislature's Joint Committee on Administrative Rules. The measure now goes to the Governor, who has said he will sign it.

Proponents of the legislation acknowledged that the vote was difficult, but said it was necessary to get state spending under control. Lawmakers who voted for the measure said that in order for the Democrats’ 67 percent tax hike to expire as promised, the state must reduce spending. They also pointed out that Illinois has the worst-funded pension system in the nation and that pension costs must be brought under control or the system could collapse. The Fiscal Year (FY) 2013 cost of the health insurance subsidy is $877 million.

Sen. Sandack, who supported the legislation, noted that it was the first of many votes that needed to take place before the end of the month.

“This vote was tough because the legislation invariably affects people,” he said.  “But the fact is we have to start on the path of fiscal responsibility and sustainability.  Fixing the financial crisis that the state faces is not going to come without some painful and hard choices, unfortunately.”

Opponents acknowledge the need to reduce state obligations, but they noted that the measure will not actually reduce spending but instead subsidize spending by requiring state retirees to pay more. Those who voted against the measure argued that the state must control costs—not push them off onto others.

In other Senate action, legislation was approved to establish mandatory daily recess for all students in kindergarten through 5th grade. Senate Bill 636 requires the recess to last at least 20 minutes, and outlines what activities constitute “recess.” While many Senate Republicans supported the concept of a recess period, most voted against the measure. They questioned why the state needed to intervene in what traditionally has been the responsibility of local school officials, and also took issue with a provision of the bill that restricts teachers and administrators from withholding recess time as a form of discipline.

Sen. Sandack voted against the legislation, saying it was another mandate imposed by the state.  He noted, "Local school officials are more than capable of deciding appropriate levels of exercise and recess. I think teachers and administrators are also capable of deciding if and when to withhold recess. Another Springfield mandate is the last thing our schools need."

The Senate also approved Senate Bill 2706, which will reduce the number of regional superintendents in Illinois by cutting the number of educational service areas from 45 to 35. Regional superintendent positions were targeted last year by Gov. Pat Quinn, who suddenly cut pay to the superintendents out of the budget. Most worked without pay until lawmakers identified a revenue stream to reinstate their salaries until a long-term solution could be negotiated.

However, the Senate rejected legislation that would give lawmakers the power to override the Governor’s decision to shutter state facilities. If Senate Bill 3564 had been approved, no facility closure could have commenced without the General Assembly adopting a joint resolution to accept or reject the Commission on Government Forecasting and Accountability’s (COGFA) advisory opinion of a proposed facility closure. Currently, the bipartisan legislative panel issues an opinion on closures, but the Governor has the final say. Senator Sandack did not support the legislation, citing his belief that Governors need the power to actually govern which would have been drastically reduced had SB 3564 passed. 

In other news, a recent audit of the state’s beleaguered College Illinois! prepaid tuition plan suggests that one former employee may have made investment decisions based on personal benefit, and reports program administrators failed to adhere to required procurement protocol.

According to the audit, the program’s former director of portfolio management, George Egan, invested $500,000 in a firm that was bidding on a contract with College Illinois! At the direction of Egan, the program signed a $30 million investment contract on Feb. 9, 2011; then Egan invested $185,000 in that same firm on Feb. 25, 2011.

Additionally, a review of the program’s procurement process from FY 2006 to FY 2011 was, according to the audit, inconsistent and lacked “transparency, independence, documentation and compliance with procurement rules and the Procurement Code.” It was also during that time when the program costs tripled from $6.4 million to $18.1 million.

Of note in the audit, was a $14 million investment made into a manufacturer of luxury hybrid vehicles that media reports indicate cost more than $100,000. Though the return on the investment has been positive so far, the audit noted that the investment was made despite numerous risks outlined in the agreement.

Illinois Student Assistance Commission (ISAC) officials accepted most of the criticism in the audit, and plan to adopt changes in June in response to the findings. Specifically, the ISAC board has confirmed plans to consider a new conflict-of-interest policy at the June board meeting.

More on the College Illinois! audit can be found at www.auditor.illinois.gov.

Finally, as budget negotiations continue, a recent survey by the nation’s top executives underscores the importance of addressing Illinois’ serious fiscal issues. Chief Executive magazine surveyed 650 top executives of companies who said Illinois trails the nation in business climate, beating out only California and New York in desirability.    

Ranked 48th out of 50, Illinois’ taxation and burdensome regulations were cited by the CEOs as prime reasons the state’s business reputation is lagging. The state’s workforce quality and living environment received slightly better ratings, but failed to compensate for the high costs and hassle that comes with doing business in Illinois.

According to the publication, “Illinois has dropped 40 places and is now in a death spiral.” The magazine noted that Illinois’ bond ranking exceeds only California.

In comparison, survey respondents ranked neighboring Indiana the 5th best state for business, while our other neighbors—Wisconsin, Iowa, Missouri and Kentucky—hovered near the middle at 20th, 22nd, 24th and 25th, respectively.