State takes money designated for charities, repays some of it

State takes money designated for charities, repays some of it

Illinoisans donated almost $45,000 on their 2009 state income tax returns to crisis nurseries in Illinois, part of a checkoff system designed to help charitable causes.

None of that money has reached the Crisis Nursery of Champaign County — or any other nursery across the state.

Instead, the money is being used to pay other state bills, at least temporarily.

In all, state officials have borrowed $1.176 million in fiscal 2011 from 11 tax checkoff funds, according to figures provided by the Office of Management and Budget.

That's on top of $434,000 that was "swept," or taken permanently, from seven funds in fiscal 2010, part of a much broader emergency funds sweep approved by the General Assembly to address a huge budget gap.

The $434,000 will not be repaid, but the money borrowed in fiscal 2011 by law has to be returned, plus interest, within 18 months, said Kelly Kraft, spokeswoman for the Office of Management and Budget.

Kraft said last week she expects the money to be repaid within a few months, at most. She said legislators approved the temporary borrowing to address cash-flow problems when they passed Gov. Pat Quinn's lump-sum budget.

But some nonprofit agencies are unhappy, to say the least.

"My concern is that the taxpayers don't know that they're donating to charities that don't even get their money. It just seems really inappropriate to use charities to pull money in, and then pull that money out to pay for bills," said Stephanie Record, executive director of the Crisis Nursery of Champaign County. "This is crazy."

Record, whose agency is slated to get about $7,000, said she had no idea the state could borrow against that money.

When the state's crisis nurseries went through the process of getting on the tax checkoff list in 2009, they asked that very question: Will the money get held up because of the state budget crisis?

"We were told over and over and over again, 'No, it'll flow straight through an account at DHS (the Department of Human Services),' and that the flow-through account would be released directly to the nurseries. Obviously, that wasn't the case," she said.

Record said donors had asked her the same questions, wondering if it would be better to write a check directly to the nursery.

Kraft and other officials said taxpayers can be assured the money they donated will eventually be used for those causes.

"It may not necessarily be tomorrow, but they will be used for those intended purposes," said Melaney Arnold, spokeswoman for the Department of Public Health, which controls seven checkoff funds.

The tax checkoffs provide "a convenient way for people to give to the causes they care about," Kraft said.

In normal budget years it takes about six months for money from the tax checkoffs to become available because of the way the fiscal year is structured, Arnold said.

Donations made on 2009 tax forms were collected by the Department of Revenue in spring 2010. That money should have been available to state agencies that oversee the funds in fiscal 2011, which started July 1, 2010.

The agencies work with nonprofits to dispense the money, but that can also take time.

Tracy Smith, executive director of Feeding Illinois, said officials from DHS urged her last fall to submit grants for money from the Hunger Relief Fund, but it took her several months to coordinate proposals with her agency's eight member food banks. Then this spring, $98,400 was borrowed from the fund.

Taxpayers donated about $72,000 to hunger relief on 2009 tax forms and $61,000 in 2010, but the Eastern Illinois Foodbank has yet to get any money.

"If this is an 18-month borrow, and we move with due haste and it doesn't keep happening, that's OK," Smith said. "But we would have a real problem if we went around asking our donors to give money to this tax fund and we never saw this money."

The borrowing was done in stages during fiscal 2011, which ends June 30, as state budget analysts needed to pay a backlog of bills to hospitals and other vendors. The earlier fund sweeps were approved in June 2010, the end of that fiscal year.

Kraft said no fund sweeps were made in fiscal 2011, and none is planned for fiscal '12. She said Quinn worked to end the sweeps, a practice in place when he succeeded Gov. Rod Blagojevich in January 2009.

"Gov. Quinn does not advocate the sweeping of funds," she said, but the fiscal 2011 interfund borrowing helped the state capture about $100 million in federal Medicaid matching funds "that otherwise would have been left on the table."

Kraft said only "excess funds" are borrowed — most funds were not zeroed out — and analysts look at a fund's history to make that determination. Some of the funds had cash accumulated from previous years or get money through other channels, officials said.

But the borrowing has held up several grants, including four slated for researchers investigating Alzheimer's disease. About $112,500 was "swept" from the Alzheimer's Disease Research Fund last year, and another $135,000 was borrowed this spring, state figures show.

The department was just about to issue the grants but had to "put a hold on them," Arnold said.

"It is most unfortunate that the state must now divert these funds at a time when the number of persons with Alzheimer's is increasing and caregivers are facing additional burdens and significant stress brought on by their caregiver responsibilities, impacting their health as well," the Greater Illinois Alzheimer's Association said in a statement.

Lawmakers should recognize the research has "great potential for prevention of longer term costs of care and service," the association said.

Also hit hard were the Penny Severns Breast, Cervical and Ovarian Cancer Research Fund ($33,000 swept, $354,200 borrowed), the Diabetes Research Fund ($8,800/$141,100). The Child Abuse Prevention Fund, administered by the Department of Children and Family Services, lost $250,000.

Arnold hopes the Alzheimer's grants can go out shortly after July 1, the start of fiscal 2012, when tax receipts from 2010 become available. But she wasn't sure if the state will have to dip into those funds, saying, "That's a decision by the Office of Management and Budget."

Kraft said the state anticipates repaying the fiscal 2001 funds much earlier than the 18 months allowed by law — "within the next few months, if not weeks." Wednesday's action by the General Assembly to transfer $365 million to the Hospital Provider Relief Fund will allow the state to pay Medicaid bills and capture an enhanced reimbursement rate before June 30, relieving some pressure on cash flow, she said.

State Rep. Patricia Bellock, R-Hinsdale, co-chair of the Commission on Government Forecasting and Accountability, said she wasn't familiar with details of the tax checkoff sweeps or borrowing but planned to look into it.

"Those people are really counting on that money," Bellock said, adding that legislators tried to minimize funding cuts for agencies that provide "direct services to people."

Republicans and some Democrats earlier this year rejected Quinn's plan to refinance the state's debt to bring in more cash, saying the state can't borrow its way out of a crisis.

But state Sen. Michael Frerichs, D-Champaign, said, "The state is already borrowing from our vendors," who have to take out loans to cover the delayed state reimbursements. He supported refinancing at lower interest rates as the more "fiscally conservative thing to do."

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adamb2000 wrote on June 26, 2011 at 8:06 am

I can honestly say right now, after reading this article, that I will never again check one of those boxes on my state return. I will give money directly to charitable organizations or through fund drives, but not to the state. What the State of Illinois has done and is doing is despicable. Sure, they say they will repay the money within 18 months, but a promise from the state means nothing. Look at all the promises and IOU's dumped into pension funds that will never be repaid. Even more infuriating is the "sweeping" of $434,000 from FY10 donations. This is money that citizens of the State of Illinois thought they were donating to worthy charitable causes, but which the State simply stole. They can put whatever label they want on it, but that money was charitably given and the State just went in and stole that money from these charities and from the citizens who donated it.

If I set out a red bucket at Christmastime, rang a bell, and said that I was collecting money for charity and then just pocketed it all myself, I'm sure I'd be arrested, yet when the state does it, it's perfectly acceptable? What kind of morally bankrupt state do we live in when it's deemed acceptable for the state to steal from crisis nurseries?

Keep in mind, this is the same state that wanted to switch health care plans to a self-funded plan where the state would pay vendors directly (when they're already almost a year behind in the payments to other vendors now). It's also the same state that tried to make all tuition and fee income from universities flow through the state before being sent to the universities, because the state would better manage it. Can you imagine what would become of the UI if every single dollar of income had to flow through the state first? They'd be broke in under a year.

Lostinspace wrote on June 26, 2011 at 11:06 am

"What the State of Illinois has done and is doing is despicable."
It is indeed despicable -- like so many other decisions -- but I think the responsibility lies not with the State of Illinois, but with Lord Michael of the 22nd and his trusty sidekick, The Mighty Quinn, governor of Chicago.

bellasfairies wrote on June 26, 2011 at 12:06 pm

The state of Illinois has taken enough hits by crooks in office. I am ashamed to tell anyone I live in Illinois. This makes me sick to think that these charities are not getting what we, as tax payers, are sending them. I refuse to ever check a box for charities and these people should be ashamed of themselves. Taking money from Charities is like taking a wheelchair from a parapalegic. I dont believe at all that they will get the money back in 18 months. There will be one excuse after another why they cannot pay it back. We need an entire office of new people.. get Quinn out of here. Get some honest people that really care about what is going on instead of only caring about how to line thier pockets. These people are idiots in my opinion. God help us all! I am so disgusted!

Glass-Steagall_or_Die wrote on June 26, 2011 at 3:06 pm

20 States Have No Budget, Headed for Possible Shut-down

Emergency consultations are under way in 20 state capitals around the United States, in hopes of coming up with budgets by hook or by crook, by July 1.

www.larouchepac.com/node/18579

Glass-Steagall by this summer or massive social-upheaval will ensue!

Cancel the $17 Trillion in bailouts (MBS', Derivatives, etc.) and re-invest in the population i.e. jobs real jobs program, (agriculture, infrastructure) before this Wall St. puppet Obama destroys the U.S.

Joe American wrote on June 26, 2011 at 8:06 pm

Just one more reason why it's very clear that we live in the armpit of the U.S. I will NEVER donate through my tax form as it's obvious that those who made the decision to divert the donated funds had planned to do it even before the taxes were filed.

I cannot wait to bolt this politically corrupt, morally bankrupt, sad excuse of a state. Those who chose to stay can continue to kiss the feet of Quinn, Madigan and all their crooked cronies.

Techman588 wrote on June 29, 2011 at 4:06 am

What the state is doing is not right, fair, forgivable, proper in any form fashion or for any reason. If anu person or organization did this sort of crap they would be in prison for fraud, theft by conversion, dank fraud, fraud, mail fraud, deceptive practices and probably many others as the charities that are the intended benificiaries of the miss directed or hijacked funds, serve the disabled and senior citizens making the actions even more criminal. I think the voters of this state should demand not ask for the immediate payment of the collected funds due the check off charities with intrest not in a month a week or even a day NOW and I mean "swept" funds (STOLEN IS THE WORD FOLKS!!) there is no acceptable justification for this outrage! The state has nor expectation of right to or any claim to the funds in question, the money was donated to the check off organizations and in no way can be construed as "available" to the state regardless if they passed a measure or voted to do it if they voted to do this then they are all guity of conspiracy to defraud! If the money isnt returned NOW the voters and public of this state should by force if requirerd recall their representatives ,Pat Quinn (I thought he didnt care for Blago, now he's tring to reserve his cell along side old Rod!) There is no way to say it any more clear a Crime is a crime , whats next the state sweeping my bank account cause they need the money?? ITS NOT THEIRS TO "SWEEP" REGARDLESS OF HOW BROKE THE STATE IS!! If I am broke can I justify bank robbery and claim I Swept or barrowed the funds and intend to repay?? DUH!!
If this is how the idiots in spring field think no wonder the state is in budget crisis!! Time to make the state finances more real world spend what they have in the accounts, no "projected budjets" or spend what they think they will have, no spend then collect. make them collect , verify funds are on deposit, spend and then NEVER allow them to barrow between funds or make loans from future years. spend this year what they collected last year.