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Nonprofits Need Solutions to Illinois' Budget Crisis

It's no secret the State of Illinois faces an enormous budget crisis. Vital services across the state are being squeezed out to pay for past-due obligations to pension plans and debt service.
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It's no secret the State of Illinois faces an enormous budget crisis. Vital services across the state are being squeezed out to pay for past-due obligations to pension plans and debt service. According to The Civic Federation, if the state doesn't act to curb these costs, the state's total unpaid bills will skyrocket from $7.8 billion in 2013 to $21.7 billion by 2018.

You'll often hear how the budget squeeze leads to cuts in education and health care across the state. However, just as important is how strapped budgets affect human service providers who are delivering lifeline services -- such as medical support, food pantries, day care and after school programs, career readiness programs, violence prevention and others -- to Illinois' neediest residents.

As many as 2 million people in Illinois depend on state funding for basic human services. Yet, nonprofits across the state struggle to get paid, get paid fairly and get paid on time. Demand for human services are higher than ever, but without the funds to pay their bills, many nonprofits are being forced to reduce services or shut their doors all together -- leaving a gap for residents.

Donors Forum recently hosted our annual state budget forum where a panel of government, civic and nonprofit leaders discussed the impact of the State's fiscal crisis on nonprofit organizations and focused on identifying solutions to sustain nonprofits and the vital services they provide to residents across Illinois.

The conversation focused on a variety of ways to tackle the problem -- including immediate pension system reform, longer-term measures to create new revenue and fundamentally reforming the way resources are allocated, which the state is starting to tackle through its new Budgeting For Results process.

It's clear that all these solutions are needed, and panelist Ralph Martire, executive director at the Center for Tax and Budget Accountability, stressed that there is no silver bullet to solve this problem in one fell swoop. Even if the legislature passes much needed pension reform, the state's tax base is eroding and without new revenue it won't be able to continue to invest in health care, public safety, education and human services for citizens.

Steve Schnorf, state budget and procurement consultant at Morrill & Associates agreed that the state cannot depend on pension reforms alone to fix its budget problems. The temporary state income tax increase is scheduled to sunset in 2015, and unless it is extended the government must find other ways to replace those funds - or the state will find itself continuing to add to its debt.

Finally, John Bouman from the Shriver Center on Poverty Law discussed how reforming the budgeting process itself will help the state better evaluate every critical spending decision. With Budgeting for Results, the state is starting down a path of building transparency and performance measurements into the budgeting process so it can begin to allocate resources based on priorities established by leaders and citizens alike. There is no shortage of needs in Illinois: schools, infrastructure, economic development and human services are all vitally important. We understand the need to make wise spending decisions that will deliver for the taxpayers of Illinois, which is why the nonprofit and philanthropic sectors have embraced the Budgeting for Result process.

It's clear that the state's budget crisis is a complicated problem with no quick fix.

But it's equally clear that not acting will continue to damage communities across the state. As frontline providers of critical services that government itself cannot provide, nonprofits have seen firsthand the devastating impact of the Great Recession, and have helped people and communities struggling to get back on their feet. Our state's network of community-based nonprofit services must remain strong in order to secure a prosperous future for all citizens.

All of which is why Donors Forum embraces an all-of-the-above solution to the state budget crisis. In the short term, we need pension reform that will release our state budget from the strangle hold of the unfunded pension liability. Long-term, we need to talk about revenue reform so that our state has the resources to invest in services, education, infrastructure and public safety. And finally we need to look at spending reform, through budgeting process that requires transparency and accountability, and rewards efficient and effective programs. Taken together, these reforms can help put our state on better financial footing in the years in come.

About Donors Forum: Founded in 1974, Donors Forum is the only statewide association in Illinois serving funders and nonprofits of all kinds as well as their advisors. It offers philanthropic and nonprofit leaders and practitioners a variety of resources to enhance their effectiveness - opportunities for convening and collaboration, education and research, and leadership in advocating for public policies to protect and promote their critical missions. Donors Forum leverages the collective power of nonprofits and philanthropy to improve lives and strengthen communities in Illinois.

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