State of the Agency January 2016
Each year the President starts out the New Year off with a “State of the Union” address to the nation. Likewise, the Governor makes a “State of the State” speech at the end of each January. These speeches take stock of where we are as a nation or state and highlight the important issues that require attention. With this in mind I thought it might be helpful to provide a “State of the Agency” address to chronical where we are as an agency in these unprecedented times.
Today, Human Support Services (HSS) programs operate pretty much as you would hope. We are providing excellent clinical services in our outpatient mental health and substance abuse areas, in our residential programs for adults with disabilities and in our adult day program and workshop. Client satisfaction and outside program audits attest to the quality of these programs. Our support staff are performing at a top level as well. And, the community continues to support our agency as evidenced by our strong record of local giving to HSS from the Mental Health Board, the United Way and charitable giving from local families.
Unfortunately, our financial environment has become toxic. We depend on state government for 70% of our budgeted revenue and the state remains in a prolonged financial crisis. It has now been over 200 days that Illinois has operated without an adopted state budget. The state continues to spend $4.5 billion more than it will take in this year, adding to the state’s backlog of bills which will grow to $9 billion by the end of the fiscal year. Due to various court orders, consent decrees and continuing appropriations the state is able to pay 90% of its bills despite not having an adopted budget. There is no authority, however, to pay the remaining 10% of the bills the state is incurring and so those state creditors suffer as they have not been paid since July 1, 2015.
More specific to HSS, we have been hurt by the loss or reduction of several grants this fiscal year and we are not being paid on several other large grants. The grants that were eliminated or reduced for FY2016 total about $177,178. These cuts alone would have been painful but what has really hurt is that we are not being paid on three grants (mostly mental health residential services) that combined should have brought us $80,000 a month this year. Together, the cuts and the grants we are not being paid exceed $1 million in revenue that we expected to receive.
You might wonder how we have been able to manage with the loss of this money since we have not closed any programs or had to lay off staff. There are two answers to this, the first being that for the bills that the state is authorized to pay, they are doing so quickly and have caught up the 2-3 months they were behind from the last fiscal year while still paying us for July-December bills from this year. This extra cash from the state and also our Mental Health Board funding which was paid in December carried us through the first six months of this year. Now, this extra money has dried up, so to speak, and as of January, 2016 we will begin a long slide where we are taking in about $80,000 per month less than what we need.
The other reason we can continue to have programs and spending at current levels is that we prepared for many years for this day to come by saving cash. At the end of calendar year 2015 we had about 130 days of cash saved up. We will begin to use this banked money each month now until the state settles its budget impasse and pays us the three grants they owe us. Projections show that we can carry on with business as usual through about October and then we will need to reassess our cash position. We will need to come up with a plan to carry on despite cash shortages. Realistically, we cannot make little changes and forever forestall the eventual day of reckoning. $80,000 a month is too much for small cuts to overcome; it is a sum equal to 36% of our staff salaries each month. Plus, many staff are income producers, that is, we get paid for the services they provide. Lay them off and we also lose that income on top of the $80,000 we are being shorted monthly.
So, with all this in mind my strategy going forward is to do three things:
- Bill as much Medicaid as we can for medically necessary services. Medicaid is not capped and these billings are being paid quickly. A good Medicaid billing month can bring us $15,000 more than a poor one. Staff need to set aggressive treatment goals and implement them.
- We do need to hold back on expenses as best we can while still operating programs.
- Ride out the storm, that is, keep our programs going as planned through October. We are aware that there are many, many other human services agencies around the state that have or are near to exhausting their financial resources. Soon they will begin to close major programs and sadly some will close their doors. In fact, the largest human services provider in the state just closed 30 programs and laid-off 750 staff. This amounts to 43% of their employees. We will depend on program closures and lay-offs like these to galvanize the public and our elected officials to break the impasse, settle the budget and pay creditors like HSS their funds.
We cannot say when the impasse will be resolved or guarantee that when it ends we will reach an outcome that is good for HSS and our clients. I know that we are as ready for this as we can be and I still think that we will be able to keep our programs and staff intact but, as I said in the opening to this letter, these are unprecedented times.
What we can do is bill Medicaid, lobby and endure. These are the tasks that we need to pursue without reservation. If you feel strongly about this and want this impasse to end, you should seek out elected officials and share your feelings with them. You can reach of elected state officials as follows:
Mailing Address: Bruce Rauner, Governor
Springfield, IL 62706
Senator: David Luechtefeld email@example.com
Mailing Address: David Luechtefeld, Senator
700 N. Front Street
Okawville, IL 62271
Representative: Jerry Costello II firstname.lastname@example.org
Mailing Address: Jerry Costello II, Representative
124 Locust Street
Red Bud, IL 62278