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State budget crisis clouds manufacturing education at community colleges

By Harvard Zhang

The state’s financial crisis is undermining community college efforts to equip Illinoisans, particularly from low-income families, with high-tech manufacturing skills at a time when manufacturing jobs are again on the rise after a decade-long decline.

Manufacturing departments at some community colleges shortchanged by the budget-less state of Illinois have been tightening their belts by scaling back equipment procurement for education purposes or offering fewer openings to educate future highly-skilled workers sought after by employers facing a talent shortfall.

“Community college graduates is a major contributor to a higher-skilled workforce in the industry,” said Jim Nelson, vice president of the Illinois Manufacturers’ Association, which represents 4,000 companies and plants in the state. “I can virtually guarantee that anybody that goes through a community college training program and earns the industry credentials can go to work immediately.”

The gloomy outlook for manufacturing education at Illinois community colleges due to a paucity of state dollars comes as U.S. manufacturing has been on the mend since 2010 with a craving for tech-savvy technicians and engineers to grab the growing on-shoring jobs and fill increasing vacancies left by baby-boomer retirees.

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No budget, not even K-12 funding as Illinois legislature adjourns

By Harvard Zhang

Springfield, Ill.— No K-12 funding plan, let alone a fiscal 2017 budget, cleared the Illinois legislature before midnight Tuesday when the spring legislative session ended, threatening to throw the financially-beleaguered state into a second budget-less year with alarming economic, financial and social implications.

Disagreement among the legislature-controlling Democrats derailed two bills their leaders introduced after disregarding the Republican governor’s stopgap budget proposal in both chambers Tuesday. The House turned down by 24-92 a stand-alone K-12 education budget 20 minutes before the midnight deadline. Earlier in the evening, a sufficient number of Senate Democrats defied House Speaker Michael Madigan by opposing the budget — $7.5 billion short of revenue, according to Republicans — that Madigan muscled through the House last week.

The Democrats then proposed separate K-12 funding for fiscal 2017 starting July 1 amounting to $15.7 billion, $900 million more than last year. Chicago Public Schools would receive $475 million, almost half of the additional funding, including $270 million of low-income student aid and $205 million of pension contributions.

“This is a Chicago bailout to the detriment of the rest of Illinois,” said Representative Ron Sandack, R-Downers Grove, before the failing vote.

The failure to resolve the state’s budget crisis risks further deterioration of the state’s bond ratings and funding for schools, state universities, social services and other government entities. Suffering from the highest unemployment rate in the U.S. and residents leaving for other states, the government of the fifth most populous state has been on auto-pilot appropriating money only sporadically on court orders and consent decrees.

Madigan announced plans Monday to keep the House in special sessions every Wednesday throughout June, in case there would be no agreement by the end of the day. A tougher three-fifths majority is needed to pass any bill starting June 1.

Budget war

Democratic leaders went along with their own short-term spending plans for public schools and a $7.5 billion out-of-balanced full year budget without considering the governor and Republican leaders’ stopgap budget bills. Speaker Madigan wanted the governor’s stopgap proposals to go to budget working groups first. Democratic lawmakers failed to pass either bill because of cracks within the majority party.

On the Democrats’ public school budget that cleared the Senate, 37-19-2, but failed in the House, Republican lawmakers said there’s not enough time to pore over the school funding formula through which $700 million would be distributed among hundreds of school districts.

The new Equity Grant considers a district’s poverty level and local resources, according to House Majority Leader Barbara Flynn Currie, D-Chicago. The spending plan promised each district no less general state aid than in this past school year.

Earlier in the day, blaming the Democrats for the state’s economic and financial distress, the second-year Republican governor advocated a short-term lifebuoy for education and essential government operations, and re-iterated his vision for pro-business reforms and economic growth that he says are they keys to balanced budgets.

“The Democrats have spent our state into the toilet for 30 years, we’re like a banana republic,” Rauner said Tuesday afternoon on the statehouse grand staircase flanked by state GOP leaders and lawmakers.

Tim Nuding, Rauner’s budget director, suggested Tuesday morning a “bridge plan” to fund public schools, state universities, social services programs and prisons through December. The money would come from federal dollars, rainy-day funds, and not repaying $450 million of interfund borrowing.

Rauner slashed at the Democrats’ spending plan, $7.5 billion out of whack, warning it calls for an income tax hike to 5.5 percent after November when lawmakers are relieved of election pressures.

Senate Minority Leader Christine Radogno, R-Lemont, declared that the Republicans’ proposals were affordable and passable before the midnight deadline. House Minority Leader Jim Durkin, R-Western Springs, calling Madigan’s budget plan “a slap in the face to every Illinoisan,“ and arguing that the Republicans’ rival fully-funded stopgap spending measure was not based on IOU or scrip.

The governor is scheduled to discuss his fully-funded stopgap budget and “clean” education bill at various state government entities and social services agencies around the state on Wednesday.

Sweeping ramifications

Entering another year without a budget will jeopardize the state’s financial status and funding already on thin ice.

The governor’s short-term spending plan would have breathed some relief into the struggling social services programs helping the elderly, the poor and the disabled, which haven’t received any state aid in nearly a year. Rauner has not yet decided whether he’ll sign the $700 million to float related agencies approved by the legislature two weeks ago.

The governor said Tuesday the state’s bond ratings, the worst among all states, would benefit from a combination of a balanced budget, strong economy, best schools, lower property taxes, and term limits on elected officials.

The bond ratings risk further downgrading as the government’s deficit continues to grow. Investors demand yields of 3.5 percent on the state’s 10-year general obligation bonds, about 1.8 percentage points higher than top-rated debt of other states, according to data compiled by Bloomberg.

The state continues its year-long struggle to resolve its unfunded pension liability, recently estimated at $111 billion, as new revenues elude Illinois amid political standoff and pension-restructuring efforts failed in the state Supreme Court.

Meanwhile, current spending runs more than $500 million a month over what the state takes in, indicating that  by June 30 Illinois will be $6.2 billion more in the red, state Comptroller Leslie Munger said in February.

Photo at top: Governor Rauner, flanked by GOP leaders and lawmakers, spoke on the state budget crisis Tuesday afternoon. (Harvard Zhang/MEDILL)

Madigan snubs Rauner’s stopgap budget as deadline nears

By Harvard Zhang

Springfield, Ill. — Illinois House Speaker Michael Madigan showed no rush to advance a short-term budget Governor Bruce Rauner proposed on the last spring-session day to fund public entities and avoid a government shutdown.

Governor Rauner and Republican leaders proposed passing a stopgap spending plan to float public schools, universities and social services programs through December 31 before the legislature adjourns Tuesday. Opposing a Tuesday passing, the speaker wanted the governor’s proposal to go to a budget working group to “fashion a good, solid bill.”

“This is not something that is going to happen today,” Madigan told reporters after meeting with Rauner.

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Clock ticking for Springfield to resolve budget crises

By Harvard Zhang

Springfield, Ill. — Illinois lawmakers have until midnight Tuesday to push the brakes on the state’s entering a second budget-less year, which would continue to take a toll on a large swath of Illinoisans and dim the state’s future.

House Speaker Michael Madigan said Monday he had scheduled House special sessions for every Wednesday through June starting next week if there’s no agreement by the end of Tuesday, and called on the governor to keep the budget working groups of rank-and-file lawmakers functioning.

The 335-day budget deadlock has been perpetuated by election-year pressures and political discord between veteran Speaker Madigan and Bruce Rauner, the first Republican governor since 2003, afflicting the most vulnerable Illinoisans in public and private sectors as a result.

“Both the governor and the speaker should be blamed for the state budget impasse,” said James Nowlan, a Republican state representative from 1969 to 1972 and now president of Stark County Communications, who observed the Memorial Day House session in the gallery. ”The governor has more to lose because he’s the chief executive of the state by office and by perception. The speaker with his negative power is controlling every piece of legislation in both chambers.”

On another note, the House joined the Senate Monday to override the governor’s veto on a bill intended to give Chicago 15 more years to reach the stipulated 90 percent funded ratio of the city’s long-shortchanged police and firefighters’ pension plans.

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Chicago investment returns on track to beat last year: City Treasurer Office

By Harvard Zhang

The return on Chicago’s investment portfolio is on track to beat last year’s results thanks to the re-allocation of funds into higher-yield bonds.

Chicago generated $15 million of revenue on “traditional reserves” from Skyway and parking meter revenues in the first quarter of 2016, and $22 million on operating funds, according to Miriam Martinez, chief investment officer of the City Treasurer Office, who said the total return for all of 2015 was nearly $57 million. Investment yield edged up in the first quarter, and the city stuck to its policy of requiring a minimum of a AA rating of its investments.

“We have hit some milestones, and we will have better figures in the second quarter,” Martinez said Tuesday during a conference call. “The biggest thing is not keeping $3 billion to $4 billion in money- market and short-term cash, which is not necessary.”

The rosy report came as the third-most-populated U.S. city has been grappling with its $26.8 billion pension liabilities after years of shortchanging its six retirement funds. Chicago’s general-obligation bonds have been pinned in the junk territory by the Moody’s Investors Service credit rating of Ba1, better than only one other populous city, Detroit.

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Illinois dentists borrow to keep treating state employees amid budget crisis

By Harvard Zhang

When Dr. Joshua Renken opened his Springfield clinic in 2003 after getting his Doctor of Dental Surgery degree, he didn’t foresee waiting for months to be paid $500,000 owed him by the state of Illinois for seeing its employees, suffering from a cash crunch, and borrowing from a commercial bank against his business assets, all while owing more than $100,000 in student debt.

The 10-month state budget impasse turns out to be a double whammy for thousands of Illinois dentists. They treat state employees at a discount without being paid, including the very politicians failing to pass a budget to pay their dentists. Furthermore, were dentists to renege on the contracts regarding state employees, retirees and dependents, they would risk losing a large swath of other patients in insurance plans offered by the same company.

Swamped with swelling unpaid medical claims and interest penalties despite shrinking funds to provide health care for its employees, the state of Illinois owes 9,000 dentists $150 million, or $16,667 per doctor on average, according to Dave Marsh, government relations director of the Illinois State Dental Society.

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Many tears, no budget: House Democrats push $15 wage floor for social workers

By Harvard Zhang

Springfield, Ill. — A number of bills proposed by Democratic representatives to boost social workers’ benefits including a $15 minimum hourly wage will face full House scrutiny after clearing a key committee Wednesday, despite the already deeply-cut funding for state social services.

The majority Democratic lawmakers, holding 11 seats out of 20 on the House Appropriations-Human Services Committee, pushed the bills through to the House floor, engaging their Republican counterparts in debates about the balance between benefits and costs.

Workers helping children, seniors, and people with disabilities and mental illnesses detailed emotionally to the lawmakers their belt- tightening and working multiple shifts on a common hourly wage of around $10 as their employers cut back on salaries and let go people in the face of shrinking state funding.

“I tried to explain to my daughter I was doing it for her but it’s difficult to explain all that to a four-year-old,” testified Ashley Ruebling, 27, an education specialist who teaches children with developmental disabilities. “I pray one day she truly understands my absence.”

Ruebling, a single parent of two who lost their father to a motorcycle accident, earns what is considered a high wage in her field of $12.80 per hour, and works 55 hours to 60 hours per week because she has to.

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Lack of state budget devastates cash-strapped school districts: Superintendent Smith

By Harvard Zhang

Springfield, Ill. — Illinois School Superintendent Tony Smith warned legislators that, without a K-12 budget by July 1, 187 school districts will have less than 100 days of cash on hand.

Testifying Tuesday before the House appropriations committee, Smith underlined the looming cash crunch facing Illinois school districts, adding that they’re also having to evaluate trade-offs in possible different school funding formulas, all with the gloomy prospect for an end to the state’s budget deadlock prolonged perhaps until after the November election.

School districts suffer as Republican Governor Bruce Rauner and Democratic lawmakers led by House Speaker Michael Madigan clashed in a fresh round over the vista for school funding.

“That 100 days of cash on hand is not just for paying staff but interest on loans, because districts have been borrowing, making it more problematic,” Smith testified.

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Vote informed: BallotReady stresses local races

By Harvard Zhang

Are you voting for someone because you think he or she has a cool name? Or it’s the first person on the ballot? Do you ever guess for offices further down the sheet or simply leave blanks?

In this big election year, a pair of online services want to empower you with free, nonpartisan candidate information for each race so that you can vote confidently — and not just for president.

Voter’s Edge covers elections in California, Illinois and New York. It’s a project of Berkeley, Calif.-based MapLight, a not-for-profit tracking money in politics.

More ambitiously, a Chicago-based online voter guide actually hopes to make money with its service.
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Interest rate, stock market uncertainties weigh on Northern Trust outlook

By Harvard Zhang

Analysts covering Northern Trust Corp. are divided on the financial holding company’s year ahead thanks to a mix of unclear macroeconomic influencers, the corporation’s growth opportunities and its uncertain ability to wield the ax on expenses.

Clouds gather over the Chicago-based corporation’s outlook with unclear interest rate movements and a volatile equity market. On the other hand, analysts see bright spots in Northern Trust’s growing market share, burgeoning new businesses and its century-old goodwill.

“Even with the contraction in the first half of this year, they’ll still outperform their peers because they continue to gain market share,” said Marty Mosby, an analyst with Memphis, Tenn.-based brokerage Vining Sparks IBG LP.

Northern Trust manages and administers assets and provides custodian services for institutions and affluent families with a relatively conservative approach. The company has 16,500 employees in more than 20 locations globally.

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