Budget

• After actions taken by House Republican member John Cavaletto, Illinois rewarded for steps to stamp out unemployment insurance fraud.   Illinois received a $2.7 million federal grant on October 1st to continue and complete its ongoing program to reduce and eliminate fraudulent unemployment insurance (UI) claims by persons who have no right to receive them.  The program, operated by the Illinois Department of Employment Security (DES), has begun to cross-check UI applicants and recipients against databases that show ineligibility for this benefit, including tax returns and records submitted by employers.  The Department reports that these anti-fraud efforts have already prevented more than $120 million in taxpayer-funded overpayments.  If a person has just been hired for job B, he or she is no longer eligible to collect unemployment as a result of being laid off from job A.  However, some new Illinois hires were “forgetting” to let the State know that they had been rehired into another position.   In its announcement of the competitive federal grant, DES specifically enumerated its new program to cross-check UI rolls against prison logs to stop unemployment checks from being issued to persons who are in jail.  The Department had put this program into place for FY13 as a result of pressure from House Republican Representative John Cavaletto (R-Salem).  Cavaletto had been the lead sponsor of HR 330 in 2011, a successful measure adopted by the House to stamp out this abuse.     

• New study finds that Illinois’ true debt load totals $55,084 for each worker employed in private sector.  The study, published by “Illinois Watchdog” on Tuesday, October 2, is based on statistics from State Budget Solutions and the U.S. Department of Labor.  It divides Illinois’ $271.1 billion in total State debt – which includes unrecognized liabilities incurred by State-managed pension funds and health care/retiree benefit programs – by Illinois private-sector employees.   A broader calculation divides total Illinois debt by the 12.9 million men, women, and children who live in Illinois, creating an alternative debt figure of approximately $21,000 per State resident.  The study found that Illinois is 6th among the 50 states in terms of debt per Illinoisan employed in the private sector and 5th among the 50 states in terms of total debt per capita.  Both sets of statistics paint a troubling picture of Illinois’ fiscal problems and show how the lack of effort to reform and curtail state spending truly costs Illinois families.

Chicago

• After seeing terms of strike settlement, Moody’s cuts credit rating of Chicago Public Schools.  The move on Friday, September 28, reduced the Chicago Board of Education’s general obligation debt rating from A1 (six notches above junk-bond status) to A2 (five notches).  Similar cuts have been made to many other public-sector borrowers throughout Illinois, including general-obligation debts issued by the State government in Springfield.  In typical practice, a reduced credit rating means less demand for an agency’s bonds and other debt, and a demand from Wall Street that the agency pay a higher interest rate.   The Chicago Board of Education already owes more than $1.0 billion to investors and creditors.  Moody’s, a widely-followed New York City credit rating agency, often takes the lead in signaling debt quality.  Its signals are followed by other credit raters who examine and diagnose the quality of U.S. public-sector debts.   The September 2012 strike settlement, approved overwhelmingly by teachers on Wednesday, October 3, will provide the average teacher with a 17 percent pay hike over a four-year period. The new contract is expected to cost about $74 million per year to Chicago taxpayers.

Downstate

• Federal government prepares to purchase unused, 1,600-cell Thomson correctional center from State of Illinois for $165 million.  The announcement by the U.S. Department of Justice on Tuesday, October 2, marked a step closer to the conclusion of what has become an almost three-year process to conclude the sale.   Delays included concerns expressed by some non-Illinois members of Congress that the unused State prison in northwestern Illinois, near the Quad Cities, might be used to house military detainees and terrorists from Guantanamo Bay, Cuba.   Congress has forbidden Guantanamo Bay detainees from being transferred to U.S. soil, and the Justice Department, which will soon be the prison’s new owner, has said the confinement facility will not be used for this purpose.   Supporters of the sale have claimed that after the prison goes into operation as a U.S. federal jail, it will create as many as 1,100 jobs in northwestern Illinois and nearby Iowa.    The Federal Bureau of Prisons houses more than 200,000 prisoners nationwide, including prisoners convicted for various federal offenses.  Its existing prison system includes facilities in Chicago, Greenville, Marion, and Pekin, Illinois.

• Jimmy John’s prepares to move significant operations out of Illinois.  Government and business leaders reacted in early October to leaks from Jimmy John’s CEO, Jimmy J. Liautaud, that he has made concrete plans to move the sandwich-maker’s licensing division to Florida in 2013.  The licensing division, which controls payments made by eatery franchisees for the exclusive use of Jimmy John’s intellectual property, is one of the most profitable divisions of the overall firm.  Liautaud, founder-owner of the 1,000-unit eatery chain, repeated a previous-voiced commitment to wind down and abandon Illinois as a location site for the various management operations of the company.   Jimmy John’s currently employs approximately 100 employees at its Champaign-Urbana headquarters, where local leaders expressed dismay at the news.  The fast food company did not disclose in which state its new headquarters would be located, although indications pointed to ongoing negotiations with two or more competing states.  In recent comments made to a Chicago political/business forum, Liautaud pointed to the lack of state income tax in Florida and Texas, and to a tax incentive package offered by neighboring Indiana.  Previously, Liautaud cited the Democrats 67% income tax increase and the failure of state government to get spending under control as possible reasons for relocation.

• Quinn administration, AFSCME union make closing arguments in Tamms closure case.  After the budget-squeezed Illinois Department of Corrections (IDOC) announced plans to close five Downstate facilities, including the key Tamms “super-max” correctional center in far southern Illinois, AFSCME (the union that represents Illinois prison guards) successfully sued to delay and perhaps block the move.   The Illinois General Assembly had appropriated sufficient funds to keep all of these facilities open, including Tamms, but the Quinn administration has so far not gone along with this segment of the overall FY13 budget.   Closing arguments were presented to the Alexander County circuit court judge court on Thursday, October 4.  A decision in favor of the Department could lead to the immediate closure of the prison and the movement of its remaining inmates into the population of another State prison in Pontiac, Illinois.

Higher Education

• Pressure from House Republican member Jim Durkin helps troubled College Illinois program get back on its feet.  The “College Illinois” higher-education savings program, which provides tax-deferred savings opportunities to 52,000 persons willing to set aside money for family members’ tuition and other higher education-related expenses, reopened its doors to new investors on Monday, October 1.  Financial experts expressed concern about the stability of the program following the 2008-12 worldwide economic downturn.  Measures sponsored by Representative Jim Durkin (R-Countryside) were credited with spurring the Illinois Student Assistant Commission, a quasi-independent State agency, to reform its operation of the Fund and take the necessary steps to ensure that money will in the future be invested in a manner characterized by probity and prudency.