Illinois' Budget Stabilization Fund, more commonly referred to as its Rainy Day Fund, was created by the Illinois General Assembly in 2000 to be the state’s primary reserve account. Its purpose is to keep government operating through times when revenues decline due to unforeseen economic challenges, such as a recession or the recent coronavirus pandemic.
Balance As Of
SEP 22
2023
Cash Balance in Illinois' Budget Stabilization Fund
$1,971,082,005.99
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The interactive bar graph above shows the Rainy Day Fund’s balance at the end of the fiscal year between 2014 and 2023, and the amount of deposits made to the fund in those years. It is important to note, however, that until 2022, most of the dollars transferred to the fund were not new investments into the fund. They were instead dollars owed to the fund as repayments after borrowing from it. During these years, the fund operated more so as another fund to pay for the operations of state government in normal times, not as the emergency fund it was intended to be.
Between 2001, when the fund received its first transfer of funds, and 2021, the fund’s balance barely exceeded $276 million in any year. The fund’s balance plummeted during the worst of Illinois’ fiscal crises, more specifically during the 736-day budget impasse of 2015-2017.
But Illinois is on a new path. The Rainy Day Fund is seeing brighter days and continues to make history under Comptroller Susana A. Mendoza’s administration. After leaving behind budget disasters and political gridlock, and emerging from the global pandemic, the Rainy Day Fund ended fiscal year 2022 with a then-record $752 million cash balance.
The fund continues to set new records every month. Fiscal year 2023 ended on June 30, 2023, with a $1.94 billion balance. As of August 2023, the fund balance sits at $1.95 billion.
Additionally, Comptroller Mendoza is working to codify automatic payments into the fund, as well as the Pension Stabilization Fund, when the state can afford it.
Fiscal Year 2024
When the Rainy Day Fund received its first transfer in January 2001, the funds were authorized by the Illinois General Assembly from the state’s portion of a 1998 lawsuit settlement against tobacco companies.
Since January 2020, when adult-use cannabis became legal in Illinois, the Rainy Day Fund has received a portion of sales of adult-use cannabis.
Beginning July 2023, by order of the General Assembly, an additional $3.75 million is transferred to the fund each month. Beginning in 2024, the fund will receive $45 million in deposits each year for the next 10 years as part of a plan to pay down the state’s unemployment insurance debt incurred during the coronavirus pandemic. The Rainy Day Fund also receives additional transfers when directed by the General Assembly.
Additionally, as required by state law, each month the Rainy Day Fund earns interest income, which is currently more than $6 million per month. Each month that the fund’s balance increases without using it to pay bills, the interest income grows.
End-of-Fiscal Year Cash Balances
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Note: Budget Stabilization (Rainy Day) Fund not part of General Funds until fiscal year 2018.
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Source: The Pew Charitable Trusts, “Fiscal 50: State Trends and Analysis,” March 2023; Days’ worth of General Funds expenditures held in rainy day funds.
Compared to just a few years ago, Illinois’ Rainy Day Fund is in a significantly better position. The fund balance now stands at a record $1.95 billion, when just a few years ago it had only $48,000. However, compared to most other states, Illinois has room to improve.
According to the most recent data from the Pew Charitable Trusts, at only 9.1 days, Illinois ranks 48th out of 50 states in the number of days it could operate state government on just its Rainy Day Fund, while the national median for fiscal year 2023 fund data reported by the states was 44.5 days and the national average was 58.5 days.
The chart above shows where each state ranks and how many days it could run on its respective rainy day fund.
We all know it is a responsible practice to set aside money for emergencies and unplanned expenses, such as home or car repairs, job loss, and medical bills. These sudden, unplanned costs or losses of income can be detrimental to a family budget.
Having a healthy savings account for these unexpected bills can lessen their impact. Similarly, state governments are faced with unexpected dilemmas such as economic downturns, natural disasters, public health threats and other emergencies that can impact a state’s incoming revenues and increase spending demands.
Having an adequate, healthy rainy day fund is not just essential to assist in paying bills during unexpected events, but it can also be used as a tool for the Illinois Office of Comptroller to lessen the effect of cash-flow problems resulting from timing variations between receipt and disbursement of funds in a given fiscal year. This enables the Comptroller to protect the appropriations made by the General Assembly better.
Also, periods of weaker revenues can result in bill-processing delays at the Illinois Office of Comptroller; you can’t pay bills with money you don’t have. These delays not only affect state vendors that depend on predictable state payments, but they can also lead to an increase in the state’s bill backlog that could, in turn, cost taxpayers more in late payment interest penalties. Perhaps most importantly, a healthy rainy day fund could help stave off the temptation to raise taxes or increase state borrowing to make up for a loss of state revenue, especially when an emergency arises.
While Illinois’ Rainy Day Fund now holds a record $1.95 billion, Comptroller Mendoza is pushing for an even stronger fund, one that is equal to 7.5% of the state’s General Funds revenues.
Earlier this year, Comptroller Mendoza shepherded legislation through the House State Government Administration Committee, garnering strong bipartisan support.
Comptroller Mendoza’s legislation would automatically trigger deposits into the Rainy Day Fund when the state’s General Funds accounts payable is estimated to be less than $3 billion and the Governor has estimated growth in general revenues over 4%. If both measures are met, then 0.5% of the state’s General Funds' revenues would be deposited into the Budget Stabilization Fund – commonly called the Rainy Day Fund – and 0.5% would be deposited into the state’s Pension Stabilization Fund.
Comptroller Mendoza believes it’s important for Illinois to continue to shore up emergency reserves to protect taxpayers and the programs and services they rely on, as well as the fiscal integrity of the state, against potential, unforeseen crises.
