Provide an analysis of at least 500 words on the 2011 Illinois State Budget. The analysis should include the state's revenues, expenditures, priorities as well as answers to the following questions:

1. Does the state have money in reserve?
2. Does the state have a surplus or a deficit?
3. Are revenues growing? If so, by how much?
4. How fast are expenditures growing and in what areas?
5. How do budgeted amounts compare to actual spending and revenues?

\fThis page intentionally left blank. Illinois State Budget Governor Pat Quinn Fiscal Year 2011 July 1, 2010 - June 30, 2011 Printed/Created by Authority of the State of Illinois www.state.il.us/budget This page intentionally left blank. The Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to the State of Illinois, for its annual budget for the fiscal year beginning July 1, 2009 (fiscal year 2010). According to GFOA, this award \"reflects the highest form of recognition in governmental budgeting.\" In order to receive this award, a governmental unit must satisfy nationally recognized guidelines for effective budget presentation. These guidelines are designed to assess how well the entity's budget serves as a policy document, as an operations guide, as a financial plan, and as a communications device. The Government Finance Officers Association's Distinguished Budget Presentation Awards Program, established in 1984, recognizes exemplary budget documentation by state, provincial and local governments, as well as public universities and colleges. Entities participating in the program submit copies of their operating budgets for review. Each budget document is evaluated using a comprehensive evaluation checklist and those judged proficient receive the award. We are very pleased to have received this national recognition. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. This page intentionally left blank. Table of Contents State of Illinois The Governor's Letter of Transmittal Chapter-Page READER'S GUIDE .........................................................................................................................................................Chapter 1 Budget Documents ........................................................................................................... 1-1 Budget Document Organization........................................................................................ 1-1 State of Illinois Organization Chart ................................................................................... 1-2 Basis of Accounting .......................................................................................................... 1-3 Guide to Understanding Agency Budget Submissions........................................................ 1-3 Agency Budget Tables ...................................................................................................... 1-4 Description of Funds ........................................................................................................ 1-8 BUDGET SUMMARY....................................................................................................................................................Chapter 2 Fiscal Overview................................................................................................................. 2-1 Summary Tables I-A Operating Appropriations by Agency - All Funds ................................................... 2-17 I-B Supplementals to Complete Fiscal Year 2010 ......................................................... 2-27 II-A Revenues by Source - All Appropriated Funds ....................................................... 2-28 II-B Revenues by Source - General Funds ..................................................................... 2-29 II-C Budgeted Funds Revenues - Generally Accepted Accounting Principles (GAAP) Basis 2-30 II-D Budgeted Funds Expenditures - Generally Accepted Accounting Principles (GAAP) Basis 2-30 III-A Road Fund ........................................................................................................... 2-31 III-B Motor Fuel Tax - State Funds ............................................................................... 2-32 IV-A Appropriated Operating Funds by Fund Group for Fiscal Year 2011 ..................... 2-33 IV-B Appropriated Operating Funds by Fund for Fiscal Year 2011 ................................ 2-34 PUBLIC RETIREMENT SYSTEMS............................................................................................................................Chapter 3 ECONOMIC OUTLOOK AND REVENUE FORECAST......................................................................................Chapter 4 EDUCATION...................................................................................................................................................................Chapter 5 Elementary and Secondary Education Illinois State Board of Education.................................................................................. 5-1 Teachers' Retirement System ...................................................................................... 5-8 Higher Education.............................................................................................................. 5-9 Illinois Board of Higher Education ............................................................................... 5-14 Public Universities Chicago State University........................................................................................ 5-16 Eastern Illinois University ...................................................................................... 5-18 Governors State University .................................................................................... 5-20 Illinois State University .......................................................................................... 5-22 Northeastern Illinois University ............................................................................. 5-24 Northern Illinois University.................................................................................... 5-26 Southern Illinois University.................................................................................... 5-28 University of Illinois .............................................................................................. 5-30 Western Illinois University ..................................................................................... 5-33 Illinois Community College Board ............................................................................... 5-35 Illinois Student Assistance Commission ...................................................................... 5-37 Illinois Mathematics and Science Academy .................................................................. 5-39 State Universities Retirement System .......................................................................... 5-40 State Universities Civil Service System ......................................................................... 5-41 Table of Contents State of Illinois HUMAN SERVICES.......................................................................................................................................................Chapter 6 Aging, Department on ...................................................................................................... 6-1 Children and Family Services, Department of .................................................................... 6-7 Comprehensive Health Insurance Plan .............................................................................. 6-14 Healthcare and Family Services, Department of................................................................. 6-16 Human Services, Department of........................................................................................ 6-23 Illinois Deaf and Hard of Hearing Commission .................................................................. 6-36 Illinois Council on Developmental Disabilities ................................................................... 6-39 Illinois Guardianship and Advocacy Commission............................................................... 6-42 Illinois Violence Prevention Authority................................................................................ 6-45 Public Health, Department of............................................................................................ 6-48 Veterans' Affairs, Department of ...................................................................................... 6-59 PUBLIC SAFETY ............................................................................................................................................................Chapter 7 Corrections, Department of .............................................................................................. 7-1 Illinois Criminal Justice Information Authority ................................................................... 7-7 Illinois Emergency Management Agency ........................................................................... 7-11 Law Enforcement Training Standards Board ...................................................................... 7-17 Military Affairs, Department of ......................................................................................... 7-20 Prisoner Review Board ...................................................................................................... 7-24 State Fire Marshal, Office of the........................................................................................ 7-27 State Police, Department of .............................................................................................. 7-31 State Police Merit Board .................................................................................................... 7-37 ENVIRONMENT AND BUSINESS REGULATIONS ............................................................................................Chapter 8 Drycleaner Environmental Response Trust Fund Council ................................................... 8-1 Environmental Protection Agency ..................................................................................... 8-3 Financial and Professional Regulation, Department of....................................................... 8-10 Human Rights, Department of .......................................................................................... 8-15 Human Rights Commission............................................................................................... 8-18 Illinois Commerce Commission......................................................................................... 8-20 Illinois Workers' Compensation Commission .................................................................... 8-24 Insurance, Department of ................................................................................................. 8-27 Natural Resources, Department of .................................................................................... 8-30 ECONOMIC DEVELOPMENT AND INFRASTRUCTURE ................................................................................Chapter 9 Agriculture, Department of............................................................................................... 9-1 Commerce and Economic Opportunity, Department of ..................................................... 9-8 Illinois Power Agency........................................................................................................ 9-17 East St. Louis Financial Advisory Authority ........................................................................ 9-19 Employment Security, Department of................................................................................ 9-20 Illinois Arts Council .......................................................................................................... 9-25 Illinois Finance Authority .................................................................................................. 9-28 Illinois Historic Preservation Agency ................................................................................. 9-30 Illinois Sports Facilities Authority...................................................................................... 9-34 Labor, Department of ....................................................................................................... 9-35 Metropolitan Pier and Exposition Authority....................................................................... 9-39 Southwestern Illinois Development Authority.................................................................... 9-40 Transportation, Department of ......................................................................................... 9-41 Illinois State Toll Highway Authority ................................................................................. 9-50 Upper Illinois River Valley Development Authority............................................................. 9-53 Table of Contents State of Illinois GOVERNMENT SERVICES ........................................................................................................................................Chapter 10 Elected Officials: Governor, Office of the ........................................................................................... 10-1 Lieutenant Governor, Office of the .............................................................................. 10-4 Attorney General, Office of the ................................................................................... 10-5 Secretary of State, Office of the .................................................................................. 10-8 State Comptroller, Office of the .................................................................................. 10-13 State Officers' Salaries .......................................................................................... 10-16 State Treasurer, Office of the ...................................................................................... 10-20 Judicial Agencies: Judges' Retirement System ......................................................................................... 10-23 Judicial Inquiry Board .................................................................................................. 10-24 State Appellate Defender, Office of the ....................................................................... 10-26 State's Attorneys Appellate Prosecutor, Office of the .................................................. 10-29 Supreme Court & Illinois Court System........................................................................ 10-32 Supreme Court Historical Preservation Commission .................................................... 10-34 General Assembly and Legislative Agencies: Auditor General, Office of the ..................................................................................... 10-35 General Assembly ....................................................................................................... 10-37 General Assembly Retirement System ......................................................................... 10-39 Government Forecasting and Accountability, Commission on...................................... 10-40 Joint Committee on Administrative Rules .................................................................... 10-40 Legislative Audit Commission ..................................................................................... 10-40 Legislative Ethics Commission .................................................................................... 10-41 Legislative Information System ................................................................................... 10-41 Legislative Printing Unit .............................................................................................. 10-42 Legislative Reference Bureau....................................................................................... 10-42 Legislative Research Unit ............................................................................................ 10-43 Architect of the Capitol, Office of the.......................................................................... 10-43 Other Boards and Commissions: Civil Service Commission ............................................................................................ 10-44 Court of Claims .......................................................................................................... 10-46 Elections, State Board of ............................................................................................. 10-52 Executive Ethics Commission ...................................................................................... 10-56 Illinois Labor Relations Board ...................................................................................... 10-58 Illinois Educational Labor Relations Board ................................................................... 10-61 Procurement Policy Board ........................................................................................... 10-63 Property Tax Appeal Board ......................................................................................... 10-65 Executive Inspector General, Office of .............................................................................. 10-67 Governor's Office of Management and Budget .................................................................. 10-70 Capital Development Board .............................................................................................. 10-73 Central Management Services, Department of................................................................... 10-76 Revenue, Department of ................................................................................................... 10-82 Illinois Gaming Board ....................................................................................................... 10-89 Illinois Racing Board ......................................................................................................... 10-92 State Employees Retirement System.................................................................................. 10-95 DEBT MANAGEMENT.................................................................................................................................................Chapter 11 DEMOGRAPHIC INFORMATION............................................................................................................................Chapter 12 GLOSSARY......................................................................................................................................................................Chapter 13 This page intentionally left blank. Office of the Governor 207 State Capitol, Springfield, Illinois 62706 March 10, 2010 To the Honorable Members of the General Assembly and the People of the State of Illinois: I respectfully submit to you the Fiscal Year 2011 Operating Budget, a $24.8 billion general funds plan that is based on the very real conditions we all face here in our great state. With this budget, we are FIGHTING FOR ILLINOIS: fighting for jobs to revive our economy, fighting to cut costs while meeting our obligations, and fighting for our families' futures. This budget is the result of difficult but responsible decisions we must make during this unprecedented time in Illinois history. The national recession is the longest and deepest since the Great Depression. This, along with poor fiscal discipline by previous administrations, has left us in a dire financial situation. In Illinois, we are facing a record $13 billion deficit for fiscal years 2010 and 2011. We need immediate, decisive and comprehensive action to solve this structural deficit. A combination of spending reductions, federal assistance, strategic borrowing, revenue generation and job growth is imperative to balancing our budget and imposing fiscal discipline. Responsibility is critical in times like these. We must tighten our belts in areas throughout state government. This budget makes major reforms by reducing spending and takes serious action on issues that have been neglected for far too long, such as our pension system. While tough decisions have been made, we will continue to maintain our commitment to our most vulnerable citizens and the essential services upon which they rely. I stand for and am committed to honesty, openness and transparency in the people's government. For the first time in our state's history, Illinois residents have the chance to actively participate in shaping our budget priorities through the Governor's Office of Management and Budget Web site, www.budget.illinois.gov. The overwhelming response demonstrates that people want to and will become engaged in the budget process when given the opportunity. Thousands of residents provided smart, sound and common sense solutions to solving our current budget crisis. We thank all of you who responded. I am the Building Governor and I know this state will recover from this fiscal crisis by putting people back to work. At 11.3 percent, our unemployment rate is unacceptable. The $31 billion capital plan - Illinois Jobs Now! - is a job-generating, capital improvement program that is reviving the state's ailing economy by creating and retaining more than 439,000 Illinois jobs. At the same time, this plan is building schools; fixing aging roads and bridges; improving mass transit; and investing in energy, the environment and our future. Together, we can, must and will move forward to the promising days ahead. The future will be built on a more dynamic economy driven by a shared focus on the great, hard-working people of Illinois. The task before us will not be easy, but I am confident we have the right plan to meet the challenges ahead. Let us work together and make this Land of Lincoln proud and prosperous once again. Sincerely, Pat Quinn Governor, State of Illinois This page intentionally left blank. The State of Illinois fiscal year 2011 budget book can be accessed online at www.state.il.us/budget or www.budget.illinois.gov This page intentionally left blank. State of Illinois CHAPTER 1 READER'S GUIDE www.state.il.us/budget This page intentionally left blank. www.state.il.us/budget 108 State House Springfield, IL 62706 217.782.4520 Readers Guide State of Illinois A READER'S GUIDE TO THE FISCAL YEAR 2011 ILLINOIS STATE BUDGET INTRODUCTION The Illinois budget process is driven by state constitutional and statutory requirements, a wide array of general guidelines and technical considerations. This Reader's Guide is designed to help readers understand the structure and content of the operating budget. It includes the following sections: A description of the budget documents. An explanation of how the fiscal year 2011 budget document is organized. An organization chart of state government. An explanation of the basis of budgeting. A guide to reading and understanding agency budget submissions including narratives and budget tables. A description of the various fund types in the Illinois accounting system. BUDGET OPERATIONS This document presents the Fiscal Year 2011 Illinois State Budget. It sets forth the governor's operating budget recommendations for the period July 1, 2010,through June 30, 2011. The state's operating and capital budgets are subject to the same procedures. However, the Fiscal Year 2011 State of Illinois Capital Budget is presented in a separate document for the reader's convenience. Both documents are or available at www.state.il.us/budget budget.illinois.gov. BUDGET DOCUMENT ORGANIZATION The Fiscal Year 2011 Illinois State Budget is organized as follows: The Governor's Letter of Transmittal to the General Assembly and the residents of Illinois. Table of Contents. Chapter 1: The Reader's Guide. Chapter 2: The Budget Summary of the state's current fiscal plan. This chapter presents the governor's budget priorities and key recommendations. It also Executive Budget for Fiscal Year 2011 highlights key financial issues, and includes several tables that summarize appropriations, expenditures, revenues and funds. Chapter 2 concludes with the following Summary Tables: o Table 1-A: Appropriations by Agency. o Table 1-B: Supplemental Appropriations for Fiscal Year 2010. o Table II-A: Appropriated Revenues by source. o Table II-B: General Funds Revenue by Source. o Table II-C: General Funds Revenue Modified Accrual Basis. o Table II-D: General Funds Expenditures Modified Accrual Basis. o Table III-A: Road Fund. o Table III-B: Motor Fuel Tax Fund - State Funds. o Table IV-A: Appropriated Operating Funds by Fund Group for Fiscal Year 2011. This is a presentation of the projected operating cash flow for each fund group. o Table IV-B: Appropriated Operating Funds by Fund for Fiscal Year 2011. This table presents the fund balance for each fund in the Illinois accounting system. The end of year cash balance is equal to the beginning of year cash balance, plus receipts, minus disbursements. Chapter 3 A report on the state's Public Retirement Systems. Chapter 4 Illinois' Economic Outlook and Revenue Forecast. This chapter describes Illinois' economy within the context of the national economy. Details are also provided on revenue sources and revenue forecasting methodology used by the state. Chapters 5 through 10 cover the budget recommendations for each agency and for other branches of government including elected officials. The agencies are grouped by service area of state government, with a chapter dedicated to each group. The service areas are: o Education o Human Services o Public Safety o Environmental and Business Regulations Chapter 1 - 1 www.state.il.us/budget 108 State House Springfield, IL 62706 217.782.4520 Readers Guide State of Illinois o o Chapter 11: The Debt Management report describes the state's debt affordability model, borrowing activities and financing schedule. Chapter 12: Demographic Information on the Illinois population Chapter 13: A Glossary of special terms. STATE OF ILLINOIS ORGANIZATION CHART Economic Development and Infrastructure Government Services (including elected officials, legislative agencies and judicial agencies. __________________________ Adapted from the Fiscal Year 2003 Illinois Comptroller Comprehensive Annual Financial Report - modified March 2010 Executive Budget for Fiscal Year 2011 Chapter 1 - 2 www.state.il.us/budget 108 State House Springfield, IL 62706 217.782.4520 Readers Guide State of Illinois BASIS OF BUDGETING The Illinois Constitution requires the governor to prepare and submit a state budget to the General Assembly for the upcoming fiscal year. The budget sets forth the estimated balance of funds available for appropriation at the beginning of the fiscal year, the estimated receipts, and a plan for expenditures during the fiscal year. The Illinois Constitution requires the governor to submit a balanced budget. PA 90-479, enacted in 1999, amended the Civil Administrative Code (State Budget Law) to provide guidance to the governor as he proposes the budget, and to the General Assembly as it makes appropriations, regarding a balanced budget requirement. PA 90-479 applies only to six funds, which it defines as \"budgeted funds\": General Revenue, Common School, Education Assistance, Road, Motor Fuel Tax and Agricultural Premium. For the budgeted funds, revenue estimates include the beginning fund balance, plus revenues to be received during the budgeted year, plus revenues due to the state as of June 30 of the budgeted fiscal year that are expected to be collected in the two-month lapse period following the budgeted year. PA 90-479 also requires the use of the \"modified accrual\" basis of budgeting: revenues are accounted for in the year they are due - not when they are received. However, the amounts due to the state in one fiscal year but actually received in the following fiscal year are typically small and consistent over time, and are due to the normal payment cycles set forth in law. For instance, final monthly sales tax payments are due the state on the 20th day of the month following the sale. Consequently, final sales tax payments for June sales are received in July, the first month of the ensuing fiscal year. Likewise, revenue estimates include only those revenues due to the state during the fiscal year, July 1 through June 30. They do not include revenues collected in the lapse period of the budgeted fiscal year (through August 31), which were due to the state as of June 30 of that year. Revenue estimates also include federal reimbursements associated with the recognition Executive Budget for Fiscal Year 2011 of liabilities paid pursuant to Section 25 of the State Finance Act. The main Section 25 programs are Medicaid and employee health insurance. Expenditure estimates for budgeted funds take into account the costs to be incurred in the budgeted fiscal year, including those to be paid from future fiscal year appropriations pursuant to Section 25 of the State Finance Act. Expenditure estimates in Table II-D do not include costs paid in the budgeted fiscal year that were incurred in the prior fiscal year. Of the budgeted funds, only the General Revenue Fund has expenditures pursuant to Section 25 of the State Finance Act. Thus, expenditure estimates for the other funds are unaffected by PA 90-479. Revenue and expenditure estimates also include transfers between funds that are based on revenues received or costs incurred during the budgeted year. All other funds must be balanced so that proposed expenditures and appropriations do not exceed funds estimated to be available. A GUIDE TO UNDERSTANDING BUDGET SUBMISSIONS AGENCY The budget recommendations of the Fiscal Year 2011 Illinois State Budget include a narrative of each agency's operations and summary tables of its budget. AGENCY NARRATIVE The narrative for each agency includes the following sections: Strategic Initiatives and Priorities: A brief description of items included in the fiscal year 2011 budget recommendation that help to achieve the agency's goals and objectives. Achievements and Accountability: A brief description of recent agency programming and/or operational achievements. About the Agency: Provides a link to the agency web page. Agency Mission: A statement reflecting the core objective of the agency. Chapter 1 - 3 www.state.il.us/budget 108 State House Springfield, IL 62706 217.782.4520 Readers Guide State of Illinois Summary of Agency Operations: A brief description of agency duties and responsibilities. Agency Resources Employed: A table summarizing funding sources, recommended appropriations and two-year history of actual appropriations. Also included is a three-year headcount trend. Programs: A summary table of resources allocated to each program within the agency. Performance Measures: A table that captures the agency's progress in key areas that relate to its strategic priorities and core mission. Emphasis is placed on outcomes, that is, results that impact the public. AGENCY BUDGET TABLES The budget tables provide summary detail on each agency's budget. The budget tables list each agency's appropriations and expenditures by major fund group, by fund and by division, as well as the agency's headcount by division. Personnel detail forms, which list the agency's staff by division and position title, are available in a separate volume. Appropriations by Major Fund Group The appropriations recommendations requiring General Assembly action are shown by type of expenditure for each of three major fund groups: general funds, other state funds and federal funds. Within each fund group, the appropriations and expenditures are further subdivided into major categories such as personal services and fringe benefits, contractual services, other operations and refunds, designated purposes, and grants. Each appropriation for designated purposes and grants is listed individually. Appropriations by Fund The agency's resources are shown in total for each fund requiring appropriations by the General Assembly. Appropriations by Division The agency's new appropriations and reappropriations requiring General Assembly Executive Budget for Fiscal Year 2011 action are shown by division as classified by the comptroller. Headcount by Division The agency's headcount by division is presented, showing actual headcount at the end of fiscal year 2009, estimated headcount for fiscal year 2010 and recommended headcount for fiscal year 2011. Column Descriptions The fiscal year 2009 appropriations column reports all original and supplemental appropriations and reappropriations enacted by the General Assembly and signed into law by the governor for fiscal year 2009. The amounts also reflect approved two percent transfers and executive orders issued by the governor. Fiscal year 2009 expenditures include those incurred from July 1, 2008 through June 30, 2009, and during the two-month lapse period ending August 31, 2009. During the lapse period, outstanding fiscal year 2009 remaining state obligations were liquidated. Fiscal year 2010 appropriations reflect all original and supplemental appropriations for fiscal year 2010 enacted by the General Assembly and signed by the governor through January 31, 2010. This column also reports changes due to approved two percent transfers and executive orders issued by the governor. Fiscal year 2010 estimated expenditures reflect the expenditures projected to be incurred through the fiscal year, including the lapse period, and also account for anticipated two percent transfers, but do not include the requested fiscal year 2010 supplemental appropriations shown in Table I-B. Fiscal year 2011 appropriations show the recommended, or in the case of other elected officials or legislative/judicial branches of government, requested budget. An example of the Budget Table follows. Chapter 1 - 4 www.state.il.us/budget 108 State House Springfield, IL 62706 217.782.4520 Readers Guide State of Illinois Actual Maximum Spending Authority Executive Budget for Fiscal Year 2011 Prior year Actual Spending (including lapse period spending) Estimated Current Year Spending (including lapse period spending) Appropriation recommended by the governor Chapter 1 - 5 www.state.il.us/budget 108 State House Springfield, IL 62706 217.782.4520 Readers Guide State of Illinois Actual Maximum Spending Authority Executive Budget for Fiscal Year 2011 Prior year Actual Spending (including lapse period spending) Estimated Current Year Spending (including lapse period spending) Appropriation recommended by the governor Chapter 1 - 6 www.state.il.us/budget 108 State House Springfield, IL 62706 217.782.4520 Readers Guide State of Illinois Actual Maximum Spending Authority Executive Budget for Fiscal Year 2011 Prior year Actual Spending (including lapse period spending) Estimated Current Year Spending (including lapse period spending) Appropriation recommended by the governor Chapter 1 - 7 Reader's Guide State of Illinois DESCRIPTION OF FUNDS The funds in the Illinois accounting system are classified into two broad categories: Appropriated and Non-Appropriated Funds. Appropriated Funds are further classified into eight fund groups: General, Highway, Special State, Bond Financed, Debt Service, Federal Trust, Revolving and State Trust Funds. Non-Appropriated Funds are composed primarily of Federal and State Trust Funds, and include a few Special State Funds. The following chart describes the major appropriated fund types, as well as the sources and uses of those funds: STATE OF ILLINOIS MAJOR FUND GROUP Fund Group Sources General Funds State income taxes, sales taxes, other taxes and fees Highway Funds Motor fuel taxes, vehicle registrations, licenses and fees Taxes and fees Special State Funds Bond Financed Funds Build Illinois and General Obligation (GO) bonds Debt Service Funds Transfers in from other funds Federal Trust Funds Federal grants Revolving Funds Repayments on project loans State Trust Funds Various Executive Budget for Fiscal Year 2011 Purposes/Uses Support the regular operating and administrative expenses of most state agencies. Include General Revenue Fund, Education Assistance Fund, Common School Fund and General Revenue-Common School Special Account Fund. Receive and distribute special assessments related to transportation. Support transportation-related activities at the state and local levels. Represent a segregation of accounts restricted to the revenues and expenditures of a specific source. Support such diverse activities as medical assistance, children's services, environmental cleanup, financial regulation and health insurance. They are designated in Section 5 of the State Finance Act (30 ILCS 105/5) as special funds in the State Treasury and not elsewhere classified. Receive and administer the proceeds of various state bond issues. Pay for capital improvements to local schools, state facilities, higher education facilities, development of coal-burning power plants, local water and wastewater treatment facilities, public transportation, airports, environmental programs and economic development projects. Account for the resources obtained and accumulated to pay interest and principal on debt obligations. Provide for debt service payments on state bonds. Support grants and contracts between state agencies and the federal government. Administered for specific purposes established by terms of grants and contracts. Support a variety of programs including education, healthcare, human services, community development, transportation and energy. Finance the operations of state agencies that render services to other state agencies on a cost reimbursement basis; support local capital projects. Appropriation of these funds depends upon intra-governmental service requirements and appropriation of other state agencies. Hold funds on behalf of other entities or individuals (such as pensions). Established by statute or under statutory authority for specific purposes. Chapter 1 - 8 State of Illinois CHAPTER 2 BUDGET SUMMARY www.state.il.us/budget This page intentionally left blank. www.state.il.us/budget 108 State House Springfield, IL 62706 217.782.4520 FY2011: Fiscal Overview & Budget Summary State of Illinois THE STATE'S GREAT CHALLENGE Structural Deficit & Great Recession Illinois faces a fiscal crisis. The worldwide Great Recession and the state's structural deficit have combined to create unprecedented obstacles for our elected officials and citizens. In fiscal year 2010, many attempts to address problems such as pension and tax reformfell short, increasing the severity of the structural deficit and delaying tough decisions that will affect our state for decades. For fiscal year 2011, we must do better. higher than the previous year. While national and state economic development programs are creating jobs and opportunities, recovery is slow and currently not sufficient to create the number of jobs our nation demands. Around the globe, the Great Recession has taken a toll on even the most robust economies. This recession is unlike those previously seen, and its end has yet to be written. The Revenue Problem Meeting the Great Recession is Illinois' structural deficita situation wherein the state's expenditures consistently exceed revenues. With historically high unemployment, the state's revenues have suffered. Individual income tax revenue is down 4 percent from the previous year, as of February 28, 2010; sales tax is down 5 percent. In the past two fiscal years, the big three tax categories (individual income, corporate income and sales) have declined 14 percent. Every state in our country is still reeling from the foreclosure crisis and de-leveraging of the banking industry. Though big business profits improved in calendar year 2009, success on corporate balance sheets was not paired with success in citizens' pocketbooks. As our nation wades through this jobless recovery, the Illinois unemployment rate, 11.3 percent as of January 31, 2010, exceeds the national average and is nearly three percentage points These significant revenue declines come at a time when state resources are being squeezed by increasing costs, with pensions, human services, health care, and education expenditures leading the way and accounting for about 90 percent of the annual budget. Pension reform and difficult choices regarding human service programs, healthcare eligibility and the P-12 and higher educational systems are required to reign in these expenditures. GENERAL FUND REVENUES FY2008 - FY2011 Source: Governor's Office of Management & Budget (in $ millions) $30,000 THE REVENUE PROBLEM $29,500 FY2011 Revenues are forecasted to be over $2 billion less than FY2008, despite almost a half billion in Federal Stimulus dollars in FY2011 $29,000 $28,500 $28,000 $29,659 $29,144 $27,500 $27,995 $27,000 $27,444 $26,500 $26,000 FY2008 Executive Budget for Fiscal Year 2011 FY2009 FY2010 (Est.) FY11 (Budget) Chapter 2 - 1 www.state.il.us/budget 108 State House Springfield, IL 62706 217.782.4520 FY2011: Fiscal Overview & Budget Summary State of Illinois The Pension Problem While revenues have declined approximately $2 billion in the last three years, pension costs have increased over $2 billion. Without stabilization, the problem will only compound in years to come. The Governor's proposal to stabilize the statefunded public retirement systems would provide public employees with a fair and secure retirement, while moderating the fiscal burden on the state by reducing longer-term pension obligations by more than $100 billion through 2045. Such stabilization, which calls for changes that would affect newly-hired, mostly young employees, would alleviate current and future burdens of a system that has been underfunded for decades. Source: Governor's Office of Management & Budget GENERAL FUND PENSION CONTRIBUTIONS GROWTH * FY2000-FY2011 $5,000 (in $millions) $4,624 $4,357 $4,500 THE PENSION PROBLEM $4,000 $3,500 $3,000 $4,052 Required Pension contributions have increased by over 300% since FY2000 $2,924 $2,500 $2,249 $2,111 $1,939 $2,000 $1,500 $1,131 $1,238 $1,339 $1,614 $1,470 $1,230 $1,000 $500 $FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 ** FY2011 FY2011 (Stabilzation) * FY2003-FY2011 includes debt service on FY2003 Pension Obligation Bonds ** FY2010 General Fund Pension Contribution was largely financed by issuance of $3,466 million in Pension Obligation Notes Executive Budget for Fiscal Year 2011 Chapter 2 - 2 FY2011: Fiscal Overview & Budget Summary State of Illinois THE FIVE PILLARS OF FISCAL RECOVERY Given the revenue and pension problems, and the obligations the state has to provide for its citizens, Illinois cannot cut its way out of this deficit. Rather, a multi-faceted fiscal strategy must be pursued. The Five Pillars of Fiscal Recovery, utilized together, can provide muchneeded fiscal relief now, while protecting myriad important programs and services. The Five Pillars can also set Illinois on a path of fiscal and economic recovery and long-term sustainability. Request continued FEDERAL ASSISTANCE through the recession The federal government's stimulus plan brought billions of dollars to Illinois and funded vital services like education and health care. As federal stimulus dollars are exhausted over the next fiscal year, decreased federal assistance will have serious consequences in Illinois. Reduced federal funds will result in fewer teachers and overcrowded classrooms. Children's health care coverage and prescription drug coverage for seniors will be jeopardized, and businesses throughout Illinois may be forced to close down. Governor Quinn is committed to working with the President and members of Illinois' Congressional delegation in support of continued federal assistance. Use short-, intermediate- and long-term BORROWING The budget presented herein contains an increase in structured borrowing. Balancing the budget on the backs of our providersmany of which are small businesses, vital to the future of our economyis one form of borrowing, and for Department of Central Management Services Bureau of Property Management Lease Consolidation Savings Time Number Square Period Lease Cost of Lease Footage through Savings Terminations Savings 3/4/10 FY10 52 $11,466,061 661,106