As Unpaid Bill Backlog Rises to $8.75 Billion, Illinois Now Ranks Worst in Nation for Late Payments to Human Service Agencies, New Report Says

(Chicago, IL) — October 7. Illinois is the worst state in the nation for late payments to nonprofit human service providers, according to a new report released today by the Urban Institute.

“Illinois is failing its residents just at the time when they need high-quality services the most. Unfortunately, this is just further evidence that Illinois’ system for human services is broken and needs to be fixed,” said Laurel O’Sullivan, Vice President, Public Policy, at Chicago-based Donors Forum.

According to the new report, Human Service Nonprofits and Government Collaboration, 72% of Illinois human service nonprofit organizations report delays in state reimbursements for services rendered, compared to 41% of nonprofit providers nationally.

Meanwhile, Illinois Comptroller Dan Hynes yesterday reported that Illinois had $5.1 billion in unpaid bills at the end of December. In addition, it faces $2.25 billion in short-term loans that the state must soon repay, plus another $1.4 billion in unpaid health care bills that have not yet been sent to the Comptroller’s Office. The state’s effective bill backlog stands at more than $8.75 billion.

“This ongoing fiscal disaster is threatening to permanently harm programs and services serving children, seniors and the disabled and if that is allowed to happen, this state will have failed our most vulnerable citizens,” Hynes said.

State vendors, including health care providers and social services providers are waiting 92 business days to be reimbursed – or more than 4 ½ months. That delay is almost double the 48 business-day delay at this time last year. Many are even waiting six or seven months for payment.

The state’s cash flow position already has declined by $4.1 billion over the past year, Hynes said. As a result, the state using its first $3.9 billion in revenues this fiscal year on last fiscal year’s bills, the comptroller noted.

According to the Urban Institute report, Illinois also ranks in the bottom nationally in two other key indicators of program quality: payments failing to cover the cost of services and unilateral changes by government to contract terms mid-stream.

Among the report’s additional findings:

• Almost two thirds (65%) of Illinois nonprofits report freezing or cutting salaries and more than half (54%) have cut jobs due to late payments.
• Two thirds (59%) of Illinois nonprofits say that government reimbursements don’t cover costs, earning the state the ranking of third worst in the nation.
• Illinois was also third worst (72%) in governments changing the terms of contracts and grants midstream, which makes it difficult to prepare reliable budgets or service programs.

Though signs of improved economic conditions nationally have emerged, Illinois’ revenue this year continue to drop like a stone. State corporate income tax receipts are down 16.3%, sales taxes 12.6% and individual income taxes 7.6%, compared to the same period last year.

And it is this fiscal monster that Governor Pat Quinn or his GOP rival, State Senator Bill Brady (R-Bloomington) will inherit in January 2011.

Good luck.