Social-service agencies beg state to pay its bills

Nonprofits send 'hardship letters' as Illinois faces a $4.6 billion backlog

Tuesday, September 28, 2010

The paper trail of Illinois' budget crisis reaches hundreds of letters high, each pleading missive an example of a state too broke to pay its bills.

The disabled soon won't have a place to live. The drug-addicted could be turned away for treatment. Prison inmates will run out of toilet paper.

The threats are found in so-called "hardship letters" that flood the Illinois comptroller's office, sent in mostly by service providers begging the state to send whatever money it can spare to ease the crunch.

"We have reached the end of our credit line and have borrowed … from all other available sources," wrote Wayne Kottmeyer, executive director of St. Coletta's of Illinois, a Tinley Park nonprofit that serves the developmentally disabled. "We see a disaster in the making."

All the providers want is what the state owes them, but as Illinois faces a $4.6 billion backlog in bills and no money to pay them, most often what they get is just enough to survive. Enough to meet the next payroll, keep the doors open for one more month and make payments on loans keeping them afloat as they wait for the state to make good.

"Every day is a triage situation," said comptroller spokeswoman Carol Knowles. "There is a limited pot of money."

And the situation isn't getting any better. Knowles said the state has bills dating as far back as seven months and the backlog is likely to "worsen during the next several months." Gov. Pat Quinn's budget director, David Vaught, has acknowledged the state will end the year where it started — owing nearly $6 billion in unpaid bills.

The hardship letters act as a way for the state to prioritize its bills. The idea is that providers send the letters when they are at their most desperate, so the state can rush payments out to avoid major disruptions.

As the state limps along year after year, social-service providers find themselves at the bottom of the barrel. First, the state must pay back the series of loans it has taken out to keep government running. Then comes paychecks for state employees. After that, it's bills from doctors and pharmacists who care for the poor. The incentive is that the federal government reimburses the state for part of those health care costs.

"Everyone else gets in line after that," said Kelly Kraft, a spokeswoman for the governor's budget office.

When a letter comes in requesting an emergency payment, agencies first check to make sure the state actually owes the money. A team then figures out how much the state can spend.

"We work with them to find out how much they really need right now," Kraft said. "We may not be able to give someone $22 million, for instance, but we can give a percentage of that to help in the meantime."

Take St. Coletta's. Kottmeyer warned that without an immediate payment from the state, the agency would have to lay off staff, and hard-to-serve developmentally disabled children and adults would have to find help elsewhere. His letter was enough to shake loose $1.8 million in May, but St. Coletta's is still owed $1.4 million, according to state records.

Kottmeyer said the payment was enough to relieve some of the pressure, though the agency is under a "constant state of stress."

"I don't think my letter was that special. I think what happened is there was genuine concern about the organization, and they did what they could to help because we were in real serious trouble," Kottmeyer said. "It's not as if they don't want to pay. They can't."

Firms that supply prisons frequently send in letters asking the state to pay up.

Earlier this year, two companies briefly stopped delivering toilet paper and shoes to Illinois prisons because the state hadn't paid its bills. A power company threatened to shut off power to a prison in downstate Centralia, which would have forced hundreds of inmates to be moved to other facilities.

Elsewhere, the company that administers debit cards for the state's unemployment and food stamp programs temporarily refused to do maintenance on the system in May because the state owed it more than $8.5 million. A firm that runs an Aurora call center that tracks parolees almost couldn't pay its employees because the state began the year owing nearly $3 million.

All of the companies have since received payments, but the state is merely treading water as the bills continue to pour in as quickly as they are paid off.

The state's poor finances loom as a major issue in the governor's race. Quinn has pushed for an income tax increase but so far has avoided widespread cuts. His Republican challenger, state Sen. Bill Brady, has said he can cut his way out of the hole but has yet to provide any specifics. Nonpartisan budget experts say it will take a combination of tax hikes and budget cuts to right the ship after so many years of neglect.

Quinn has asked for patience.

"The General Assembly basically gave us a lump-sum budget. They gave us a $5 bill to pay $20 worth of groceries," Quinn said. "We're doing the best we can with that situation."

That's little comfort for providers who do everything from supply postage and pens to providing care for some of the state's most vulnerable.

"It's a tough situation to be in. We're in a business that has seen a record demand for service, yet the budget for these services continues to dwindle," said Neli Vasquez-Rowland, president of A Safe Haven, which helps inmates transition back into the general population by providing drug and alcohol counseling as well as job training and housing.

The Chicago-based nonprofit has had to cut services and lay off workers, and it recently held its first-ever fundraiser to try to get money from the business community to support its efforts.

"There's got to be a better way for the state to run its finances," Vasquez-Rowland said. "It's unfortunate that we are operating as the state's bank. We are bankrolling contracts for the state of Illinois, and we're suffering because of it."