Submitted by Mary Anderson on February 4, 2016 - 11:37

A Tale of Two States: Budget Crises in Pennsylvania and Illinois


What we wish we didn't have in common...

While not-for-profit social service providers in Illinois may feel alone as they suffer because state leaders cannot pass a budget, a similar crisis is happening in Pennsylvania.  At M+S, we have started to follow the crisis in Pennsylvania to determine the similarities and differences in these crises and whether there are some lessons to be learned for providers here in Illinois.  This will be the first of several blog posts on the parallel state budget crisis in Pennsylvania. 

Pennsylvania has a similar political power dynamic to Illinois that is causing the budget impasse – a governor and legislature of different parties – but with a few different twists.  While here in Illinois we have a newly elected Republican Governor at odds with a Democratically-controlled legislature, in Pennsylvania the newly-elected Governor is a Democrat and the legislature is controlled by Republicans.  The rhetoric also appears to be somewhat different.  Here in Illinois we have a Governor who is promoting a “Turnaround Agenda” that proposes eliminating collective bargaining rights for unions, term limits for legislators, and other non-budget related issues in exchange for a budget.  In Pennsylvania, the major issue appears to be whether to increase taxes and reform pensions.  While these are issues in Illinois, as well, in Pennsylvania there is a debate over whether to increase or decrease funding for schools and social services, and discussions about collective bargaining rights and other non-budget issues do not appear to be a part of the debate. 

The overall pain caused by the Pennsylvania budget impasse is more spread out than it is in Illinois.  In Illinois, general state aid school funding was actually appropriated, and Medicaid and other federal pass-throughs are being funded as a result of several federal court consent decrees.  However, in Pennsylvania, no school funding has been appropriated and school districts have borrowed approximately $1 billion to keep their doors open, according the Pennsylvania Auditor General.  The Republican legislature did pass a stop-gap budget at the end of December, but Governor Wolf line-item vetoed the bill so only the first six months of school funding was released.  None of the federal funds that are passed-through Pennsylvania state government are being dispersed, and advocates are contemplating litigation against the state. 

Social service agencies in Pennsylvania are definitely feeling the pain, and agency closures and lay-offs are occurring similar to those we are seeing in Illinois.  The United Way of Pennsylvania surveyed 282 service providers in October of 2015 and found:

  • Over 30% of responding agencies have reduced services and/or turned away clients.
  • Approximately 34% of responding agencies have laid off staff, reduced hours, lost staff benefits, or have staff working without pay. 
  • 73% of agencies are tapping into their cash reserves.
  • 60% are accessing lines of credit.  42% of agencies cannot access lines of credit. 

This fiscal crisis of social service agencies reflects the same crisis we are seeing in Illinois.  The United Way of Illinois found similar outcomes in their survey of 444 service providers in Illinois in January of 2016:

  • 85% of responding agencies cut the number of clients served; 84% have cut programs.
  • 27% of agencies have laid off staff; 5% have had to skip payroll.
  • 49% of agencies have tapped into their cash reserves.
  • 26% are accessing lines of credit. 

We are currently reaching out to providers and advocates in Pennsylvania to find out first-hand the effect of the budget crisis as well as learn about collective advocacy efforts.  Stay tuned . . .