SPRINGFIELD—Comptroller Susana A. Mendoza announced that Illinois is ending Fiscal Year 2023 today by reaching the following laudable fiscal milestones – some of which Illinois has not seen in decades:
The additional $200 million transferred to the state’s retirement systems reflects a priority of Comptroller Mendoza, Governor Pritzker and the General Assembly to direct additional funds toward state pension liabilities when the state can afford to do so.
This payment follows the $200 million in additional funds transferred earlier in fiscal year 2023 and the $300 million in additional funds transferred at the end of Fiscal Year 2022. In total, the $700 million in additional contributions is estimated to lower the long-term pension liabilities by $2.4 billion.
As of Friday morning, there’s a total General Funds Accounts Payable of only $528 million – and a GRF voucher payment cycle of zero days for the second straight year. This means the IOC is caught up on all bills related to Medicaid, the state’s Group Health Insurance program, elementary and high schools, higher education and other government operations and programs.
Most of the $528 million Accounts Payable are bills still being processed at state agencies which have not yet been sent to the IOC. Illinois is paying bills faster than the private sector.
“All this good fiscal news did not happen by accident. This takes strong strategic planning throughout the year and daily attention to cash management; knowing which bills to pay first to maximize federal matching funds so we can end the fiscal year on such a high note,” Comptroller Mendoza said.
With the GRF payment cycle at zero days, the IOC paid MCATs for elementary and high schools on the very day they were due, at the end of the fourth quarter of the fiscal year. This is in stark contrast to when Comptroller Mendoza took office in December 2016, inheriting a rising GRF payment delay that reached 210 days in 2017 as a result of the 2015-2017 budget impasse, and an MCAT delay of more than six months. Today, elementary and high schools don’t even wait one day.
The $200 million transferred to the Rainy Day Fund caps off an $850 million supplemental appropriation approved by the General Assembly and Governor in January, when revenue estimates came in higher than originally budgeted.
“One of the most important things state leaders did this year was to resist spending this additional revenue on new programs – the better long-term approach is to save and prepare the state for potential downturns in the future,” Comptroller Mendoza said.
The cash balance in the Rainy Day Fund now has reached an all-time high of nearly $2 billion, miles from the $48,000 balance in the fund in August 2018, which was not enough to run state operations for 30 seconds. Comptroller Mendoza notes that today, Illinois will end the fiscal year with the cash balance in the Rainy Day Fund exceeding the total General Funds accounts payable for the first time since Fiscal Year 2008.
Also, in the fiscal year’s fourth quarter, the GRF’s adjusted balance, after accounting for unpaid bills, reentered positive territory for a sustained period for the first time since 2007, a time that was dubious for its distinction of being the beginning of an onslaught of downgrades from credit rating agencies that would not cease until June 2021. The ending balance in the GRF is projected to be over $1 billion, a level the state hasn’t seen since 1999, more than two decades ago.
“After 17 consecutive years of downgrades, Illinois earned eight credit rating upgrades in the past two years, and delivered stability and predictability to state vendors and providers that they hadn’t seen in years,” Comptroller Mendoza said. “This action has been most meaningful to Illinois’ health-care industry partners, educators and small businesses, who bore the brunt of the ongoing pandemic and the effects of the 2015-2017 budget impasse.”
In addition to the positive developments and fiscal milestones not seen since prior to the Great Recession, Comptroller Mendoza believes a highlight of this past fiscal year has been returning $1.8 billion in relief to taxpayers under the Governor’s Illinois Family Relief Plan that aimed to give taxpayers and property owners back their own money during a time of record inflation and rising gas prices.
The Rainy Day Fund would now cover around 10 business days’ worth of state operations during an emergency. That’s a lot better than the under 30 seconds worth of state operations six years ago. But most states have more than 40 business days’ worth of reserves in their Rainy Day funds. This still leaves Illinois among the states with the fewest days it could run on its Rainy Day Fund, according to data released by the PEW Charitable Trusts.
Comptroller Mendoza has proposed legislation, Senate Bill 2443, sponsored by state Sen. Michael Halpin, and House Bill 2515, sponsored by state Rep. Stephanie Kifowit, to lessen this uncertainty by fortifying the state’s Rainy Day Fund and the state’s Pension Stabilization Fund through the implementation of automatic triggers for regular deposits into both funds. Credit rating agencies approve of the extra $700 million applied to pensions, but they warn Illinois needs to pay even more toward its pension funds. S&P Global just issued another report this week with that warning.
“The fact that we’ll have nearly $2 billion dollars saved in our Rainy Day Fund to begin the new fiscal year certainly helps, but Illinois must save more when we experience stronger revenues so we can further strengthen our ability to weather unexpected crises,” Comptroller Mendoza said. “We must heed the advice given by the credit rating agencies that Illinois must still do more to enhance our reserves and continue to pay down our pension obligations.”
