The ILLINOIS Report 2012
Foreword
At the University of Illinois, we share the same dream as every citizen across our great state: a future of prosperity and progress, security and success, health and happiness.
For nearly 150 years, the university has partnered with the state to build a better tomorrow for the people of Illinois, through world-class academic and research programs that produce both new generations of leaders and new waves of innovation.
And for nearly half of our storied history, our Institute of Government and Public Affairs (IGPA) has helped lead the way.
IGPA is a jewel of our university and our state, created by the Illinois General Assembly in 1947 as a place where decision-makers can turn for real solutions to the state’s most critical problems. Its offices in our campus cities of Urbana-Champaign, Chicago, and Springfield are home to top public- policy researchers, known nationally for their groundbreaking scholarship in fields ranging from public finance and ethics to health and social policy.
Each year, our IGPA experts take a fresh look at the state’s biggest challenges in The Illinois Report . This sixth edition examines a host of issues that are crucial to our future, including the state’s budget deficit, its changing demographics, and its educational needs.
The report has a singular goal—providing nonpartisan, evidence-based analysis to help guide decision-makers and steer Illinois toward a new era of economic and social growth that will make it a model for the nation.
The University of Illinois deeply values the key role that our academic and research programs play in shaping the state’s future, and the crucial support that we receive from Illinois and its citizens. The Illinois Report 2012 is another example of the value we bring to the state. Michael J. Hogan President University of Illinois
3 Preface
The Illinois Report 2012 looks with a critical eye at some of the most pressing issues facing the state. This report’s primary goal is to provide decision-makers with information they can count on to be grounded in evidence and presented in accordance with the best practices of social science study. The faculty and staff of the University of Illinois who have contributed to this edition of The Illinois Report 2012 are some of the University’s best scholars. They devote their careers to pursuing solutions to the problems that face society.
The University of Illinois is committed to public service and public engage- ment across its three campuses. The rigorous scholarship of the Institute of Government and Public Affairs and the publication of The Illinois Report, now in its sixth year, epitomize this commitment. I look forward to working with our state’s leaders and policymakers as they confront the difficult decisions that await them during the coming year. I also invite your comments or suggestions about how the University of Illinois can be of further assistance to Illinois become an even greater state. Christophe Pierre Vice President for Academic Affairs University of Illinois
4 The ILLINOIS Report 2012
Table of Contents
Foreword ...... 3 Michael J. Hogan Preface ...... 4 Christophe Pierre Introduction ...... 6 Robert F. Rich CHAPTER 1: Lessons Learned from the 2010 Census ...... 8 Matthew Hall CHAPTER 2: Latinos in Illinois:
A Growing Population Amid a Stagnating Economy and Challenged Public Institutions ...... 22 Jorge Chapa CHAPTER 3: The Painfully Slow Recovery Continues ...... 34 J. Fred Giertz CHAPTER 4: Through a Dark Glass:
Illinois’ Budget Picture is Dire and Distorted ...... 41 Richard F. Dye, David F. Merriman, and Nancy Hudspeth CHAPTER 5: Illinois’ Pension Puzzle ...... 57 Darren Lubotsky CHAPTER 6: An Illinois Health Care Report Card ...... 65 Bryan N. Becker CHAPTER 7: The Challenging Road to Coherence in Illinois Education Policy ...... 72 Benjamin M. Superfine, Mark A. Smylie, Marlon I. Cummings, and Steven Tozer CHAPTER 8: Playful Learning in Early Childhood ...... 83 Rachel A. Gordon CHAPTER 9: The American Research University:
A Renewable Resource of Innovation ...... 90 Caralynn V. Nowinski and Lawrence B. Schook 5 Introduction By Robert F. Rich
A return to y almost every measure, Illinois prosperity in remains in a fiscal quagmire. Even the state’s Bthough legislators enacted a large increase economy in personal and corporate income taxes in and in its early 2011, the pile of overdue bills still government amounts to about $4 billion and Illinois has will not come the largest unfunded pension liability of without any state in the nation. The state is sacrifice. borrowing from consumers, pharmacies, For progress dentists, physicians, universities and to occur, schools to whom money is owed. We have context of the current demographic, difficult more obligations than income (a structural economic, and political trends. In the deficit), a long-standing problem that choices and following pages, researchers from the continues to haunt us and make it very decisions Institute of Government and Public Affairs difficult to be optimistic about the future. and others from the University of Illinois must be explore some of the factors that have made. It took years for Illinois to reach these depths contributed to our state's current condition. of fiscal gloom. It will take years for Illinois While the economic and fiscal difficulties to emerge and gain economic stability. have become the state’s focus in recent However, as IGPA researchers Richard Dye, years, we also cannot overlook changes in David Merriman and the makeup of Illinois’ population that will Nancy Hudspeth show affect nearly every aspect of life in the state. in the following pages, We also must not lose sight of the critical there is reason to believe need to maintain a high-quality health care that good fiscal health system in the face of growing numbers of can return. uninsured and demands on Medicaid. Our state’s schools must continue to prosper, for There can be little doubt it is through a vibrant education system that for Illinois to that coming generations will be able to face recover fiscally, it must future challenges. recover economically. Innovation, education We are consistently reminded of the and training of a attributes that make Illinois a great state: superior workforce, and great wealth in terms of per-capita income, policies that enable our a robust transportation network, depend- state's businesses, able energy resources and hardworking, industries and corpora – resilient people. These assets remain despite tions to grow should the economic doldrums of the recent past. Robert F. Rich, always be our goal. Illinois must remain Director, This means that Illinois continues to have competitive and attractive. This is absolute- Institute of great capacity and potential for prosperity. ly key if we are to attract and retain business- Government and Public Affairs es, and if we hope to create new jobs. A return to prosperity in the state’s economy and in its government will not The Illinois Report 2012 examines the most come without sacrifice. For progress to 6 important issues facing this state in the occur, difficult choices and decisions must y o C c M y e s l e K
With each Highlights from The Illinois Report 2012 include: difficult choice, • Analysis of data from the 2010 Census to those with a determine how population change is stake in that affecting the state. We also provide a particular focus on changing demographics among issue—no the Latino population in Illinois; matter what it • The aforementioned projections from our is—will rise to Fiscal Futures Project find that, under support or certain conditions, fiscal stability could oppose. Those be made. Our problems cannot be return to Illinois by 2019; who make the • A snapshot of the quality of health care addressed if we try to explain them away decision must as “it’s simply a revenue problem” or “it’s across the state; • An examination of the interconnections be willing to simply a spending problem.” Instead, we assume the risk will need strategies that will combine cuts of education policy in Illinois and how a associated with with generating revenue and possibly lack of coherence might affect outcomes some borrowing. With each difficult in the classroom; a tough choice. choice, those with a stake in that particular • Exploration of a concept known as issue—no matter what it is—will rise to Playful Learning, which provides an support or oppose. Those who make the interesting contrast to the “Three-R’s” in decision must be willing to assume the risk preschool that can make education in associated with a tough choice. They must later years more rewarding; be willing to fashion compromise that • A look at the importance of research mediates the consequences as much as universities to the economic fabric of the possible while still fulfilling the need that state. Universities produce innovation, made the choice necessary. Ideas in good which leads to economic development, currency need to be more important than which, in turn, leads to new investment, simple ideology. jobs, and prosperity.
In early October 2011, IGPA convened its The Institute of Government and Public second State Summit. This meeting in Affairs provides this information in a Chicago brought together the forces of nonpartisan way, comparing and contrast- business, labor, government and education ing policies and practices in Illinois with to focus on the funding crisis in the state’s those of our peer states, and proposing public-employee pension systems. policy options where evidence suggests Through hours of discussion and ideas worthy of consideration. IGPA is sometimes heated debate, it became very proud to be part of a set of challenging clear that each of these groups is dedicated deliberations and discussions in this state. to finding a solution to this problem. The As always, our faculty researchers and staff summit proved that there are areas where stand ready to respond quickly to assist the reasonable people can agree and places policy discussion in the year ahead. where political divide can be bridged. I am proud of what we accomplished and am convinced that such gatherings are beneficial to the state. 7 The Ilinois Report 2012 CHAPTER 1
8 The Illinois Report 2012 Lessons Learned from Census 2010 By Matthew Hall
As mandated by Article 1 of the U.S. Constitution, Congress is required to au - Matthew Hall, thorize and fund a complete count of the Assistant American population every 10 years. The Professor of form of the decennial census has changed Sociology, IGPA over time, from a simple enumeration of the
population to a snapshot of its social, eco - the region—including Michigan which 1 Including recent nomic, and demographic profile. Last sum - actually declined by 0.6 percent—it meant vital statistics and st mer, the Census Bureau released complete that Illinois ranked 41 among the 50 states data from the American data on its latest headcount that was con - in terms of population growth during the Community Survey ducted in April of 2010. 2000s and was even slower than demogra - and the Current phers had predicted. Population Survey. This chapter uses 2010 census data and 1 other recent sources to draw seven policy All population growth and change is gener - lessons about critical demographic patterns ated by two demographic processes: natural and trends that have direct relevance to increase and net migration. Both are simple: state and municipal governance, revenue natural increase is the number of births streams, and program service deliverability. minus the number of deaths occurring dur - Illinois is changing and with change comes ing some period, while net migration is the new opportunities and challenges. During number of people moving into an area (in- these tough economic times, it is crucial that migrants) minus the number of people policy decisions recognize Illinois’ demo - moving out (out-migrants). Each of these is graphic reality. contributing to Illinois’ stagnant growth. Lesson 1: Stagnant Population Growth
Illinois’ population has grown in every Figure 1 decade since statehood was granted in Illinois population, 1910 to 2010 1818 (Figure 1). The current population of
s 14
12.8 million makes Illinois the fifth largest n o i l
l 12 state, behind California (37.2 million), i M
Texas (25.1 million), New York (19.4 mil - n 10 i n
lion) and Florida (18.8 million), and the o
i 8 t a largest state in the Midwest. More than l u 6 p
one out of every 25 Americans calls Illinois o P 4 s home. While the state’s historical standing i o
n 4 i l
as a major population hub clearly remains, l I the ability to maintain this ranking in the 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 9 8 7 6 5 4 3 2 1 0 9 8 7 6 5 4 3 2 1 9 0 0 9 9 9 9 9 9 9 9 9 9 8 8 8 8 8 8 8 8 8 5 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 years ahead is less clear. While the U.S. 1 Y N D
/ population increased by 9.7 percent be - m Source: 1810-2010 decennial censuses o c . tween 2000 and 2010, Illinois increased by o t o h
p merely 3.3 percent. While this slow growth k c o t
s was not uncharacteristic of other states in I 9 The Illinois Report 2012
2 The crude birth rate (“natality”) is the number of births occurring per 1,000 residents. In 1980, Illinois natality was Between 2000 and 2009, 1.7 million babies 16.7; in 2009 it was were born in Illinois and 960,000 deaths oc - 13.7. curred, representing a net gain of 740,000 Table 1 Illinois Population, 2000 to 2030 3 See Kenneth D. and an average annual rate of natural in - Kochanek, Jiaquan crease of 6.2 per 1,000 residents. This rate of Year Population Population Percent Xu, Sherry L. Change Change Murphy, and Arialdi natural increase is actually slightly higher 2000 12,419,293 988,691 8.65 M. Miniño, and than the national average (5.8), but that styl - 2010* 12,916,894 497,601 4.01 Hsiang-Ching Kung. ized point overlooks the fact that rates of 2010 12,830,632 411,339 3.31 2011.“Deaths: 2020* 13,326,720 406,088 3.16 Preliminary Data for fertility and mortality have changed consid - 2030* 13,432,892 196,172 1.48 2 2009.” National Vital erably over time. Illinois’ crude birth rate Statistics Report , * Projected population 59(4). has decreased by 18 percent since 1980 and, Source: Census Bureau Population Projections (2005) and the more concretely, the number of births in 2000 and 2010 Census 4 Because of the way net migration is 2009 is the fewest recorded since the 1970s. calculated (as a Conversely, while deaths in the state have residual estimate increased over time, the age-adjusted death from population change due to rate has fallen to a level below the national into the state than leaving it. From 2000- natural increase), it average, meaning that Illinoisans are living 2009, Illinois’ migration deficit was -228,888, 3 is difficult to com - longer. meaning that the number of out-migrants pare the number of 4 in- vs. out-migrants. far exceeded the number of in-migrants. Arguably more important to Illinois’ slug - Negative net migration has been a defining gish growth is that fewer people are moving characteristic of the state for decades, but the continuation of these lopsided flows in the context of declining fertility raises con - cerns about the prospects of future popula - Figure 2 tion change. Indeed, as shown in Table 1, Percent Change in Illinois Population During 2000s, by the pace of growth in the state is projected 5-Year Age Cohorts to slow considerably over the next 20 years, and given that the Census Bureau overesti - 85 & over mated the 2010 state population in its ear - 80 to 84 lier projection by 86,262, there is reason to 75 to 79 70 to 74 suspect that future growth will be even 65 to 69 lower than expected. 60 to 64 Lesson 2: Unbalanced Age Cohort Change 55 to 59
s 50 to 54 p u
o 45 to 49 Overall population change masks consider - r G
e 40 to 44 able variation in the age groups that com - g
A 35 to 39 pose the state’s population. As shown in 30 to 34 Figure 2, relative change in Illinois’ five-year 25 to 29 age cohorts between 2000 and 2010 varies 20 to 24 dramatically. The upper horizontal bar indi - 15 to 19 cates that there was a 22 percent increase in 10 to 14 the very-elderly population during the 5 to 9 2000s. In 2010, more than a quarter million Under 5 residents of the state were 85 or older. -10% 0% 10% 20% 30% 40% Growth in this population reflects a continu - Percent Change ation of increases in old-age life expectancy. Source: 2000 and 2010 Census Since 1980, life expectancy for 65-year-old Illinoisans has increased by about one 10 month every year and currently stands at Institute of Government & Public Affairs
82.8 (i.e., a 65-year-old is expected to live for budgets, the state’s fiscal situation will 5 another 17.8 years). The increase in this frail likely be even worse than it is now. population adds a considerable cost to state programs that support the elderly; i.e., in - The need to deal with the state’s bulging creasing the number of eligible recipients for elderly population is confounded by a old-age health, disability, and elderly serv - shrinking middle-career population. The ices. The costs of these programs will natu - decline in the age groups immediately fol - rally increase unless the price/quality of the lowing the baby-boom cohorts is a histori - care is reduced or eligibility rules are stricter. cal inevitability (as demographic “booms” are always followed by demographic While the relative size of the 85-and-older “busts”), but the consequences are no less population increased substantially, the ab - important. The reduction in the middle-ca - solute size of the overall elderly (70 and reer population potentially will result in older) population increased only modestly, labor shortages, even during recessionary from 1.1 million in 2000 to 1.12 million in times, if younger workers do not substitute 2010. However, as can be seen in Figure 2, (or they cannot numerically replace) the this will quickly change as the baby-boom work of retirees. The lesson then is to fix cohorts move into retirement. Collectively, senior/elder care programs and tackle fiscal 5 Table 34 in Illinois Department of the four age groups (45-49, 50-54, 55-59, 60- capacity now. Public Health. 2005. 64) that define the baby-boom generation Vital Statistics increased a whopping 25 percent, or more The slightly increasing high-school, college, Illinois 2001. Illinois Center for Health than three-quarters of a million, from those and young-worker population (aged 15- Statistics, same age groups a decade ago. This move - 29)—the “boomlet” that occurred when Springfield, IL. ment up the population pyramid—some - boomers began to have children—presents 6 Based on analysis of thing demographers colloquially refer to the state with a unique opportunity to in - 2009 ACS public- as a pig moving through a python—has vest in the future. Illinois has a long history use microdata sample for Illinois potentially profound effects for policymak - of training an educated workforce and, workers between ing. On the one hand, these individuals are while there are some signs of cracks in the ages 45 and 64. often at the peak of their earnings careers: foundation (see Lesson 6), the state’s many 7 U.S. Census Bureau. personal income for Illinois workers is high-quality colleges, universities, and 2005. Population higher during the 50s than any other age training centers can keep this tradition alive Projections, Table 3. period. Thus, growth in this population if supported adequately. represents a demographic bonus for tax re - ceipts over the next decade or two. On the Despite the growth in the young-adult pop - other hand, as this population transitions ulation, the child and adolescent population from employment into retirement, the is declining. Collectively, the under-15 age costs of state-funded senior-care programs cohorts declined by 137,074 between 2000 (e.g., Circuit Breaker, Community Care and 2010 with the under-5 population Program, Illinois Cares Rx) will soar. To recording its lowest total since the 1940s make matters worse, about 13 percent and, as noted earlier, fewer babies were born (roughly 307,000) of working baby in 2009 than at any point since 1976. The boomers are state or local government em - contracting child population has the fiscal ployees and will be potentially eligible for bonus of relieving pressure on child welfare, pension benefits that will put even greater family assistance, and educational programs. 6 pressure on state and community funds. But it has the detriment of potentially reduc - In 20 years, the elderly (65+) share of the ing school-aged populations below the criti - state’s population is expected to increase cal mass necessary to sustain classrooms by 50 percent, from 12 percent to 18 per - and local schools, and could eventually lead 7 cent and unless adjustments are made to to gaps in employment if labor pools are not either revenue streams or program large enough to meet demand. 11 The Illinois Report 2012
Lesson 3: Changing Household and Family Structure middle-career adults. More than one-third of them are 65 or older, and among these elderly singles, nearly three-quarters are The quintessential American family— women. Another large non-traditional married mom and dad living with their household group is married couples with - children in a single-family home—is a poor out children—which constitute more than 1 description of the state’s varied household in 4 Illinois households. This group consists structures in 2010. As shown in the pie chart of couples who never had children and 8 Illinois’ marriage rate in 2009 (5.9) is in Figure 3, while “married with children” empty nesters whose children no longer lower than at any homes make up a sizeable share of Illinois’ live with them. Filling in the rest of the pie point in the state’s households, they are far from the majority recorded history are unmarried parent families (e.g., single and the percentage and not even the largest household type. parents and cohabiters with children), non- of children born to That honor goes to single-person house - traditional unions without children (e.g., unmarried (vs. mar - holds, which consist mostly of early- and ried) women (40.8 gay and straight childless couples), and percent) is higher in those in group quarters (e.g., nursing 2009 than at any homes, college dorms). other time. (Sources: http:// Figure 3 www.idph.state.il. Considering the profound consequences of us/health/bdmd/ Household Types in Illinois, 2010 marr_div_annul. household structure for child well-being, it htm and http:// Married Couples is pertinent to explore the distribution of www.idph.state.il. With Children Married Couples children across family types. In 2010, nearly us/health/bdmd/ 22.30% Without two-thirds of Illinois children (64.4 percent) unmarried.htm) 27.22% Group Children lived in homes with two married parents, 9 For a review of this Quarters 6.24% about 1 in 4 children lived in unmarried par - research, see Jane 6.360% Waldfogel, Terry- Non- ent homes, and about 1 in 10 in homes with 10.80% Ann Craigie, and traditional other relatives, including grandparents. Jeanne Brooks- Unions 27.83% Unmarried Perhaps more important than the simple Gunn. 2010.“Fragile Without Parent Families and Child Children Families distribution of children’s family structures Living Alone Wellbeing.” Future of are the recent changes in family types. Children 20(2): 87- 112. Source: 2010 Census Figure 4 demonstrates that while children in married-parent homes are the largest family type, their group size is shrinking (declining from 2.17 to 1.98 million during the 2000s). This is due to two major trends: fewer peo - Figure 4 ple are entering marriage (or doing so after Family Types for Illinois’ Children, having children) and married couples are 2000 and 2000-2010 Percent Change having fewer children than they had in the 8 past. In contrast, there has been substantial e
g 15
n growth in the unmarried-parent and other- a
h 10 C relative family types: which both grew by t n
e 5 about 10 percent during the 2000s. The for - c r e
P 0 mer family type includes both single parents 0
1 and cohabiting (gay and straight) couples 0 -5 2
– with children. The point here is that while a 0
0 -10 0 substantial majority of Illinois’ children live 2 Married Unmarried Other parents parents relative in married, two-parent families—a family Family types arrangement that carries academic, behav - ioral, and emotional benefits for children Source: 2000 and 2010 Census 9 over the course of their lives —non-tradi - 12 tional family types are on the rise. Institute of Government & Public Affairs
The increasing diversity of Illinois house - for just about three-fourths of all population holds means that there is increasing diver - growth in the state, and without it the sity in their needs. Any policy that targets state’s population would have declined by children and their families must recognize 85,977 people. Not only has Latino popula - these changing contexts. The rise in the tion growth been demographically substan - child population living in unmarried parent tial, but it was also large enough to surpass homes is especially concerning: the state’s the size of the black population, making poverty rate among these families (34.2 per - Latinos the state’s largest minority group. During the cent) is nearly five times higher than it is for In 2010, nearly 1 in 6 Illinoisans and more married-with-children families (7.1 per - than 40 percent of minorities were Latino. 2000s, Illinois 10 cent). Thus, growth in this population will added just over likely put pressure on child and family as - The Latino population is covered in greater 400,000 people sistance programs and could potentially im - detail in the next chapter of this report, but a to its pede achieving goals to improve academic few points are worth noting. First, fueling population. outcomes if schools cannot overcome fam - Latino growth is high fertility, not immigra - ily disadvantage. State policymakers also tion. Between 2000 and 2010, the Latino pop - need to recognize that part of this popula - ulation grew by about a half million. Only 22 tion includes couples in stable cohabiting percent of this growth was due to an in - unions, who may share more in common crease in the number of foreign-born Latinos, with married couples than with single par - while 78 percent resulted from growth in ents, but for whom eligibility rules often the number of Latinos born in the United 11 limit their access to assistance programs. States. The increase in the school-age Latino Lesson 4: Racial/Ethnic Diversity Grows
During the 2000s, Illinois added just over Figure 5 400,000 people to its population. This de - Racial Composition of Illinois, 2000 and 2010 mographic change, however, conceals sub - stantial differences in population shifts 2010 16 64 14 51 among the state’s racial and ethnic groups (Figure 5). Of the major racial/ethnic 2000 12 68 15 31 groups (Latinos and non-Latino whites, 0% 20% 40% 60% 80% 100% blacks, Asians, and multiracials), three ex - perienced population growth between 2000 Latino White Black Asian Multiracial and 2010 and two declined. The largest of these—non-Latino whites—is one of the lat - ter: its 2010 population was the largest in Source: 2000 and 2010 Census the state at 8.2 million, but declined from 2000 by nearly a quarter million. The non- Latino black population shrunk during this 10 2010 American Community Survey (Table B17010) same period, but more modestly so, by 11 23,228. By contrast, the multiracial, Asian, The 2010 American Community Survey (ACS) indicated that the Latino population grew by 508,710 between 2000 and 2010, which differs slightly from the census and Latino populations grew considerably 2010 estimate which enumerated Latino growth at 497,316. Since nativity was not during the 2000s: the multiracial population asked on Census 2010, growth according to nativity is calculated based on differ - ences between census 2000 and the 2010 ACS, which finds that the U.S-born by 29,961, the Asian population by 160,531, Latino population increased from 823,531 to 1,219,884 and the foreign-born Latino and the Latino population by nearly a half population from 705,610 to 817,967. It is likely true that Latino immigrants—partic - million. The growth in the Asian and Latino ularly undocumented ones—are undercounted by the Census. However, even if we assume that 20 percent of Latino immigrants were missed by the census, U.S.-born populations was especially explosive, grow - Latinos still accounted for more than three-fourths of Latino population growth ing by 33 percent and 38 percent, respec - over the period. tively. Latino population growth accounted 13 The Illinois Report 2012
population has been so profound that more salient in the years ahead as diversification than 1 in 5 children under the age of 18 and 1 gains momentum through the aging of the in 4 of those under five is Latino. The lesson diverse child population; yet schools are is that while immigration-issues—e.g., legal grappling with issues of diversity now. status, language barriers, and cultural orien - Diverse institutional settings present real tations—have particular salience to Latinos opportunities for people from assorted and their families, policymakers must recog - backgrounds to become better acquainted nize that a bulk of the state’s Latinos are with one another, to learn about cultural 12 Kenneth M. Johnson and Daniel American-born, are committed to a perma - distinctions and to understand shared prob - T. Lichter. 2010. nent life in the state, and face challenges sim - lems and commonalities, and to develop “Growing Diversity among America’s ilar to other racial/ethnic groups in finding friendships and relationships that are inte - Children and Youth: work, completing school, obtaining health gral to eradicating prejudices and biases. Spatial and insurance, and improving their communi - But institutional diversity, especially in its Temporal Dimensions.” ties. Thus, while the face of the Latino popu - nascent state, can be costly. Diversifying Population and lation is often that of an unauthorized schools often requires diverse curriculum Development migrant, Illinois’ Latino boom is not a demo - and services—whether multilingual educa - Review 36: 151-76. graphic blip or temporary phenomenon. To tion or an increased need for before-school paraphrase demographers Kenneth Johnson and after-school programs; goals that can be and Daniel Lichter, the seeds of diversity challenging to meet. Community leaders have already been sown and regardless of and policymakers must also be prepared to whether new immigrants are prevented prevent and combat racial segregation in from coming into the country or embraced neighborhoods, jobs, and schools. Racial with open arms, the future of the state and segregation has a tendency to increase dur - 12 the nation is racially diverse. ing times of rapid racial/ethnic change, and if group contact and interaction are not just Policymakers need to be mindful of contin - seen as byproducts of diversity but as a ued racial and ethnic change: a generation means to accelerate that process, then con - ago the state was overwhelmingly white; fronting segregation should be among our but now 1 in 3 Illinoisans is a member of a top priorities. minority group. If current trends con - Lesson 5: Uneven Growth and the Emerging tinue—and there is no reason to believe Chicago Donut they will not—the state will be a majority- minority state within 50 years. A changing racial composition affects governmental Population growth during the 2000s was functioning at all levels, from the deliver - not distributed equally across the state. ability of public services to employment di - While the state grew by 411,339 people be - versity in state agencies. tween 2000 and 2010, local growth varied enormously. Reflecting the state’s overall The diversification of the state is not only sluggish growth, 61 of Illinois’ 102 counties increasing but morphing. For the first time lost population during the 2000s. As shown in the nation’s history, Latinos, not blacks, in Figure 6, many of the state’s rural and are the largest minority group. The decline downstate counties lost population over the in the black population and increase in the last decade. The five counties with the “newer” Latino and Asian populations raise largest relative losses were Pulaski, important questions about political repre - Alexander, Gallatin, Henderson, and sentation and civic engagement. The forma - Hardin, which each saw a reduction in their tion of political alliances or the breeding of population of between 10 percent and 16 conflicts are alternative outcomes as groups percent. All except Henderson County are jockey for political, social, and economic located in the southern tip of the state (col - 14 position. These issues will be especially loquially referred to as “Little Egypt”) Institute of Government & Public Affairs
Figure 6 County Population Percent Change Between 2000 and 2010 migration data is very limited, negative net migration—more people moving out of than into an area—makes up the remainder of the population loss. Especially in difficult economic times, the availability of jobs is the primary reason for why people move. Given that some of the highest unemploy -
ment rates and lowest income levels are 13 County unemploy - found in southern Illinois, it is not surpris - ment rates in 2008: ing that workers and families are searching http://www.bls.gov 13 /lau/laucntycur14. for greener pastures elsewhere. txt; income data comes from 2005- Population losses of this magnitude can 2009 American Community Survey. have profound effects on community func - tioning and municipal governance. Areas 14 Pulaski, Alexander, and Hardin coun - that are losing 10 percent of their popula - ties have, for exam - tion are seeing similar (if not bigger) reduc - ple, the three tions in their tax base, workforce and school highest SNAP rates in the state (be - classrooms. And, because migration is a se - tween 17.8 percent Losing lective behavior—people who move are dif - and 23.2 percent) (Negative ferent than people who stay—the and are among the % change) bottom five with composition of a community is also likely respect to college Steady to change. Communities experiencing se - education (with be - (0–4.9% change) tween 9.7 percent vere population loss are faced with at least and 10 percent of Growing two demographic challenges: because fertil - their populations (5 or more % change) ity is low and young families are not mov - 25+ having a col - lege degree). See ing into these areas, population loss tends Tables C17002 Source: 2000 and 2010 Census to correlate with aging. The five counties (Poverty), B22001 with the largest relative population losses (SNAP), and B15002 (Education) of the during the 2000s all have median ages well 2005-2009 above the state average of 36. The policy American Com- implication is that population loss will put munity Survey. between the Mississippi and Ohio Rivers. pressure on senior care services and will This region has long suffered from declin - narrow the tax base if older adults are no ing river trade and coal mining, as well as longer in the labor force. The second chal - from flooding and other natural disasters. lenge is that job-based migration tends to be Pulaski County, for example, lost 1,187 peo - “positively selective;” that is migrants pos - ple during the 2000s, which continued a sess characteristics that make them more trend. Since the end of World War II, the ready to work. The upshot is that during county’s population has declined by more times of high negative net migration and than half—from a high of 15,875 in 1940 to a particularly in smaller communities with low of 6,161 in 2010. Mounds, the largest specific industrial functions, non-migrants town, lost more than one-fourth of its popu - tend to be split between those who have lation over the last decade (from 1,117 to stable work and those with characteristics 810). As noted in Lesson 1, there are two de - that make them less able to work. mographic forces that contribute to these Unsurprisingly then, those five counties population losses. The first is that deaths have among the highest levels of poverty, outnumber births in each of these areas. In receipt of SNAP (Food Stamps), and lowest 14 Pulaski County, 74 babies were born but 83 levels of education in the state. deaths were recorded in 2008. While local 15 The Illinois Report 2012
Table 2 Population Change in Metro Chicago Between 2000 and 2010
Place 2000 2010 Change driven largely by the quality of local 18 City of Chicago 2,896,016 2,695,598 -200,418 schools and safety of the neighborhoods , Inner Suburbs 1,045,514 1,035,989 -9,525 continued concerns about crime and educa - Middle Suburbs 776,295 775,370 -925 Outer Suburbs 1,790,820 1,852,729 61,909 tion have likely accelerated the thinning out Far Exurbs 1,603,480 1,977,228 373,748 of Chicago. Regardless of the underlying process, the reality is that demographic Note: Metro Chicago defined as six-county (Cook, DuPage, Kane, Lake, McHenry, and Will) region; Inner Suburbs are areas within 2 miles of Chicago, chasms are occurring across the state, with Middle Suburbs are those between 2 and 5 miles, Outer Suburbs are those downstate and rural counties growing between 5 and 15 miles, and Far Exurbs are areas beyond 15 miles from Chicago. slowly or not at all and a population donut Source: 2000 and 2010 Census forming around the northeastern part of the state as Chicago’s population declines and the outer suburban ring grows.
While southern and rural counties in This demographic ebb and flow highlights Illinois were experiencing population loss, the distinctiveness of the state as a patch - the main source of population decline came work of communities, each with different from the largest county. Between 2000 and qualities that attract, retain, or repel indi - The 2010, Cook County lost 182,066 people, but viduals and their families. The uniqueness nearly all of this was due to a loss of 200,418 uniqueness of of the individual places that compose in Chicago. As shown in Table 2, population Illinois underscores that the composition of the individual loss lessens and growth increases as one places that their populations varies dramatically, and a goes farther from the city. In Metro one-size-fits-all approach to public policy is compose Chicago’s inner suburbs, places like Des unlikely to succeed. How the state can man - Illinois Plaines, Maywood and Oak Lawn, the pop - age public programs with such diverse local underscores ulation declined slightly. This likely reflects populations is an important policy question that the an aging of the housing stock in these areas that warrants discussion. Moreover, how in - composition of and racial succession, with minority groups dividual communities themselves deal with their moving into these communities and whites population aging, racial diversification, or populations moving farther out. In the middle suburbs (e.g., Lansing, Orland Park, and Wilmette), varies 15 population change stalled, increasing very Between 2006 and 2008, job growth in Cook dramatically, County increased by 0.5 percent, while in sur - slightly. By contrast, substantial population rounding counties it grew by between 0.7 per - and a one-size- growth occurred in Chicago’s outer suburbs cent (Du Page) and 8.9 percent (Will). fits-all (e.g., Bolingbrook, Elgin, and Palatine) and 16 From 2006 to 2008, 57,860 jobs were added in approach to far exurbs (e.g., Crystal Lake, Monee, and the six-county region; only 14,967 of these were public policy is Plainfield). Growth in the reaches of in Cook County. Data from the Bureau of Economic Analysis’ Regional Economic Accounts unlikely to Chicagoland is driven at least partially by (http://www.bea.gov/regional/). succeed. job availability. Job growth in the five coun - 17 ties surrounding the city has outpaced The median year housing units in Chicago were 15 built is 1945, ranking 12th lowest about the 108 Cook County for several years. In fact, just cities with populations above 200,000 (see Table 1 in 4 jobs created in the six-county Chicago B25035 in 2010 American Community Survey). Chicago’s population density in 2010 was 11,864 metropolitan area immediately before the people/sq. mile, ranking seventh highest among Great Recession (between 2006 and 2008) cities with populations above 200,000 (see cen - 16 occurred in Cook County. Suburban and sus 2010). exurban growth also reflects continued resi - 18 See John Hipp. 2009.“Specifying the dential preferences for low-density single- Determinants of Neighborhood Satisfaction: A family homes with high-quality public Robust Assessment in 24 Metropolitan Areas.” Social Forces 88: 395-454; and Sapna Swaroop services. The housing stock of the city is one and Maria Krysan. 2011.“The Determinants of 17 of the densest and oldest in the nation. Neighborhood Satisfaction: Racial Proxy Revisited.” Demography 48: 1203-229. 16 And, because residential satisfaction is Figure 7 Educational Attainment of Workforce in 2010, by Midwestern State
100 90 80 70 60 50 40 30 20 10 19 Census of 0 Governments i s s a a a a a a o n n r i i i t t t a
k (http://www. a n u o s w s h o o o s a g o n n i o s n i k k a i I O s r
l census.gov/govs/ e o a a a d h l s I i c b n c K n D D i I s e i n cog/). The number M i h h M N t t W M r of school districts in u o o N S 2007 (912) has since been reduced to 870 (see Illinois Less than high school High school diploma Some college State Board of College degree Professional degree Education for counts of educa - tional entities by Source: 2010 American Community Survey academic year, http://www.isbe. net/research/htmls/ directories.htm).
20 Diane Rado, Duaa industrial decline is uncertain. Many public Illinois has more local governments (6,994) Eldeib, and Todd policy debates that have historically been than any other state. This number includes Wilson. 2011. about big-city problems—poverty, failing 102 counties, 1,299 municipal governments, “School-merger plan faces big hur - schools, housing abandonment, and home - 1,432 townships, and 870 school districts dles,” Chicago lessness—are now occurring in former sub - (more than all states except California and Tribune . March 5. 19 urban bedroom communities and rural Texas). When Governor Pat Quinn pro - 21 Fran Spielman. towns. posed to reduce the number of school dis - 2011.“Suburbs owe tricts to around 300, the reaction was largely city $15 million in 20 unpaid water bills, The inequalities in population growth negative. Yet, the formation of jurisdic - Emanuel says,” across the state also lead to diseconomies of tional and/or regional alliances can poten - Chicago Sun Times . scale and unequal quality of government tially improve both the cost efficiency and Sept. 22. services and functions. As populations fall, quality of governmental functions. Several communities’ ability to negotiate for lower towns that straddle the border of Chicago, rates for public utilities, labor contracts, and for example, have long-standing agree - the like similarly declines. These disecono- ments with the city to supply water and mies of scale could then lead to higher pro - manage sewage. While these partnerships gram costs even while service populations have not necessarily been universal suc - 21 fall. The upshot is that inequalities emerge cesses, these types of arrangements have in the quality of public goods and services. been economical for many declining inner- Growing municipalities are better equipped ring suburbs as well as for the city. to bargain for lower costs and/or higher Lesson 6: Educational Gaps quality services while waning communities suffer the dual disadvantage of population loss and higher per capita costs and/or re - The state has a long history of serving as an duced quality. To address these inequities, it educational engine for the Midwest, and may be sensible for political leaders in af - the most recent data do not suggest that this fected communities and those surrounding tradition has faded. As shown in Figure 7, them to consider the consolidation of gov - one-third (33.2 percent) of Illinois’ workers ernmental responsibilities. Currently, (those between the ages of 25 and 64 who 17 The Illinois Report 2012
are in the labor force) were college edu - workers, such as Indiana (-17.2 percent), cated, more than any other state in the Michigan (-21.4 percent), Missouri (-17.2 Midwest except Minnesota. Similarly, percent), and Ohio (-21.2), experienced con - Illinois ranks first among Midwest states in siderably larger declines. total college enrollment and in labor force share of workers with an advanced degree Perhaps most concerning is that Illinois has 22 (e.g., MA, JD, PhD). During the 2000s, the the highest high school dropout rate in the number of college-educated workers in - nation. Recent data from the National While Illinois is creased in all Midwest states by an average Center on Educational Statistics indicates arguably the of 21 percent, and Illinois’ college graduates that among those who were ninth graders best in the fell in the middle of this group, increasing in 2004-2005, 11.5 percent never finished 25 Midwest at by 21.6 percent. The good news then is that high school. There is considerable racial/ training and Illinois remains an educational powerhouse ethnic variation in these rates with about 2 retaining in the region. Given this tradition and the percent of white and Asian students drop - educated substantial fiscal benefits to having an edu - ping out, but 13.4 percent of Latino students cated workforce, state policy leaders would and 20 percent of black students failing to workers, it is 26 the worst at be wise to seize the opportunity to educate finish high school. There are also substan - getting its expanding teenage and young-adult co - tial geographical differences in these rates children horts. To do so, the state needs to renew its across the state. At 30 percent, the East St. commitment to both affordable and high- Louis and Decatur school districts have the through high quality universities. Most major public uni - highest dropout rates in the state. Chicago school. versities in the state face considerable Public Schools fare better but still have an budget shortfalls, largely due to unpaid ap - alarmingly high rate of 15 percent. Among 23 propriations from the state. Accordingly, the lowest dropout rates are schools in af - in-state tuition rates have increased sub - fluent Chicago suburbs, such as Northfield stantially—the cost of tuition at the University of Illinois has increased by 72 percent since 2004—and faculty salaries 22 See Table 280 in 2012 Statistical Abstract of the United States for total college enrollment by have lagged below inflation. Moreover, as state. state universities increase tuition and rely 23 more heavily on out-of-state students, At the time of writing this report (October 2011), the state owed the University of Illinois about Illinois’ high school graduates have fewer $500 million and Southern Illinois University an - 24 opportunities to further their education. other $145 million.
24 In 2000, 90.2 percent of the students at the While Illinois is arguably the best in the University of Illinois at Urbana-Champaign were Midwest at training and retaining educated Illinois residents; by 2011, this number had dropped to 78.9 percent. Source: University of workers, it is the worst at getting its chil - Illinois Final Statistical Abstract dren through high school. The percentage (http://www.dmi.illinois.edu/stuenr/). of Illinois’ workforce with less than a high 25 Illinois’ dropout rate for this period was higher school diploma is substantially higher than than any other state by a considerable amount any other state in the Midwest: nearly 1 in (Alaska and the District of Columbia have the next highest rates at 7 percent). There is some 10 workers (9.1 percent) in the state lack a concern that the most recent estimate is a statis - high school education and there are more tical anomaly, as previous estimates have consid - than a half million high school dropouts in erably lower. See Chris Chapman, Jennifer Lair, Nicole Ifill, and Angelina KewalRamani. 2011. Illinois’ labor force, more than any other Trends in High School Dropout and Completion Midwestern state. Just as troubling, Illinois Rates in the United States: 1972-2009. had among the smallest declines in this por - Washington, D.C.: National Center for Education Statistics. tion of the labor force during the 2000s, re - ducing it by only 8.3 percent while other 26 Source: Common Core of Data, National Center for Education Statistics. 18 states with large shares of poorly-educated Institute of Government & Public Affairs
Figure 8 Illinois Annual Domestic Migration, by Age
(2 percent) and Elmhurst (2.9 percent), and 350 -77,942 several rural districts downstate. 300 In Migrants s d
n 250 Out Migrants a Addressing this educational shortfall of the s u
o 200 state’s workforce and school-aged popula - h T n tion should be a major policy priority. The i 150 n o i -12,860 educational demands for employment con - t 100 a r
g -23,457 tinue to rise; during these tough economic i 50 -8,627 -9,141
M -4,919 times when 1 in 10 Illinois workers are un - -6,524 -7,533 -4,881 0 employed, well-educated workers fare con - Total 0–9 10–19 20–29 30–39 40–49 50–59 60–69 70+ siderably better than poorly-educated ones, Total and by Age Group with unemployment rates of 6.9 percent for college graduates, 13.1 percent for high Source: 2007-2009 3-year American Community Survey school graduates, but 23.8 percent for high 27 school dropouts. The importance of edu - cational training and credentials will likely 27 Source: 2010 be even stronger as the nation and the state to finish high school would save the state Current Population 29 work out of the Great Recession and into a $208,000 per student over their lifetime. Survey for 25-64 st 21 century economy that relies more on year olds in the Lesson 7: Negative Net Migration labor force. knowledge than physical skills. 28 See Table 25 in Characteristics and Education is not simply an investment in As noted in Lesson 1, a major source of Financial individuals but also an investment in the Illinois’ slow population growth is the im - Circumstances of state’s prosperity. Because high school balance generated from more people mov - TANF Recipients, Fiscal Year 2007. dropouts are nearly twice as likely as high ing out of the state than moving in. But Administration for school graduates and almost four times as migrants and non-migrants tend to be dis - Children and likely as college graduates to be unemployed, similar, i.e., migration rates are variable for Families, U.S. Department of they are considerably more likely to require different types of people. The average an - Health and Human public support, whether in the form of un - nual net migration for the state over the last Services. employment benefits, health insurance, few years has been a loss of 10,926, mean - 29 Illinois Task Force food stamps, or cash assistance. In fact, ad - ing that each year the state is expected to on Re-enrolling ministrative data for the state indicate that lose almost 11,000 people to migration Students Who Dropped out of while high school dropouts make up a alone. While this deficit may seem modest, School. Final Report small slice of the Illinois population, they it conceals the fact that direct immigration to the Governor account for 44 percent of the population re - (of people from foreign countries directly to and the General 28 Assembly. January ceiving welfare (TANF). Thus, missing the Illinois) accounts for a sizeable portion of 10, 2008. (http:// 30 opportunity to educate the state’s youth the state’s in-migration stream. When im - www.isbe.net/ accountability/ could very well put demographic pressure migrants are removed from the calculation, pdf/re-enrolled_ on state assistance programs. By the same Illinois’ migration loss grows to 77,942. On students_rpt.pdf) token, educated workers contribute more to balance, the state lost about 13.5 people to 30 In recent years, the state’s coffers. Average annual earnings other states for every 10 domestic migrants about 23 percent of for Illinois’ college graduates ($53,626) are that it received. Illinois’ annual nearly four times higher than for high in-migrants came from abroad. Based school dropouts ($14,425) and accordingly, As shown in Figure 8, this pattern varies by on analysis of 2007- the tax revenue generated from a college age, but the state has fewer in-migrants 2009 American Community Survey graduate is considerably higher than from a than out-migrants at every age. Especially data. high school dropout. While getting those concerning is the net loss among the young lacking a high school education to complete adult population. Collectively, the state is a college degree may be unrealistic, the losing 36,317 domestic persons between state estimates that even getting dropouts ages 10 and 29 each year. These teenage and 19 The Illinois Report 2012
Why are they leaving and where are they going? More than half of Illinois’ out-mi - Figure 9 grants indicate that they left the state for a Illinois Annual Domestic Migration, by Education job-related reason. Among this group of 90 job-related migrants, two-thirds left because -30,044 80 they found another job or their job was moved out of state; the remainder left to 70 -20,969 -18,6359 look for work, for an easier commute, to re - 60 31 -501 tire, or for another job-related reason. If 50 anything, the 53 percent leaving the state 40 for job reasons is likely an underestimate -6,242 30 because it is often families, not simply indi - 20 viduals, who migrate and a good portion of the 23 percent leaving for “family reasons” 10 are likely following spouses (or parents) 0 who found work elsewhere. Indiana, Less than High school Some College Professional high school diploma college degree degree Wisconsin, Missouri, California, and Texas are the top five destinations for people leav - In Migrants Out Migrants ing Illinois. Indiana receives 11.5 percent of the state’s out-migrants and while the pri - mary source of domestic in-migrants to Source: 2007-2009 3-year American Community Survey Illinois is from Indiana, our eastern neigh - bor receives 18 Illinoisans for every 10 Hoosiers that it sends. A similarly lopsided
31 Based on analysis migration flow exists with Texas (17:10) and of Current early-career ages are when important edu - Missouri (16:10). While economic condi - Population Surveys, cational and occupational decisions are tions are not robust in any part of the coun - 2006-2010. made and migration decisions are likely to try, these five states have had greater job be heavily influenced by these factors. The growth than Illinois in recent years and state is also experiencing negative net mi - public campaigns to lure workers and com - gration among its child population, likely panies away from Illinois may have proved the children of early-career migrants, and successful. The implication is that the state’s among its elderly who are likely fleeing to best tool to prevent out-migration is to warmer climates for retirement. focus on job growth, particularly jobs occu - pied by semi-skilled workers with high Illinois is similarly experiencing migration school and some-college educations. deficits among all educational groups Facing the Demographic Reality (Figure 9). These migration gaps are espe - cially profound among those groups with individuals who do not have a college de - Like most other states, Illinois is undergo - gree. Indeed, the domestic migration flow ing important demographic shifts: the pop - for those with college degrees is basically ulation is lagging and aging, fewer babies flat, with roughly equal numbers of in- and are being born now than in most previous out-migrants. This implies that—unlike points over the last century, the state’s fami - other Midwestern states—Illinois is not suf - lies are diversifying, and ‘new’ minority fering from a “brain drain.” An overwhelm - groups—Latinos and Asians—are making ing majority of Illinois’ askew migration up a larger share of the population. These streams is a result of many more people general trends characterize the state as a with lower levels of schooling leaving the whole, but population change is distributed 20 state than entering it. unevenly with some communities growing Institute of Government & Public Affairs
rapidly while others suffer from population demography. Cuts to social programs must decline. Illinois is also challenged by an in - recognize that the eligible pool of recipients ability to get its children to complete high will only expand over time as the boomers school and continues to suffer because age into retirement; expectations of new fewer people are moving into the state than revenue streams need to acknowledge that moving out. labor pools—especially among peak-career workers—are shrinking; further reductions As Chapter 4 of this report details, the fiscal in educational resources may further thwart condition of the state is gloomy. As state high school completion and access to higher and local policymakers are required to education; and any policy that limits job make tough choices and major changes, growth will likely lead to an even steeper they must be conscious of Illinois’ shifting exodus of the state’s workers.
21 The Ilinois Report 2012 CHAPTER 2
22 The Illinois Report 2012 Latinos in Illinois: A Growing Population Amid a Stagnating Economy and Challenged Public Institutions By Jorge Chapa
Given the rapid growth of the Latino population of Illinois, it is now essential to deepen our understanding of this group. Table 2 This population increase is occurring at a Origin and Nativity of Illinois Latinos, 2010 time when the economy has yet to recover Percent Percent from the Great Recession and many of the of Percent Foriegn Frequency Latinos Native Born state’s public institutions are facing severe fiscal challenges. This chapter will outline Mexican 1,623,262 79.7% 56.4% 43.6% the demographic characteristics of the Puerto Rican 201,582 9.9% 98.6% 1.4% Guatemalan 32,355 1.6% 43.0% 57.0% Latino population including educational Cuban 25,596 1.3% 65.1% 34.9% attainment and employment statistics. It Ecuadorian 25,491 1.3% 40.3% 59.7% Colombian 21,934 1.1% 47.9% 52.1% will then assess the participation of Latinos Peruvian 14,428 0.7% 41.0% 59.0% in the educational institutions and All Other Spanish/ prospects for Latinos’ participation in the Hispanic/Latino 92,668 4.4% 57.1% 42.9% All Latinos 2,037,316 100% 450% 350% labor force and the economy. Non-Latino 10,805,850 91.3% 8.7% Latino Population Growth Illinois Total 12,843,166 86.3% 13.7% Source: Analysis of American Community Survey Microdata
The results of the 2010 Census indicate that Illinois’ Latino population grew by about 33 percent between 2000 and 2010. The state’s origin Latinos are the largest of these non-Latino population decreased by 0.8 groups in Illinois, constituting almost 80 percent, so all of Illinois’ population growth percent of the more than 2 million Latinos in the last decade was due to the increase in in the state. Puerto Ricans are almost 10 Latinos. This group comprised 16 percent of percent of Illinois Latinos. Table 2 also lists the total population in 2010. (See Table 1 .) Jorge Chapa, Professor of Latinos are an aggregation of many national Sociology, IGPA
n origin subgroups: Mexican, Puerto Rican, n a m Cuban, etc. Table 2 shows that Mexican- n e s i E b e D y b e t i s o
p Table 1 m o
C Illinois’ Population, 2000 and 2010 , y o C c 2000 2010 Change % M y e s l e Non-Latino 10,889,031 10,803,054 -85,997 -.8 K y Latino 1,530,262 2,027,578 497,316 32 b y h Total 12,419,293 12,830,632 411,339 3 p a r % Latino 12% 16% g o t o h p Source: Census Bureau l a r u
M 23 The Illinois Report 2012
the national origin groups that comprise decade. You will see that the number of non- more than 1 percent of the state’s Latino Latino immigrants in Illinois— 944,000— is population, and shows that 5 percent of all greater than all of the 812,000 Latino immi - Latinos claim one of 18 additional origin or grants in Illinois. It is worth restating: immi - identity groups listed in the census. Table 2 grants are a growing part of Illinois’ also shows that a substantial portion of all population and most are not Latinos. Latinos (39.9 percent) were born abroad and immigrated to Illinois. Puerto Ricans born The fact that the percentage of immigrants 1 Pew Hispanic Center,“The in the U.S. or in the Commonwealth are among all other foreign-born Latinos Mexican-American citizens by birth. shown in Figure 1 is increasing steadily Boom: Births Over - take Immigration,” suggests a similar pattern as that seen 2011, (Washington, National-level analyses of Latino popula - among the non-Latino immigrants. It is in - D.C.). tion growth for 1980-2000 found that this teresting to note that the pattern of Mexican growth was due in equal proportions to immigration shows a lower percentage of natural increase (more births than deaths) immigrants in the 2000s than the 1990s. This Immigrants are and to immigration. Latino immigration reflects a number of factors, including a de - a growing part has slowed since 2000, so that natural in - crease in the number of undocumented im - of Illinois’ crease has become the major source of the migrants and other related factors. 1 population Mexican population growth. and most are A complete discussion of Latino immigra- not Latinos. Nonetheless, immigration has been a signif - tion requires addressing the issue of undocu- icant source of Latino population growth mented immigration. It is impossible to get and an important demographic characteris - detailed reliable estimates of the number or tic. Figure 1 indicates that immigration is an characteristics of the undocumented popu- increasing portion for all population groups lation, but it is possible to present useful over time. The numbers reported in this approximations. Table 3a shows the total chart are the percentage of the total popula - number of undocumented immigrants for tion of each group that immigrated by various years from 1980 through 2010. The
Figure 1 Decade of Entry for Immigrants by Group, 1950-2010
.18 .16
e .14 s a
e .12 r c
n .10 I t
n .08 e c r .06 e P .04 .02 0 Mexican Puerto Rican Cuban All Other Latinos
1950–1959 1970–1979 1990–1999 1960–1969 1980–1989 2000 or later
Source: Analysis of 2010 Census ACS microdata 24 Institute of Government & Public Affairs
Table 3a Undocumented Residents of US from Mexico, Latin America and all Countries, Various Years (in Thousands) table also reveals that the total number of 1980 1992 1996 2007 2010 undocumented immigrants in the U.S. is thought to have peaked at 12 million in 2007 All countries 2,057 3,900 5,000 12,000 11,200 and decreased since then. Also, while most Mexico 1,131 2,100 2,700 7,000 6,500 Other Latin undocumented immigrants are from Mexico, America 351 575 725 2,600 2,600 more than 40 percent of all undocumented Total Latino Origin Countries 1,482 2,675 3,425 9,600 9,100 immigrants are from other countries. Mexican Origin as % of Total 55% 54% 54% 58% 58% Table 3b shows estimates of the undocu- Latino Origin as % of Total 72% 69% 69% 80% 81% mented immigrant population of Illinois and several other states. While the reported Sources: 2007 and 2010 estimates from Pew Hispanic Center,“Unauthorized Immigrant Population: National and State Trends, 2010,”; other estimates documented in Chapa, 2008. estimate for 2010 shows an increase, the 90 percent interval in 2010 ranged from 425,000 to 625,000. Since the 2007 estimate is well within this range, it is better to say that, in contrast to the estimates for the U.S. and several other states, Illinois’ undocu- Table 3b Undocumented Residents, Selected States, Various Years mented population is not thought to have (in Thousands) decreased between 2007 and 2010. 1980 1992 1996 2007 2010 Table 3c shows the undocumented immi- California 1,024 1,600 2,000 2,750 2,550 grants as a percentage of the 2010 total Texas 186 530 700 1,450 1,650 population for states with large numbers of New York 234 410 540 825 625 undocumented. Illinois has a lower Florida 80 270 350 1,050 825 Illinois 135 220 290 500 525 percentage than do most of the other states Arizona 25 95 115 500 400 shown. New Jersey 37 105 135 600 550
Sources: 2007 and 2010 estimates from Pew Hispanic Center,“Unauthorized Immigrant Population: I and many others have argued in past National and State Trends, 2010”; other estimates documented in Chapa, 2008 research that undocumented Latino immi- gration has functioned as a de facto guest 2 worker program or system. This de facto system evolved from the Bracero Program which was a de jure guest-worker agreement Table 3c between the U.S. and Mexico that ended in Undocumented Residents as a Percent of Total Population, the 1960s. As is the case for most guest - 2010 (in Thousands) worker systems throughout the world, our State Undocumented State Percent guest workers have seemingly become Population Population Undocumented permanent workers and permanent residents. California 2,550 37,254 6.8% Texas 1,650 25,146 6.6% The system thrives in a context in which as - New York 625 19,378 3.2% pects of both U.S. immigration policies and Florida 825 18,801 4.4% Illinois 525 12,831 4.1% economic policies work to increase the Arizona 400 6,392 6.3% New Jersey 550 8,792 6.3%
2 See Chapa, Jorge. 2008. “A Demographic and Sources: Pew Hispanic Center,“Unauthorized Immigrant Population: National and State Trends, 2010”; Sociological Perspective on Plyler’s Children, and Mackun and Wilson. 2011 1980-2005.” Northwestern Journal of Law & Social Policy. Vol. 3, Issue 2, Spring; and, Jacoby, Nicole. 2003.“America’s De Facto Guest Workers: Lessons from Germany’s Gastarbeiter for U.S. Immigration Reform.” Fordham International Law Journal. Volume 27, Issue 4, Article 9. 25 The Illinois Report 2012
Latinos’ Youthful Age Distribution number of long-term undocumented resi - dents in the United States. Employers bene - fit from the ready supply of reliable Illinois Latinos are a young population. workers who are willing to do onerous Analysis of 2010 census data shows that work for low wages . Also, the employers more than one-third are under age 18 com- do not have to directly bear most of the pared to about 22 percent of non-Latinos. costs associated with administering this They have much younger age distributions “program” or expenses due to the rapid in - (median age of 26 years) compared to non- 3 Millard, Ann., Jorge Chapa, et al. 2004. crease in the number of immigrants living Latinos (median age of 39 years). There are Apple Pie & Enchi - in the community where the employers are also discernible differences in the median ladas: Latino New - 3 age and thus the age distribution among comers to the Rural located. Midwest. University Latino sub-groups. For example, the medi- of Texas Press. Large-scale undocumented migration to the an age of Mexican-origin Latinos is 25 years, United States would not exist without a and for Cuban-origin Latinos it is 38 years. strong demand by employers during times of rapid economic growth . The superheated The concentration of Latinos in the younger growth of the U.S. economy in the 1990s, ages further emphasizes the probability that the resulting extremely tight labor market, their population will continue to grow. The changes in immigration law and the chal - young median age indicates many Latinos lenges facing the Mexican economy all re - have more child-bearing years ahead of sulted in extremely high Mexican them compared to groups with older immigration to the United States during the median ages. Latino fertility has decreased 1990s. The economic crash of this decade but is still high compared to most other and possibly increased enforcement efforts groups, and thus Latinos will likely become explain the decrease in Mexican immigra - an even greater part of the young tion shown in Figure 1 and the recent de - population in the near future. The current crease in the undocumented immigrant and future concentration of Latinos in the population shown in Table 3a. younger age groups emphasizes the importance of issues, problems and policies that pertain to Latino youth, especially education.
Table 4 The changes in the population composition Educational Attainment of Illinois Residents Ages 25 and will be more pronounced when differences Older, 2010 in the age distribution or age structure of Foreign-Born U.S.-Born U.S.-Born these groups is taken into account . There Latino Latino Non-Latino will be relatively more Latinos in the Less than High School 337,319 77,459 584,582 youngest age groups and predominantly High School or GED 193,941 113,246 1,849,453 more white non-Latinos in the older ages . Some College 92,383 119,556 2,039,515 There are two policy-relevant areas where BA 42,050 53,585 1,331,059 Advanced Degree 16,831 24,573 778,246 these age-ethnic differences are likely to be Total 682,524 388,419 6,582,855 most noticeable . Almost one-third of the Less than High School 49% 20% 9% High School or GED 28% 29% 28% Illinois school-age population will be Lati - Some College 14% 31% 31% nos in the future . This increase will surely BA 6% 14% 20% also result in the increase in the number of Advanced Degree 2% 6% 12% Total 100% 100% 100% Latino-majority schools and school districts . Secondly, the same trend of Latino growth Source: Analysis of 2010 Cencus ACS Microdata in the younger age groups will be notice - able as Latinos compose a larger proportion 26 of the working age population . This will be Institute of Government & Public Affairs
particularly evident in the younger entry- Latino population, the Latino population level age groups . This increase may have a concentration in given areas, and the rate at noticeable impact on the Illinois economy if which the Latino population increases. educational and skill levels of Latinos do Most of Illinois’ population lives in Cook not improve. and the surrounding counties, and Latinos are even more concentrated in northeastern Latino Educational Attainment Illinois. The 2010 census shows that more than 60 percent of Latinos live in Cook Many studies Although Latino educational attainment County, compared to 40 percent of the levels are increasing, they continue to be state’s total population. Four “collar” coun - find that low when compared to non-Latinos. Lower ties—Kane, Lake, DuPage, and Will—are communities levels of Latino educational attainment are home to an additional 28 percent of Latinos. experiencing often attributed to the large proportion of Another perspective on Latino population the settlement immigrants. The information presented in growth is provided by examining the of Latino Table 4 shows that Latino immigrants do in - Latino percentage of the total population. immigrants deed have generally low educational attain - Census data also show that Latinos are 31 have not been ment. Just about half of the foreign-born percent of Kane County’s population. Cook, prepared for Latinos in Illinois have completed fewer Boone and Lake counties all have a Latino the concurrent than 12 years of schooling. This group population of 20 percent or more. demands for would be commonly thought of as high housing, school dropouts but generally they emi - Another dimension of Latino population grated from countries with low levels of ed - growth that should be considered is the schooling, ucation and never started the equivalent of increase in the proportion of Latinos in a translators, high school. In Mexico, for example, free given area. In 2010, Cass County had 2,291 community public compulsory education ends after Latino residents or 17 percent of the total specialists and eighth grade. Only 8 percent of foreign- population of 13,642. Beardstown in Cass services. born Latinos have a BA or higher degree. County is home to a meatpacking plant that has attracted a large number of Latino im - The education attainment of U.S.-born Lati - migrants. This rapid increase in the Latino nos is substantially higher than foreign- population in recent years has been associ - 4 Miraftab, Faranak. 2011. “Faraway born Latinos, but 11 percentage points ated with racial tensions, violent confronta - Intimate Develop - lower than U.S.-born non-Latinos. The 20 tions and a number of other social ment: Global 4 percent of U.S.-born Latinos with less than problems. Restructuring of Social Reproduc - a high school education are very likely to be tion.” Journal of high school dropouts. The 20 percent of Many studies find that communities experi - Planning Education and Research . 31: U.S.-born Latinos with a BA or higher de - encing the settlement of Latino immigrants 392 gree is 12 percentage points lower than the have not been prepared for the concurrent 32 percent of the non-Latinos. The approxi - demands for housing, schooling, transla - mate symmetry between the higher propor - tors, community specialists and services. tion of U.S.-born Latino dropouts compared The economic consequences for places ex - with the higher proportion of non-Latinos periencing these rapid demographic changes with higher education degrees exemplifies are costly, despite some economic benefits the educational problem facing U.S.-born brought by increased employment . Popula - Latinos in Illinois. tion growth resulting from new meatpack - ing plants has brought many positive Latino Population Growth and Geographic Distribution economic effects for rural places, such as a stable market for farmers, growth in local business, a strengthening of community or - The impact of a growing Latino population ganizations, revitalization of local schools, can be assessed by looking at the size of the and an expanded tax base. However, it has 27 The Illinois Report 2012
also brought new problems. The onerous making them more visible in their commu - work in meatpacking typically results in nities. For the most part, neither the indus - unusually high population mobility. The tries that are attracting migrants to the work is difficult and dangerous and there is Midwest nor the communities that host the little opportunity for advancement. Worker plants have planned sufficiently for the in - turnover is high because of illness, injury, tegration of the new workforce. Meatpack - problems with management, economic in - ing plants make no attempt to prepare security, and dislike for the job. Plants con - communities for the changes that they can 5 Millard & Chapa, Apple Pie & Enchi - stantly hire new workers to fill vacancies, so expect or to encourage development of ladas. there is a continuous stream of newcomers. proactive policies and programs. In general,
6 Ibid. Because meatpacking jobs pay low wages, proactive policy has mostly consisted of and because they typically attract finan - saying “yes” or “no” to industries propos - 7 Ibid. cially pressed workers, poverty and corre - ing new plant construction . The communi - 5 8 Illinois State Board lates of poverty are increased. ties to which immigrants migrate, however, of Education, “Fall do incur the costs associated with providing Enrollments Communities that experience this rapid services to a rapidly growing, low-income, Counts, Fall 2010- 7 11,” http://www. growth must confront sudden demands for non-English speaking population . isbe.net/research/ housing, education, health care, social serv - xls/school_sum11 Latino Population Growth, School Board .xls) ices, and law enforcement. In most of these Representation and Tax Referenda places, available housing has been inade - quate, overcrowded, and dangerous. Lack of health insurance, and difficulties in af - The lack of equitable educational attain - fording co-payments among the insured, ment is one of the major issues that confront have led to inadequate prenatal care, gaps Latinos and everyone in Illinois. Latino ed - in child immunization, and deficient dental ucational attainment lags behind that of The lack of care. Rapid increases in school enrollments non-Latinos at every level. This is true for equitable have brought about the need for bilingual immigrants and multi-generational U.S. cit - educational and English-as-a-second-language (ESL ) in - izens. The counties with concentrations of attainment is struction. It is difficult, however, to attract Latinos all have many towns and schools one of the qualified bilingual teachers to remote with high concentrations of Latinos. But major issues places. Teenagers find it especially difficult there are also schools with high percentages that confront to gain enough English skills or social confi - of Latino students in counties with rela - Latinos and dence to be successful in high school, and tively few Latinos. Further analysis of Illi - everyone in thus have problems with truancy, preg - nois State Board of Education (ISBE) enrollment data shows that more than 25 Illinois. nancy, dropouts and gangs. The prevalence of these problems implies worsening condi - percent of Illinois public schools have tions for future generations. School Latino-majority enrollments compared to 8 turnover is high in meatpacking towns . 2.5 percent of public school districts. School Language barriers have also become an ex - board elections and school tax referenda pensive issue for courts, schools, and social occur at the district level and Latinos are 6 service providers. given short shrift in both regards.
Changing ethnicity in a region can also Analysis of national survey data has found bring about tension among established resi - that Latino students attain higher and more dents . Unlike California, where settled His - equal levels of attainment when Latinos are panics often provide services to newcomers represented on the school board. Minority and where immigrants are segregated in and non-minority students get better scores particular towns or parts of cities, immi - in schools with more minority teachers. In - grant workers in the Midwest often obtain creased representation on school boards 28 services from non-Hispanic providers, leads to hiring more Latino administrators, Institute of Government & Public Affairs 9 Leal, David L.; Valerie Martinez- Ebers, and, Kenneth J. Meier. 2004. “The Politics of Latino Education: The Biases of At-Large which leads to more Latino teachers. Latino describe these issues and provide many in - Elections.” The Jour - nal of Politics , Vol. representation on school boards is also sights into how Latino access to higher edu - 66, No. 4, Novem - linked to more support for programs and cation can be improved. ber, pp. 1224–1244. policies of particular interest to Latinos, 10 9 Illinois Association such as bilingual education . Latinos com - The issue of immediate concern for this of School Boards. prised 23 percent of the students in Illinois chapter is how well Illinois’ public institu - 2009. “2008 Survey of School Board public school enrollments in 2010, yet only tions of higher education serve Latinos. Members.” http:// 1.2 percent of Illinois school board members Despite the many obstacles Latinos face in www.iasb.com/ 10 were Latinos. The important impact that participating in higher education, there are services/2008 BoardMember - Latino school board members can have on many reasons to think that the state’s public Freqs.pdf. educational outcomes and the huge gap be - institutions could do better. One reason is 11 McKillip, Mary E. M.; tween Latino proportions of school board that Latino enrollments are low. Previously Gillian Stevens, and, members and students may well explain a in this chapter we have shown that Latinos Jorge Chapa. 2008. part of the Latino educational problem. represent 16 percent of the total population “The Latino Effect? The Difficulty of but 23 percent of the population under age Passing Tax Illinois school districts rely on local funds 18. Ninety percent of this group are U.S. cit - Referenda in Illinois and often propose taxes in local elections in izens and most are fluent speakers of Eng - School Districts with High Concen - order to increase their budgets. One recent lish. Also, about 14 percent of all Illinois trations of Latinos.” research publication focusing on Illinois high school graduates in recent years were CDMS Occasional 14 Paper Number 2. found that school districts with high con - Latinos. This information provides a per - Center on Democ - centrations of Latinos are less likely to pass spective for Table 5, which shows Latino racy in a Multi- school tax referenda than other districts. undergraduate and graduate student en - Racial Society, University of Illinois This effect appears particular to districts rollments at the public universities and at Urbana- with Latino populations, as it is not found community colleges. As is true across the Champaign. for districts with concentrations of non-His - country, Latinos are slightly over-repre - 12 Gandara, Patricia & panic foreign -born constituents, or in dis - sented at community colleges, under-repre - Frances Contreras, tricts with concentrations of black residents. sented in baccalaureate programs and 2010). The Latino Education Crisis: The It appears that non-Latino voters are more severely under-represented in graduate Consequences of likely to reject tax increases for public edu - programs. Failed Social Policies . cation in districts with substantial Latino Harvard University Press. populations as compared to districts with A report by the Institute for Research on 11 smaller Latino populations . This fact may Higher Education at the University of 13 Contreras, Frances. explain another part of the Latino educa - Pennsylvania contends that, “In the mid- 2011. Achieving Equity for Latino tional problem. and late-1990s, Illinois was a top-perform - Students: Expanding ing state in preparing students for college, the Pathway to Latinos and Illinois Public Higher Education Higher Education enrolling residents in college, and keeping through Public Policy. Teachers Some of the shortfall in higher education College Press. participation of Latinos compared to non- 14 Calculated from Latinos is due to the characteristics and cir - Table 5 data presented in, cumstances of Latinos themselves . For 2010 Fall Enrollments, Latinos and Total Illinois State Board of Education,“2007- example, proportionally more Latinos are Illinois Public Latino Latino Percent 2008 Number of first -generation college students, come from Universities Males Females Total Latino High School low -income households, have parents with Undergraduate 6,373 7,593 152,795 9.1 Graduates, by Graduate 943 1,759 52,228 5.2 Gender and Race/ low educational attainments, attend low - Illinois Ethnicity,” http:// performing schools, etc. Two recent books , Community www.isbe.state.il.us The Latino Education Crisis: The Consequences Colleges Total 26,962 36,383 379,736 16.7 /research/pdfs/eoy 12 _graduates07-08. of Failed Social Policies and Achieving Equity Source: IBHE Dynamic Data Book, http://www.ibhe.state.il.us/ pdf for Latino Students: Expanding the Pathway to IBHEDatabook/ChapterI/Table%20I-2.aspx Higher Education through Public Policy 13 29 The Illinois Report 2012
15 college affordable .” Since the mid-1990s, education. About half of the achievement its performance in these three areas has gap was eliminated when Latino students sharply declined. Additionally, the state has were in classes with a Latino instructor. The made no progress toward mitigating per - results were slightly stronger when African- sistent inequities whereby African- American students had an African-Ameri - 17 American and Latinos are far less likely to can instructor. enroll in or graduate from a public institu - tion. The report gives the example that even These findings highlight the implications of though the Board of Higher Education is re - the very low levels of Latino employment quired to annually present an in almost all job categories at public univer - 15 Perna, Laura; Joni “Underrepresented Groups Report” detail - sities and community colleges. The fact that Finney and Patrick Callan. 2011. “A ing the lower levels of minority participa - Latino faculty and administrators are par - Story of Decline: tion to the governor and Legislature, “no ticularly scarce at community colleges that Performance and actions or consequences appear to follow have a high Latino-student concentration Policy in Illinois 16 Higher Education,” from the information in these reports .” emphasizes the potential positive impact of Executive Sum - The Penn report attributes this to a 1995 re - increasing Latino faculty who could affect mary. University of organization that generally replaced sys - the academic success of Latino students. Pennsylvania, Institute for tem-wide administrative leadership with Research on Higher localized controls. The reorganization A new state law requires public universities Education, p.3. negated the possibility of coordinating pro - and community colleges to annually report 16 Ibid, page 4. grams and policies among the different in - their progress on efforts to hire and promote stitutions and the possibility of allocating Hispanic faculty, administrative staff, and 17 “A Community College Instructor resources to meet state goals and priorities. bilingual persons. This data can be used to Like Me: Race and Finally, the report notes that all of these con - bring about improvements in hiring Latino Ethnicity Interac - siderations will make it especially difficult faculty and educating Latino students. tions in the Class - room,” Fairlie, for the higher education system to ade - Latinos and the Illinois Economy Robert; Florian quately serve Latinos who will rapidly Hoffmann, Philip Oreopoulos. grow to become a large part of the state’s National Bureau of college-age population. Despite the problems with Illinois public Economic Research higher education, Illinois is among the best (NBER), Working Paper 17381. http: Another important recent research report Midwest states in terms of producing a highly //www.nber.org/ found strong support for one way to mini - educated workforce. The state is educating papers/w17381. mize the gap between minority and major - more people with BA or advanced degrees 2011. 18 ity academic achievement in higher than can find jobs here. However, Illinois is also the Midwest state with the worst high 19 school graduate rate. Part of this problem can be attributed to the state’s demographics. Table 6 The Latino population percentages of Illinois Income, and Wages and Salary of Illinois Residents Ages 25-64, 2010 18 Eskew, Matt; and Paul Kleppner. 2006. “The Illinois Residents ages 25-64 Latino Non Latino Future of High-Wage Jobs in Illinois.” The State of Median Personal Income $20,000 $32,000 Working Illinois is a joint project of Center for Tax Median Wages and Salary $18,000 $25,000 and Budget Accountability and Northern Illinois University (Office for Social Policy Research and US-Born Illinois Residents ages 25-64 Latino Non Latino Regional Development Institute). www.State Median Personal Income $25,000 $32,000 OfWorkingIllinois.niu.edu. Median Wages and Salary $23,000 $27,000 19 Hall, Mathew, “Lessons Learned from Census Source: Analysis of 2010 American Community Survey Microdata 2010.” 2011. Presentation made at Institute of Government and Public Affairs, University of Illinois, September 23. 30 Institute of Government & Public Affairs
are substantially greater than other Midwest comparison to the requirements of newly states and the high school completion rates created jobs. Assessing the situation 25 for both U.S.-born and immigrant Latinos are years later, it does seem that these trends much lower. All of these considerations help continued throughout this period and that explain Latinos having substantially lower in - these concerns do apply to Illinois today. comes than non-Latinos (see Table 6) . The dif - ference between Latinos and non-Latinos is However, this perspective needs to be ex - smaller but still substantially large even panded. Johnson and Packer’s analysis fo - For decades, when immigrants are excluded from the cused on new, high-tech jobs in emerging analysis, as can be seen by examining the industries. The fact that the new jobs cre - economists data in Table 6 for U.S.-born Illinois residents. ated by economic growth and change gen - have erally do require higher educational levels, wondered if Many of the new, high-paying jobs in our as Workforce 2000 indicates, does not mean our future economy do require advanced degrees. For that the skill requirements for existing jobs workforce decades, economists have wondered if our are increasing. The report of the National would have the future workforce would have the education Center on Education and the Economy, education and 21 and skills necessary to be economically America’s Choice: High Skills or Low Wages, skills necessary competitive. One example is Johnston and provides a very helpful complement to 20 to be Packer’s 1987 report, Workforce 2000 . The Workforce 2000 . The authors argue that these economically authors argued that the following trends new high-tech jobs stand on the stable competitive. would have a great impact on America’s strata of the large majority of jobs with low economic future: 1) The continuing growth formal educational requirements and no in - of service employment and continuing de - dications of imminent change. A major 20 Johnston, W.B. and A.H. Packer. 1987. cline in manufacturing; 2) An increasing de - component of America’s workforce consists Workforce 2000: mand for more highly educated workers; 3) of jobs that require no more than an eighth- Work and Workers As the population ages, the majority of a grade competency in math and language, for the Twenty-first Century. Hudson decreasing pool of future labor force en - the requisite physical ability to do the work Institute: trants will consist of women and minorities; and an agreeable personality. Some of the Indianapolis, IN. 4) Inadequate child care and other support occupations in the service and construction 21 The National Center systems limit the potential productivity of categories in Table 7 and many of the jobs in on Education and women; and, 5) Ineffective educational in - the production and transportation category the Economy. 1990. America’s Choice: stitutions limit the potential productivity of fit this description. The concentrations of High Skills or Low minorities. One major potential conse - Latino males in these same three categories Wages, Rochester, quence of the interaction of these trends is a and Latina females in service and produc - NY. future shortage of well-educated workers in tion categories are obvious. Neither of the
Table 7 Occupational Category for Non-Latino and Latino Males & Females, 2009
Males Females Non-Latino Latino Non-Latino Latina Number in Labor Force 2,649,200 840,569 2,539,580 339,159 Management, professional, and related occupations 37% 13% 42% 21% Service occupations 13% 24% 19% 26% Sales and office occupations 19% 14% 34% 33% Farming, fishing, and forestry occupations 1% 1% 0% 0% Construction, extraction, maintenance, and repair occupations 13% 17% 0% 0% Production, transportation, and material moving occupations 17% 31% 5% 19%
Source: Analysis of 2009 ACS data from American Factfinder 31 The Illinois Report 2012
two reports foresaw that these jobs would occupations increased by approximately 48 increasingly be done by Latinos. The me - percent between 2003 and 2007, the year of dian wage for Latinos grew by 3.6 percent peak employment. This may represent between 1990 and 2004, substantially less young Latinos with low to moderate levels than the increase in the median wage paid of education entering the labor force. During to white non-Latinos. Much of the decrease this period, Latino immigrants employed in has occurred in the job categories with high construction increased by 15 percent. All of concentrations of Latinos. the groups have experienced a decrease 22 Official unemployment since 2007, but proportionally the cuts were statistics are The long term trends that have shaped Illi - larger among Latinos. This may be an exam - calculated using data from the nois economy for the last 25 years have ple of last hired, first fired. While the evi - Current Population been troubling. However, the changes in the dence is far from conclusive, the data on Survey (CPS) economy since 2007 due to the Great Reces - unemployment presented here suggest that conducted by the Bureau of Labor sion have been really grim. In 2010, the the employment opportunities for Latinos 22 Statistics and the overall unemployment rate was 11.4 per - with low skill and educational levels are Census Bureau. The cent and was in double digits for all educa - volatile. It is not clear if the availability of unemployment estimates used in tional groups except for workers with a BA these jobs will increase or decrease in the fu - this chapter were degree or higher. The rate for workers with ture, but it does seem clear that they will calculated using data from the less than a high school education was 17.4 pay less and have few if any benefits. Census Bureau’s percent (See Table 8) , and half of the Latino American immigrants and one-fifth of U.S.-born Lati - There is a large literature listing a number Community Survey (ACS). ACS has a nos fall into this category. Figure 2 shows of possible causes of these economic much larger sample that Latino unemployment rates have been changes. Among these are increased inter - size and other higher than non-Latino rates throughout national trade, technological change, wide - advantages over the CPS. Also the last decade. It is also interesting to note spread computerization, industrial decline, official unemploy- that gap between the rate increases during increased immigration, increased variance ment statistics are subject to the post-9/11 recession and during the most in the quality of education, skill restructur - adjustments that recent “Great Recession.” ing, the widespread use of computers; and were not used here. the decreasing consequence of unions, labor So although the unemployment laws and other wage-setting institutions . It rates presented is clear from this literature that there is no here are very close one factor that will explain all of the eco - to the officially Table 8 published rates Unemployment Rates for All Illinois nomic changes touched upon here . It is also they are slightly Residents in the Labor Force, 2010 clear that whether they are cause or conse - different in some Total Labor Force 11.4% quence, all of these factors are implicated in cases. Less than high school graduate 17.4% High school graduate decreased opportunities for Latinos with (includes equivalency) 13.2% low levels of education . Some college or associate's degree 10.6% Bachelor’s degree or higher 5.5% Looking Ahead
Source: Analysis of 2010 ACS Microdata The future well-being of Illinois is increas - ingly linked to the educational and economic advancement of the Latino population. It is a Table 9 is an effort to put this observation certainty that Illinois’ Latino population will into perspective. The table examines em - continue to grow at a rapid rate. Everyone in ployment in a sector severely impacted by Illinois will be better off if we can create the the latest recession—construction from 2003 circumstances and opportunities for Latinos (the first year this series was available in to increase their education and income. This ACS) through 2010. It is striking that the chapter suggests specific changes that may 32 number of U.S.-born Latinos in construction help bring this about. Institute of Government & Public Affairs
Table 9 Illinois Construction Workers, by Nativity and Latino/Non-Latino Identifiction, 2003-2010
Change Change 2003 2004 2005 2006 2007 2003-07 2008 2009 2010 2007-10
Non-Latino Citizen 292,269 286,262 296,541 299,724 300,056 2.7% 289,550 275,665 259,315 -13.6% Non-Latino Immigrant 35,189 30,868 35,939 40,240 33,230 -5.6% 35,260 29,879 31,417 -5.5% Latino Citizen 15,968 29,293 16,483 20,605 23,593 47.8% 25,987 22,166 19,051 -19.3% Latino Immigrant 57,681 59,966 61,821 62,692 66,623 15.5% 57,320 61,444 52,996 -20.5% Grand Total 401,107 406,389 410,784 423,261 423,502 5.6% 408,117 389,154 362,779 -14.3%
Source: Analysis of ACS IPUMS
One key factor One key factor for improving Latino educa - higher education could increase Latino par - for improving tional attainment is to increase the number ticipation and success. Given the concentra - Latino of Latino school board members . Electing tion of Latino students and the paucity of board members by voting districts or cumu - Latino faculty, this is an urgent priority for educational lative or proportional voting schemes may community colleges. One way to improve attainment is help bring this about. Reviewing rules and Latino attainment of BA and advanced de - to increase the procedures for tax referenda elections is grees would be to increase transfers from number of also warranted. At various times and places community colleges to universities . Latino school in our history, non-citizen parents have board been allowed to vote in school board elec - Latinos are concentrated in jobs with low members. tions. If this were instituted in Illinois, it pay and few benefits. The same jobs had could increase the likelihood of pass tax ref - better pay and benefits in the recent past. erenda in districts with high Latino enroll - Improving these would have a positive im - ments and might also help elect Latino pact on many workers and their families. It school board members. is also important to do what we can to cre - ate more jobs in Illinois that pay well and Latino college students learn more when create employment opportunities for highly they have Latino instructors. Increasing the skilled workers. number of Latino faculty in Illinois public
33 The Ilinois Report 2012 CHAPTER 3
34 The Illinois Report 2012 The Painfully Slow Recovery Continues By J. Fred Giertz
J. Fred Giertz The year 2011 was another difficult year Professor of for the economy. The pace of growth Economics, IGPA slowed markedly in the first half of the year with concern that the economy might be slipping back into recession. Improved Gross Domestic Product performance in the third quarter of the year, along with a relatively strong holiday sales season, has allayed some of the concern about a dou - ble-dip recession. But all still is not well.
The recession of 2007-2009 has come to be known as the Great Recession for good reason. It has been unlike other post-World War II recessions in both its intensity and duration. The 2007-2009 recession ended more than two and a-half years ago, but it would be hard to recognize this by some experienced in the United States since the measures, especially the level of unem - Great Depression. Studies suggest that ployment. The national unemployment these situations result in much more seri - rate in November 2011 was 8.6 percent, an ous disruptions and that it takes many improvement over the 9.2 percent level years to achieve a full recovery. recorded in June. However, this was still well above the 5 percent level of December But not all the economic news is negative. While it 2007 when the recession began and down The economy has shown growth for the appeared at only slightly from the 9.5 percent level at last nine quarters, with GDP now surpass - first that Illinois 1 the end of the recession in June 2009. ing pre-recession levels. The financial situ - might fare ation in the United States has stabilized somewhat The Illinois picture was even bleaker. The with strong business profits and the recov - better than the state unemployment rate rose from 9 per - ery of financial markets from the low point country as a cent at the beginning of 2011 to 10.1 per - in early 2008. Productivity growth also re - whole, that cent in October, before dropping back to 10 mained high through 2010 which is good appearance percent in November. The Illinois rate in for long-term economic prospects. There is was deceiving. November exceeded the national rate by even good news on the energy front with more than one percentage point, compared the likelihood of major expansion of oil to the start of the year when it was below and natural gas production the U.S. and the national level. While it appeared at Canada. first that Illinois might fare somewhat bet - ter than the country as a whole, that ap - The economic picture for 2012, however,
n pearance was deceiving. remains muted. Even with continued GDP n a m
n growth, unemployment will decline only e s i 1 E The painfully slow recovery can be attrib - gradually for a number of reasons. In the As of Dec. 15, 2011. b e D
: uted to a unique aspect of the Great Reces - short run, increased productivity means n o i t a sion. It was a recession accompanied by a
r that businesses can produce more with t s u l l financial crisis or panic unlike anything I fewer workers. This means that there must 35 The Illinois Report 2012
be substantial increases in demand to gen - political impasse over the debt ceiling in - erate additional hiring. In addition, for the crease last summer and the failure of the unemployment rate to fall, a sufficient so-called super committee to meet budget number of jobs must be created to absorb goals suggest that these problems will not new entrants into the workforce while also be resolved anytime soon. This adds a con - decreasing the backlog of those who are tinued uncertainty that may dampen the unemployed. This is happening very recovery. slowly. Also, there are a number of dis - Even more couraged workers who are not in the The Illinois economy for the most part threatening in workforce now but will seek employment lives or dies with the national and world the long run once the economy improves. This explains economy and state leaders can do little to are the the recent anomaly in Illinois where em - change these underlying drivers. However, unresolved ployment increased substantially while the Illinois faces its own fiscal challenges con - fiscal unemployment rate also increased. nected to a structural deficit not unlike challenges those faced at the national level. The major facing the U.S. The economy also faces broader issues that tax increase approved early in 2011 has over the next make the recovery more problematic. The provided some stability in regard to the several financial problems plaguing Europe for state finances at the cost of considerably decades when more than a year show no signs of abating. higher tax rates. There was general agreement at year’s end projected that the financial and budget problems of Some observers suggest that the increase government southern Europe, most notably with in the unemployment rate in 2011 (from 9 expenditure Greece, but also involving Spain and Italy, percent in January to 10 percent in Novem - growth, largely would not end without major structural ber) is a response to higher taxes. It is from various changes. The question remains how much clearly too early to determine a causal rela - entitlements, damage will result and how widespread it tionship here, but it is a complicated issue. will far outpace will be. This will clearly have a major im - Higher taxes create negative incentives, existing pact on Europe, but it will no doubt affect but an insolvent state government is revenue the rest of the world, as well. There is hope hardly an attraction for business either. sources. that these problems can be managed and contained, but there is no assurance of this. In any case, Illinois faces continued diffi - cult economic challenges, both internally Even more threatening in the long run are and from the difficult national and global the unresolved fiscal challenges facing the economic environments. U.S. over the next several decades when projected government expenditure growth, largely from various entitlements, will far outpace existing revenue sources. This looming problem has been known for more than a decade, yet little has been done to address it. Eventually, major re - ductions in the rate of growth of spending along with new revenue must be found to avoid a fiscal disaster. Fiscal discipline will eventually be imparted by the financial markets but, like the current crisis in Eu - rope, it cannot be accomplished without pain. Unfortunately, the performance of the government in addressing these prob - 36 lems has not been encouraging. The Institute of Government & Public Affairs
Employment Analysis and 2012 Prospects for Illinois and the Metropolitan Areas By Geoffrey J.D. Hewings, Minshu Du and Jenny Chi Chun Chan 1
Throughout much of 2011, discussion about the economy centered on the possibility of a “double-dip” recession. The fears were heightened by the continuing problems with sovereign debt in Europe. December Geoffrey J.D. 2011 national employment figures from the Hewings, U.S. Bureau of Labor Statistics showed a Professor of provisional gain of more than 200,000 jobs Geography, and a decrease in the unemployment rate to Economics, and 8.5 percent. State level data were not yet Urban and available for December as this report was Regional written, but through November, as Table 1 Planning, IGPA indicates, Illinois had added more than 57,000 jobs. Illinois has almost matched the U.S. employment growth rate for the last two years, whereas over the period from 1990 through 2009, Illinois’ employment Over the grew at about one-third of the national rate. months, resulting in a total net loss of period from Illinois added 46,300 jobs in 2010 and, if Illi - 299,100 jobs. However, Illinois has added nois continues to grow at the same pace as 105,600 jobs since January 2010, when Illi - 1990 through the nation, final numbers for 2011 may see nois employment growth resumed . The 2009, Illinois’ the addition of more than 65,000 jobs. Rest of the Midwest, Illinois’ most impor - employment tant trading partner, has not fared as well. grew at about Since the beginning of the recession in Employment growth has been at a rate that one-third of December 2007, Illinois has posted net job is 75 percent of that for Illinois and only 63 the national losses 30 months and net job gains in 17 percent of that for the U.S. as a whole. rate.
Table 1 The Employment Situation, Illinois, Rest of the Midwest, and the Nation
Oct 2011–Nov 2011 Last 12 months Nov 2011 1. Minshu Du and Total Growth Number Growth Number Jenny Chi Chun Non-Farm Rate of Rate of Shadow Chan are students Employment percent Jobs percent Jobs U.R.** in the Regional Economics December Nation 0.09 120,000 1.23 1,600,000 12.2 percent Applications 2011 RMW* -0.06 -12,000 0.78 144,300 13.8 percent Laboratory. Illinois 0.01 600 1.01 57,100 12.5 percent
*RMW stands for Rest of the Midwest including six states, Indiana, Iowa, Michigan, Missouri, Ohio and Wisconsin. **The U of I Regional Economics Applications Laboratory has estimated a shadow unemployment rate; this is calculated as the unemployment rate that would be observed if labor force participation rates matched the average for the 15-year period from 1990 to 2004.
Source: Regional Economics Applications Laboratory, University of Illinois 37 The Illinois Report 2012
Figure 1 and the accompanying table pro - percent , 23.04 percent , 58.86 percent , 45.61 vide a sense of the challenge ahead in percent, respectively, from the jobs lost terms of an employment recovery sched - during the recession. However, the con - ule. At November 2011 growth rates, it struction, information , financial activities would still take Illinois more than eight and other services sectors have continued years to regain the employment levels of to lose jobs, leading to negative recovery November 2000 (Illinois’ prior peak em - rates of -7.44 percent, -66.36 percent, -25.08 ployment), adjusted for population growth percent, and -72.88 percent, respectively. and labor force participation rates. The challenge of course is to sustain a level of The 12-month-ahead job recovery forecasts job creation in excess of 60,000 per year, show that the future recovery for sectors something Illinois has done rather infre - such as manufacturing will slow down quently since 1990. while it will increase for sectors such as trade, transportation and utilities, financial During the official recession period , De - activities, professional and business serv - cember 2007 through December 2009, eight ices, leisure and hospitality and other serv - out of 10 Illinois sectors shown in Table 2 ices. The professional and business experienced negative job growth. The edu - services sector is likely to make a full re - cation and health and government sectors covery to the pre-recession level by No - are the only two that had positive job vember 2012. Sectors such as construction growth during the recession. Since January and information will continue to lose jobs 2010, the manufacturing sector , trade, at even more elevated rates. The rather transportation and utilities, professional large range for the total employment fore - and business services, and leisure and hos - casts (38,800 to 64,200) reflects the signifi - pitality sectors have recovered 15 .69 cant variability in the month-to-month employment changes.
Table 3 provides a complementary per - spective by examining job losses by sector Figure 1 during the recession and then charting the Recovery Barometer and Employment Recovery Schedule [583,000]* recovery in terms of the percentage of lost jobs that have been regained. The table To Recover Growth Rate also highlights the widespread effect of the recession; as noted, all but one sector lost November 2011 June 2010 jobs. In 5 years 95,500 jobs/year 109,000 jobs/year In 8 years 59,700 jobs/year 68,000 jobs/year Illinois Metropolitan Forecasts In 10 years 47,700 jobs/year 54,000 jobs/year In 15 years 31,800 jobs/year 36,000 jobs/year October 2011 * The figure 583,000 is the number of jobs needed for the Illinois Employment forecasts for the metropolitan economy to recover to the previous employment peak, Nov. 2000. [105,600]*** The gap between the previous peak in Nov. 2000 and the areas through October 2012 are provided previous lowest point in Dec. 2009 is 479,000. Adding 104,000, which is the number of jobs needed to bring shadow and official in Table 4 (page 40). All metropolitan areas unemployment rates together, the total number of jobs that June are forecast to have an expectation of posi - Illinois needs to create is 583,000. 2010 **The figure 38,200 represents the jobs recovered from Dec. 2009 tive job growth in 2012, but several (previous lowest level) through June 2010. [38,200]** *** The figure 105,600 represents the jobs recovered from Dec. 2009 (Kankakee, Peoria, Rockford and Spring - through Nov. 2011. field) have a chance of losing jobs. The last Source: Regional Economics Applications Laboratory, University of Illinois two columns show the expectations for the sectors with the highest and lowest growth rates for each of the metropolitan areas. 38 Construction appears only in the last Institute of Government & Public Affairs
Table 2 Employment Forecasts for 2012
Number Growth Rate Illinois Nov 2011 Nov 2012 (p) of Jobs percent
Total non-farm 5,686,100 5,750,300 38,800 ~ 64,200 0.68 ~ 1.13 Construction 199,400 188,600 -10,800 -5.42 Manufacturing 571,400 567,900 -3,500 -0.61 All Trade, transportation and utilities 1,141,400 1,149,600 8,200 0.72 metropolitan Information 96,800 94,400 -2,400 -2.48 Financial activities 356,800 358,200 1,400 0.39 areas are Professional and business services 834,100 878,700 44,600 5.35 forecast to Education and health 859,800 882,500 22,700 2.64 Leisure and hospitality 522,300 529,200 6,900 1.32 have an Other services 251,700 252,400 700 0.28 expectation of Government 842,800 848,800 6,000 0.71 positive job Source: Regional Economics Applications Laboratory, University of Illinois growth in 2012, but several (Kankakee, Peoria, Table 3 Rockford and Sector Job Losses During the Recession Springfield) Illinois job recovery by sector from Dec 2007 - Nov 2011 have a chance Forecasted of losing jobs. Job Job Job Changes in Recovery Recovery Forecasted Recession Jan. 2010 – Recovery Jan 2010 – Recovery Period* Nov. 2011 Percentage Nov. 2012 Percentage
Construction -64,500 -4,800 -7.44 -15,600 -24.19 Manufacturing -116,000 18,200 15.69 14,700 12.67 Trade, transportation and utilities (TTU) -98,100 22,600 23.04 30,800 31.40 Information -11,000 -7,300 -66.36 -9,700 -88.18 Financial activities -32,700 -8,200 -25.08 -6,800 -20.80 Professional and business services -91,400 53,800 58.86 98,400 107.66 Education and health 34,300 38,100 -- 60,800 -- Leisure and hospitality -22,800 10,400 45.61 17,300 75.88 Other services -5,900 -4,300 -72.88 -3,600 -61.02 Government 5,200 -13,600 -- -7,600 --
Source: Regional Economics Applications Laboratory, University of Illinois
Challenges Ahead column, whereas education and health ap - pears as the fastest growth sector in four areas while being placed at the bottom in Forecasting has been complicated by the one (Chicago). Manufacturing is forecast to “noisiness” of the employment figures in lead the growth of Chicago and Quad the last several years, and currently there Cities employment while the information are so many exogenous challenges—the sector appears at the bottom of the growth continuing uncertainties in Europe, the at - rates for Champaign-Urbana-Rantoul, the tention on the U.S. presidential election Quad Cities and Peoria. and the role that foreclosures may play in 39 The Illinois Report 2012
2012 in dampening prospects for a modest suggesting that Illinois may be able to fol - housing recovery—that forecasting re - low the recovery path for the nation. How - mains difficult. Illinois has always lagged ever, the lagging recovery in the Rest of the the U.S. in recovering from recessions that Midwest presents a more serious problem, have occurred post 1945; for the last two especially since nearly 40 percent of years, Illinois’ employment growth rate Illinois’ exports are destined for this region has almost matched that for the U.S., of the country.
Table 4 Metropolitan Area Employment Forecasts
Sector with Sector with Growth Highest Lowest MSAs Oct. 2011* Oct. 2012 Number Rate Growth Growth (p)* of Jobs* Percent Growth Rate (p) Rate (p)
Bloomington-Normal 90,600 90,600 0 ~ 500 0 ~ 0.6 + TTU (2%) CON (-7%) Champaign-Urbana- Rantoul 105,200 105,400 150 - 160 0.1 ~ 0.2 + LEI (2%) INF (-6%) Chicago 4,016,000 4,053,500 22,000 ~ 37,500 0.5 ~ 0.9 + MAN (7%) EDU (-2%) Davenport-Rock Island- Moline 182,200 182,400 200 - 900 0.1 ~ 0.5 + MAN (3%) INF (-3%) Decatur 52,800 53,200 200 - 400 0.4 ~ 0.8 + OTH (3%) PRO (-9%) Kankakee 45,200 44,600 -600 ~ 200 -1.3 ~ 0.4 - EDU (1%) CON (-5%) Peoria 186,300 185,700 -600 ~ 700 -0.3 ~ -0.4 - EDU (3%) INF (-4%) Rockford 145,000 144,400 -600 ~ 1,000 -0.4 ~ 0.7 - EDU (2%) CON (-7%) Springfield 112,300 112,200 -100 ~ 100 -0.1 ~ 0.1 - EDU (2%) CON (-7%)
Note: P indicates provisional, TTU (Trade, transportation and utilities), CON (Construction), LEI (Leisure and Hospitality), MAN (Manufacturing) INF (Information), EDU (Education and Health), PRO (Professional and business services), OTH (Other services)
Source: Regional Economics Applications Laboratory, University of Illinois y o C c M y e s l e K y b h p a r g o t o h
40 P The Ilinois Report 2012 CHAPTER 4
41 Through a Dark Glass: Illinois’ Budget Picture is Dire and Distorted By Richard F. Dye, Nancy W. Hudspeth and David F. Merriman
Illinois ended 2011 with a better financial plan has ended. General Funds spending situation than it faced a year earlier. How - was capped at 2 percent, but Illinois has ever, the state began the year with a hole so more than 600 other funds that have no deep that not even a massive tax increase cap on growth . The state comptroller’s and drastic spending cuts could come close website reports the deficits in the General to filling it. In this chapter, we use a care - Revenue Fund, but no one officially re - 2 Unfortunately, fully constructed model of the Illinois ports deficits in the non-General Funds. Illinois’ budget and detailed database about past accounting revenue and expenditures to develop pro - It took years of avoiding tough fiscal and budgeting jections of future fiscal balance. This analy - choices and a brutal recession to get Illi - practices have sis delivers what is, perhaps, the headline nois’ finances into such a mess. Denial, message from our work: We find that main - borrowing, one-time revenue, and other not promoted taining increased income tax rates after they short-term solutions delayed the reckon - good fiscal are scheduled to expire and extreme auster - ing, but eventually the severity of the un - behavior and ity with respect to spending could bring Illi - derlying problems restricted the state’s sometimes nois into fiscal balance by Fiscal Year 2019. cash flow and it became difficult to con - obscure the We neither endorse nor reject this scenario duct day-to-day operations . This dire cir - nature and but believe that it provides a useful baseline cumstance has penetrated the public and extent of its against which alternative fiscal plans can be political consciousness. The tax increases fiscal measured. and spending growth caps have been huge challenges. steps in the right direction, but other re - Unfortunately, Illinois’ accounting and cent efforts to deal with the fiscal crisis budgeting practices have not promoted have not been productive. good fiscal behavior and sometimes ob - scure the nature and extent of its fiscal A number of proposals to expand revenue challenges. Illinois still has about $4 billion or cut spending are on the table, but as of 3 in unpaid General Funds bills, and no fi - this writing none has passed. Major gam - 1 nancial plan to deal with the backlog. A bling expansion plans have been fiercely major tax increase in January 2011 brought debated, but not yet enacted. Proposals to increased income tax receipts, but federal restructure public-employee pensions, lay aid is down because the national stimulus off state workers, and close state-run
1 In October 2011 the Comptroller’s Office reported that in July, 2011, the bill backlog was $3.798 billion, and since that time“the Office has received $1.34 billion in FY 2011 bills. That means more than $5.1 billion in FY 2012 revenues will be used to pay off last year’s bills.” The outstanding liabilities above and beyond the $3.8 billion backlog include“unaddressed Medicaid bills, unpaid state employee health insurance bills and unpaid corporate income tax refunds held by the state agencies. Beyond those challenges, the GRF owes approximately $486 million to other state funds to pay back FY 2011 interfund borrowing, of which approximately $350 million is due to be repaid in FY 2012.” Illinois Office of the Comptroller. Comptroller’s Quarterly . Edition 41, October 2011 (pages 1-2.) http://www.ioc.state.il.us/index.cfm/resources/comptrollers-quarterly/ ; down from the $6.4 billion in the January 2011 report (Edition 38).
2 For the General Revenue Fund balance see http://www.ioc.state.il.us/index.cfm/fiscal-condition/fiscal-condition/ .
42 3 Late November 2011, after the fall veto session of the General Assembly. Richard F. Dye, facilities have raised numerous legal issues The Fiscal Futures and it could be years before these plans—if Project, IGPA implemented—would save the state any money. Governor Pat Quinn, a Democrat, has proposed additional borrowing to pay down the state’s overdue bills, arguing that the state has already spent this money, but these plans have been opposed by Re - publican leaders. Borrowing is becoming increasingly costly as Illinois’ bond rating has been repeatedly downgraded, result - ing in higher interest rates to sell the state’s debt. As a result, social service providers, physicians, pharmacies, schools and other vendors that do business with the state continue to wait for payment.
Nancy Hudspeth, A lack of clarity in the presentation of the The Fiscal Futures state’s finances further complicates the situ - Project, IGPA ation. Without an accurate assessment of the problem, it is all but impossible to make progress toward a solution. Although most people can agree that government trans - parency and accountability are laudable ideals, how do we know when a state’s fi - nancial reports are transparent? Illinois has a lot of information posted on its websites, which give it high marks from some online transparency advocates, but in a recent 50- state study we found that Illinois is one of the least transparent states because of its practice of moving expenditure items be - tween the General Funds and special funds budgets from one year to the next. David F. Merriman, This chapter is divided into four sections. The Fiscal Futures First, we review the events of the past year, Project, IGPA beginning with the January tax hike, which—as our analysis shows—does not completely close Illinois’ budget gap. Sec - ond, we present our latest long-term projec - tions from the Fiscal Futures Model for three different policy scenarios. These scenarios 43 demonstrate that achieving fiscal balance in The Illinois Report 2012
Illinois will require extraordinary willpower during which lame-duck legislators could and careful fiscal monitoring. We then dis - vote on unpopular legislation without fear cuss our recent study of budget transparency of electoral reprisal—to enact a temporary that shows Illinois compares unfavorably to increase in the state personal and corpo - other states, and finally we outline some rate income tax rates. The legislation also simple policy options that could make the included a cap on General Funds expendi - state’s financial reports more transparent. tures and authorization for new borrow - ing. Governor Quinn signed these into law All in all, 2011 in Review: A Titanic Beginning shortly after legislative approval: Illinois had • An increase in the personal income tax little choice In The Illinois Report 2011 , we described the rate from 3 percent to 5 percent through but to raise fiscal situation at the beginning of the year in 2014 (effective January 1, 2011). The rate taxes. a chapter titled “Titanic and Sinking: The Illi - then falls to 3.75 percent through 2024, 4 nois Budget Disaster.” We used the Fiscal and 3.25 percent after that . 5 Futures Model to quantify a variety of policy • An increase in the corporate income tax scenarios for closing a Fiscal Year 2011 rate from 4.8 percent to 7 percent budget gap of about $11 billion. We illus - through 2014 (effective January 1, 2011). trated that to balance the budget only with The rate then drops to 5.25 percent revenue increases would have required dou - through 2024, and back down to 4.8 per - 6 bling the Illinois income tax or sales tax; to cent after that . balance the budget only with borrowing • A cap on General Funds spending would mean that by 2014 debt service would growth of 2 percent per year for fiscal consume all the receipts from the personal years 2012, 2013, 2014 and 2015 . Because income tax; and to balance the budget only scheduled and non-discretionary in - by reducing expenditures would require cuts creases in pension contributions and of 26 percent. We also illustrated the impos - debt service are more than 2 percent, the sibility of doing nothing but wait for the effective cap on non-pension, non-debt economy to grow. Even if personal income, spending like Medicaid and school aid is corporate income, and general sales taxes re - closer to 1 percent per year. (Note also turned to their 2008 peak levels in inflation- that the cap only applies to General adjusted dollars, state revenue would Funds, which represent about half of the increase by only about $2.8 billion (net of total state budget.) revenue transfers to local government), far short of the amount needed to close the 4 Dye, Hudspeth and Merriman, The Illinois Report budget gap. The “Titanic” chapter also 2011 , Institute of Government and Public Affairs, showed that if the state continues to spend University of Illinois pp. 28-38. more than it receives, unpaid bills could 5 The Fiscal Futures Model starts with past and amount to nearly $4 0 billion by the end of FY current amounts for a broad measure of the 2013, with an associated payment delay of state budget, broken down into a number of revenue and expenditure categories that are more than five years. In 2022, the backlog consistently defined over time. The statistical would be on the order of $23 0 billion and the relationship for each budget category and payment delay would exceed 3 0 years. All in selected economic or demographic“driver” variables is estimated. Those relationships are all, Illinois had little choice but to raise taxes. combined with projections of future values of The January 2011 Tax Increase and the driver variables to make projections of the fiscal variables. See: http://igpa.uillinois.edu/ Spending Cap fiscalfutures .
6 Illinois also imposes a personal property tax Facing a mounting cash flow crisis, in mid- replacement tax of 2.5 percent on the corporate January 2011 the General Assembly took income tax base. This was unaffected by the new legislation. 44 advantage of a short political window— Institute of Government & Public Affairs
7 Fiscal Futures • Authorization to borrow $3.7 billion to service obligations in future years . analyses use a make the required payment for FY 2011 • broad budget Worsening underfunding of pension concept (which we pensions with that debt to be paid off obligations will increase future gaps . call the consoli - over eight years . • Revenue from the new tax rates dated funds budget) rather than might be lower than projected be - the narrow and Immediately after the January 2011 policy cause businesses or workers could more commonly changes were enacted, the Fiscal Futures leave the state to avoid the higher discussed General Funds concept to Model was used to project Illinois’ budget burden. Others might decide against analyze Illinois’ 7 gap before and after the changes. The con - moving into Illinois, diminishing the fiscal health. There are very large and clusion from these projections was that the state’s future economic growth. important differ - January 2011 policy changes significantly ences between reduced —but did not eliminate —the pro - The bottom line is that the fiscal crisis in these two budget concepts and, for jected budget gaps. Instead of projected Illinois is far from over, even after the tax reasons discussed gaps growing steadily from $12 billion in increases . in more detail later FY 2012 to $29 billion in FY 2022, the tax in this chapter, we Subsequent Budgetary Events and Actions believe that our increases and spending caps decreased the broad concept is projected FY 2012 gap to the range of $4 strongly preferable 8 billion to $10 billion. Even with the new There have been a number of proposals for to General Funds. taxes and spending caps, the budget crisis new revenue and cost savings since the tax 8 “Fiscal Fallout #5: in Illinois was worse than the $4 billion- increase in January 2011. But compared to The large tax increase just $10 billion budget gap projection because : the size of the state’s budget imbalance, enacted falls short • As of December 31, 2010 the state had the receipts or savings—if realized—are of closing the $6.5 billion in unpaid bills from the relatively modest. state’s enormous budget gap,” Fiscal prior 2½ years . The backlog was not ad - Futures Project, dressed by the January 2011 (or any sub - 1. FY 2011 (July 1, 2010 - June 30, 2011, Institute of with an “extended lapse period” until Government and sequent) legislation. Public Affairs, • Because the 2 percent growth cap is December 31, 2011, during which bills University of specified in terms of General Funds, it is accrued during the fiscal year may be Illinois, January 18, paid): 2011, http:// still possible to increase spending more igpa.uillinois.edu/ than 2 percent by shifting expenditures • In December, 2010 the state securitized system/files/ to non-General Funds . its tobacco bonds for $1.5 billion (a documents/FF-5-18 9 jan11.pdf . • The January 2011 projections optimisti - one-time revenue source for FY 2011). cally assumed expenditures will grow • Pension restructuring legislation af - 9 http://www. only 2 percent even after the cap expires. fecting current employees was pro - bondbuyer.com/ 10 issues/119_480/- Historical rates of expenditure growth posed in the spring but failed to pass. 1020672-1.html . have generally exceeded 2 percent. • Gambling expansion was proposed, 10 http://www. • Fiscal Futures Project calculations do but not approved in FY 2011. suntimes.com/ not take account of pension liabilities • Just before the end of FY 2011, Illinois news/metro/56789 that will be unfunded even if Illinois issued $4 billion in pension bonds to 33-418/pension- reform-put-off-by- makes the statutorily required pension pay its required contribution. Illinois illinois-lawmakers. payments. has not yet made its required FY 2012 html . • The $4 billion -$ 10 billion gaps will have contribution. to be dealt with somehow, causing addi - tional problems. 2. FY 2012 (July 1, 2011 to June 30, 2012): • Longer payment backlogs will in - • In July, a private company began crease service costs as some vendors managing the Illinois State Lottery. In stop doing business with the state its proposal, the company said it will and others raise prices to compensate generate an additional $1.1 billion to for the delay . $1.5 billion more than what the state • New borrowing will mean new debt had originally projected the lottery 45 The Illinois Report 2012
11 http://www. New Consolidated Budget Projections from huffingtonpost. would earn through the next five 11 the Fiscal Futures Model com/2010/09/03/ years. illinois-lottery- contract_0_n_ • In August, after the national debt 704944.html . ceiling crisis and ratings downgrade, We present the latest budget projections from the Fiscal Futures Model for four possi - 12 http://www. Moody’s—a major credit rating suntimes.com/ agency—issued a special statement ble scenarios: (a) assuming current law, i.e., news/ on the dire state of Illinois finances. the increased tax rates are really temporary, transportation/ and will be phased out beginning in 2015; 7271678-418/ • In early August, Illinois’ Republican illinois-tollway- leaders held a press conference to (b) assuming that the higher tax rates re - board-approves- state their opposition to further bor - main indefinitely; (c) assuming that the steep-toll-hike .html . rowing. spending growth rate can be limited to the • In September, the Illinois State Toll inflation rate; (d) maintaining higher tax 13 http://articles. rates and limiting spending growth to infla - chicagotribune. Highway Authority board voted com/2011-09-06/ unanimously to pass a $12 billion, 15- tion. Each of these scenarios shows that news/ct-met-pat- year capital plan to expand and mod - budgetary deficits will continue to be a quinn-illinois- problem in the years ahead, but the state’s budget20110906_1 ernize the tollway. Tolls will increase 12 _quinn-plans-major 87 percent. finances will be more stable if the higher tax -state-employees- • Also in September, Governor Quinn rates remain in place beyond 2015. union-pat-quinn . announced plans to lay off thousands Scenario A: Consolidated budget gap 14 http://www. of state workers and close seven projections under current law cnbc.com/id/44758 783/Illinois_ mental health and correctional facili - Can_t_Lay_Off_ ties in response to the reduced 13 Fiscal Futures Model 1_900_State_ budget. In October, an arbitrator The projects growth Workers_Arbitrator rates for a number of separate spending also see http:// ruled that the governor’s layoffs www.pantagraph. and revenue categories of the consolidated would violate prior agreements made 16 com/news/state- with the American Federation of funds budget. We use this model and the and-regional/ latest available data to estimate Illinois’ cur - illinois/ article_ State, County, and Municipal Em - 33d5792e-00d0- ployees (AFSCME). In addition, the rent and future fiscal situation. The October 11e1-94b1-0 2011 version of the Fiscal Futures Model 01cc4c03286.html . plans for facilities closures were 14 being challenged. On November 29, (using the most current data available as 15 http://illinoisissues 2011 the governor and legislators this was written) uses revised, but not yet blog.blogspot.com/ final, data for FY 2011 and updated esti - 2011/11/ reached a last-minute agreement to 17 lawmakers-say- keep facilities open and prevent lay - mates for FY 2012. In compiling numbers budget-deal-fixed. offs by shifting money from special for FY 2012, we have used the most current html 15 funds into the General Funds. available estimates from the Commission 16 See http://igpa. on Government Forecasting and Accounta - uillinois.edu/ bility (COGFA), the Illinois Office of the system/files/fiscal_ As illustrated by these events, after the futures_ January legislation very few changes have documentation_25 been made that would help bring Illinois 17 Fiscal Year 2012 does not end until July 2012, so may11 percent20 it is not yet known what the final, actual receipts final.pdf for much to solvency. Perhaps political leaders and and expenditures will be or what the“lapse more detail on data the public believe that the tax increase and period” for final payments will be. FY 2010 and and methods. spending caps are solving the state’s fiscal 2011 lapse periods were extended from two problems. To determine whether that is the months to six months past the end of the fiscal Fiscal Futures Model year. The Comptroller’s Detailed Annual Report for case, we used the to FY 2010 is not available (as of December 1, project revenue and expenditures into the 2011). FY 2011 data is available on the future for four possible scenarios. As we Comptroller’s website drilldown but since the demonstrate in the pages ahead, solving lapse period is not over until December 31, expenditure numbers for FY 2011 are still Illinois’ budgetary imbalance is going to be changing and are often revised. a very difficult struggle for the coming 46 decade. Institute of Government & Public Affairs
Comptroller, and the Governor’s Office of The long-term projections of the budget Management and Budget (GOMB). How - gap from the Fiscal Futures Model are ever, not all agencies and receipt categories shown by the blue line in Figure 1. If the have estimated total budgets from all funds higher tax rates are phased out beginning (as opposed to General Funds) available. in 2015, the consolidated-funds budget gap Therefore, in some cases we have had to es - is projected to rise from just under $3 bil - timate based on past trends. lion in 2012 to almost $13 billion in 2023. Note the big jump in the projected deficit Illinois’ four-year, 2 percent cap on spend - when the personal income tax rate drops ing growth applies to General Funds ex - to 3.75 percent in 2015 from 5 percent in 20 penditures. However, debt service and 2014. Figure 1 illustrates the important pension fund contributions from General point that the fiscal crisis in Illinois is far Funds are scheduled to grow by more than from over despite large tax increases and 2 percent. So, to remain within the con - tight spending caps. straints of the spending cap, we estimate that non-debt General Funds spending may grow by a maximum of • 0.8 percent in FY 2013, Figure 1 • 1.1 percent in FY 2014, and Projected Gap in Consolidated Budget With and Without 18 • 0.6 percent in FY 2015. Phase-out of Income Tax Rate Increases
0 General Funds spending represents less Tax rates go down than half of total spending in the 380-fund -2 Tax rates kept up consolidated Illinois budget used in the Fis - ) s -4 cal Futures Model . The General Funds share n o i l l of total spending varies widely across the i B -6 $ categories of expenditure—from zero per - ( p a
cent for employee health care spending to G -8
19 t 95 percent for corrections spending. e g
d -10 u B Since the spending caps apply only to a -12 fraction of the total budget, it is quite pos - sible that they will not be binding. When -14 1 2 3 4 5 6 7 8 9 0 1 2
spending starts to grow beyond the limits 1 1 1 1 1 1 1 1 1 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 set on the General Funds, parts of the 2 2 2 2 2 2 2 2 2 2 2 2 budget could be moved into the non-Gen - Fiscal Year eral Funds. If this happens, spending will Source: IGPA Fiscal Futures Model, with information as of November 6, 2011 continue to grow at the same underlying rate. Instead of this pessimistic (but plausi - ble) possibility, the model projections for FY 2013-15 assume that the General Funds 18 The corresponding share for FY 2012 was also less than 2 percent, but 2012 portion of each spending category really spending is estimated directly from budget documents and not projected by grows only by the allowable 0.8 percent, the model. 1.1 percent, or 0.6 percent maximum each 19 See Figure 9 below and Dye, Hudspeth and Merriman,“Why Ignore Almost year while the non-General Funds portion Half of the Illinois State Budget Picture? Consolidation of General and Special grows at the rate estimated for that cate - Fund Reporting.” Institute of Government and Public Affairs, University of gory from historical evidence. After 2015, Illinois, July 2011, http://igpa.uillinois.edu/system/files/Fiscal percent20 Futurespercent20Budgetpercent20Transparency percent20Report.pdf . growth rates estimated from historical data are applied. 47 The Illinois Report 2012
Scenario B: Consolidated budget gap projections with no drop in tax rates FY 2015. What if spending growth could be constrained across the entire consolidated budget and further into the future? The pro - The red line in Figure 1 shows the projected jected inflation rate in the Fiscal Futures budget gap if the higher income tax rates—5 Model varies slightly from year to year, but percent personal and 7 percent corporate— averages about 2.1 percent per year for the are retained past the 2015 expiration date. If next 10 years. the tax rates were to remain at the higher 20 By stopping the projections in 2022, levels, this would substantially reduce, but Figure 2 shows Fiscal Futures Model projec - the detrimental not eliminate, the projected consolidated tions of the consolidated budget gap assum - effect on the budget gap for Illinois. The deficit would be projected deficit of ing: the same impact of the cap on General a further drop in more than $4 billion in FY 2015, would Funds spending through 2015 that was as - the income tax rate grow each year, and exceed $6.5 billion in sumed in preparing the estimates used for in 2025 to 3.25 FY 2022. The growing budget gap results percent is not Figure 1, scheduled changes in debt service shown. from the fact that the model projects rev - and pension spending, and the same drivers enue to grow more slowly than spending— of revenue growth in all years; General a difference of about 1 percent per year. Funds spending growth is held to the infla - Scenarios C & D: Keep the growth rate in tion rate after 2015; and other spending spending down to the inflation rate grows at only the inflation rate both before and after 2015.
The spending growth cap applies just to The green line in Figure 2 illustrates Sce - General Funds spending and expires after nario C. If the higher tax rates are allowed to expire, the projected gap in the consoli - dated budget would reach $7 billion in FY Figure 2 2016 and then, because inflation-only Projected Gap in Consolidated Budget if Future Growth in growth in spending would be less than rev - All Non-Pension, Non-Debt Spending Can be Held to the enue growth, the gap would decline each Inflation Rate With and Without Phase-out of Income Tax year and reach $3.5 billion in 2022. The or - Rate Increases ange line represents Scenario D with both higher taxes and spending constraint. If 4 spending growth is held to inflation and the Tax rates go down not 2 Tax rates kept up higher income tax rates are phased out, the consolidated budget is projected to ) s 0 roughly balance in 2019 and reach a surplus n o i l
l of $3 billion in 2022. i
B -2 $ ( p
a Keeping the growth rate of all spending
G -4 t
e down to 2.1 percent per year would require g
d -6
u severe cuts in state programs. Over the long B term, wages tend to grow at a higher rate -8 than inflation, and only by doing so can the real standard of living grow over time. The
1 2 3 4 5 6 7 8 9 0 1 2 model assumes that state contributions to 1 1 1 1 1 1 1 1 1 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 pensions grow as currently scheduled by Fiscal Year law, but that schedule will result in growing
Source: IGPA Fiscal Futures Model, with information as of November 6, 2011 unfunded liabilities unless there are major changes to pension law. Medical costs, which show up in the state budget both as 48 Medicaid and contributions for employee Institute of Government & Public Affairs
health care, have grown well in excess of ei - inconsistent accounting conventions. ther the price inflation rate or the growth in Moreover, budget information is not al - other government spending and are pro - ways presented in a timely manner or an 21 jected to continue to do so. easily accessible form. Worse, confusion follows transactions that can flow through As brutal as it would be to hold overall multiple funds or accounting conventions spending growth to the inflation rate and to that change from one year to the next. maintain tax rates at or near current levels, 21 The Congressional it is reassuring to see projections that sug - The General Funds budget represents less Budget Office gest Illinois’ fiscal problems are potentially than half of state receipts and spending—a calculates“excess cost growth for manageable over the next 10 years. In The fact that is not always well-understood. Pre - spending for health Illinois Report 2011 , we estimated that the senting clear budget categories—without care” as 1.7 state budget gap was so massive that cor - fund shifts and transfers—increases trans - percentage points per year for the recting it with a change in any single policy parency. As we have explained, the Fiscal 1985 to 2007 instrument would be impossible. The big Futures Model uses a broad and time-consis - period and uses that same figure in tax increases enacted in January 2011, the tent budget concept—consolidated expen - their long-term spending cuts that have been made so far, ditures—which prevents distortion by projections, and the additional cuts necessary to achieve idiosyncratic accounting practices. Without http://www.cbo. gov/ftpdocs/122 the General Funds spending caps have an accurate assessment of the problem, it is xx/doc12212/06- whittled the gap from impossibly large to more difficult to make progress toward a 21-Long-Term_ potentially manageable. That’s progress. solution. If voters are to be asked to make Budget_Outlook. pdf , Table 3-1, p. 42. difficult choices, elected officials have an Before FY 2011, the state did very little long- obligation to provide clear and transparent 22 This section draws on Dye, Hudspeth, range fiscal planning, but legislation en - information about the actual history and and Merriman, acted in January 2011 mandated multi-year constraints faced by the state. “Transparency in forecasting and planning for some elements State Budgets: A Search for Best of Illinois’ budget. In April, the Commis - It is easy to agree that complicated, hid - Practices,” Institute sion on Government Forecasting and Ac - den, and inconsistent budget practices are of Government and countability (COGFA) issued multi-year not desirable and that greater transparency Public Affairs, University of budget projections for General Funds rev - would help create more informed policy - Illinois, September enue and spending for FY 2012 thru FY making. But how does one go about meas - 2011, http://igpa. uillinois.edu/ 2014. It is a very important step forward, uring budget transparency? A recent content/ but as we discuss in the following sections, report by the IGPA Fiscal Futures Project transparency-state- General Funds are not the total state team, Transparency in State Budgets: A budgeting . budget. This fact is not obvious because Search for Best Practices , examines budget looking at Illinois’ budget picture is like transparency from several perspectives. looking through a dark and distorted glass. But before presenting our own indicators The state could do a much better job of pre - of budget transparency, we briefly review senting budget information in a clear, past work by others: academic and profes - broad, and consistent way to help Illinois sional studies of government budget trans - move toward fiscal solvency. parency, and public interest organizations’ evaluations of public access to state budg - Budget Transparency: Benefits and Measures 22 etary information . Academic and professional studies of We believe that a focus on the seemingly government budget transparency arcane topic of budgetary reporting may be an important facet of fiscal reform and re - covery. State budgets in Illinois and other In academic literature, there are trans - states are massive, complicated documents parency studies published in political that use idiosyncratic and sometimes science, public administration, and 49 The Illinois Report 2012
Figure 3 Tally of State Budget Transparency Indicators Number of States with economics journals. Most of these studies: Each Count
(a) identify desirable characteristics of the Alt-Lassen Index of Budget Transparency timing or content of budget information; (b) find measurable indicators of these; (c) 14 13 13 13 compile an overall score for each govern - 12 s e ment studied; and (d) look for a statistical t 10 a t
association between budget ttransparency S f 8 o
23 scores and cross-government differences in r See our e 6 outcomes—such as the size of the budget, b 4 Transparency in m
u 4 State Budgets for 33 debt, or how informed the electorate is. N more details and 2 1 full citations. Empirical studies generally find that 0 greater transparency is associated with fa - 0 24 123 4 5 6 7 8 Our on-the-ground vorable outcomes. Almost all of the aca - experience demic articles describe transparency Count of Desirable Budget Features confirms all of the (Illinois = 4) Illinois-specific differences between nations. Only one NASBO data except group (James Alt and co-authors) has pub - Source: Dye, Hudspeth and Merriman,“Transparency in State for the claim that Budgets,” September 2011 Illinois uses multi- lished academic studies on budget trans - year expenditure parency among the United States. forecasts in compiling its budget. For Using recent data from the National Asso - criteria. Illinois’ tally of only four “yes” national ciation of State Budget Officers (NASBO) consistency, we scores is below 32 other states that score a have used NASBO we reconstructed an index based on the “yes” on from five to eight of the criteria. data for all states work of Alt and co-authors with current 23 Public interest organizations’ evaluations of but note that data. The criteria, number of states with a NASBO error on public access to state budgetary information this item causes “yes” and results for Illinois are: Illinois to appear to • Budget is reported using generally have a more transparent accepted accounting principles There are three groups that score states budgeting process (GAAP); 16 states, including Illinois, based on the online accessibility of their than it does in “yes”; budget and related information: Good Jobs reality. • Multi-year expenditure forecasts are First, U.S. Public Interest Research Group used; 38 states, including Illinois, (PIRG), and Sunshine Review. Figures 4-6 24 “yes”; show the number of states given A, B, C, D, • Budget cycle is annual; 29 states in - and F grades by each of the organizations. cluding Illinois, “yes”; • Revenue forecasts are binding; 32 Compared to other states, Illinois is graded states “yes,” Illinois “no”; fairly highly and earns a “C” from Good • Legislative branch has or shares re - Jobs First, a “B” from U.S. PIRG, and a “B” sponsibility for revenue forecasts; 37 from Sunshine Review. states “yes,” Illinois “no”; • Appropriation bills are written by A fourth public interest group, Truth in non-partisan staff; 31 states “yes,” Accounting, reports the average number of Illinois “no”; days from fiscal-year end to the release of • Tax or expenditure limitations; 29 the important Comprehensive Annual states “yes,” Illinois “no”; Financial Report (CAFR). As shown in • Budget requires published perform - Figure 7, Truth in Accounting groups the ance measures; 42 states, including states into three categories: Illinois, “yes.” • “timely,” up to 179 days; • “tardy,” 180-279 days; Figure 3 shows the distribution of states by • “worst,” 280 or more days, including 50 the total number of “yes” scores for the above Illinois at 316 days. Institute of Government & Public Affairs
Figure 4 Good Jobs First: Internet Disclosure of Budget and Other Information
30 s e
t 24 Figure 6 a t
S Sunshine Review: Completeness of
f 20 o Online Budget Information r 13 e b 10 m u 4
N 4 0 0 s
e 30 26 25 A B C D F t Dye, Richard, Nancy a t
S 20 Hudspeth and Overall Grade (Illinois = C) f o 11 13 David Merriman r
e 10 July 2011.“Why Source: Dye, Hudspeth and Merriman,“Transparency in State b Ignore Almost Half Budgets,” September 2011 m 0 0 u of the Illinois State
N 0 A B C D F Budget Picture? Consolidation of Overall Grade (Illinois = B) General and Special Fund Reporting.” Source: Dye, Hudspeth and Merriman,“Transparency in State Institute of Budgets,” September 2011 Government and Figure 5 Public Affairs, U.S. PIRG: Web-Page Access to University of Budget Information Illinois, July 2011, http://igpa. uillinois.edu/ 18 content/igpa- 17 Figure 7 report-examines- 20 Truth in Accounting: strategy- 15 Number of Days to Release of CAFR transparent- budgeting . 10 6 4 5 25 22 22
1 s e
t 20 N 0 a u A B C D F t m S 15 f b o e Overall Grade (Illinois = B) r r e 10 6 o b f S m
t 5 Source: Dye, Hudspeth and Merriman,“Transparency in State u a N
But dgets,” September 2011 e
s 0 Timely Tardy Worst ≤180 days 181– 279 days ≥280 days Rating (Illinois =“Worst” at 316 days) General Funds versus special funds shares of total spending Source: Dye, Hudspeth and Merriman,“Transparency in State Budgets,” September 2011
As we have discussed above and else - 25 where our study of Illinois has demon - strated that accounting procedures that year-to-year variation in net transfers. Be - narrow the focus of budgetary discussions cause General Funds are more commonly to General Funds can lead to obfuscation reported, using special funds or transfer - and confusion, and can enable the use of ring funds back and forth can cloud the unsustainable budgetary practices. Using budget picture. Year-to-year changes in this insight, we developed four original in - special funds or in fund transfers may alter dicators of fiscal transparency: (a) the the frame of reference and confuse budget share of total spending that comes from watchers. special—as opposed to General—funds; (b) year-to-year variation in that share; (c) Table 1 and Figures 8 and 9 show Illinois’ the magnitude of net transfers between scores on these measures. Note that for all General Funds and special funds; and (d) four measures, lower scores imply greater 51 The Illinois Report 2012
transparency and higher scores imply less budget transparency. Figure 8 Special Fund Share of Total Spending Figure 8 and the first row of Table 1 show
that the special-fund share of total spend - g .65 n i
ing in Illinois is far below the 50-state aver - d n
e .60
age in each year and eighth-lowest among p S l
a .55
states overall. Illinois’ relatively good score t o
Variation in the T
on this measure of transparency may be f .50 special-fund o e
misleading. The other three indicators sug - r a .45 share of the h
gest a lack of transparency. Inspection of S d state of Illinois the year-to-year changes in Figure 8 and n .40 u F budget is the second row of Table 1 indicate that l a
i .35 c e 9 8 7 6 5 4 3 2 1 0 9 8 extraordinary. variation in the special-fund share of the 7 0 0 0 0 0 0 0 0 0 0 9 9 9 p 0 0 0 0 0 0 0 0 0 0 9 9 9 S 2 2 2 2 2 2 2 2 2 2 1 1 Only three state of Illinois budget is extraordinary. 1 states have Only three states have more average vari - more average ability—i.e., less transparency—than Illi - Illinois variability— nois. 50-State Average i.e., less Figure 9 and the third row of Table 1 indi - Source: Dye, Hudspeth and Merriman,“Transparency in State transparency Budgets,” September 2011 cate that Illinois has extremely large —than Illinois. within-year transfers from General Funds to special funds (Measure C). While the 50- state average is about 2 percent, Illinois th ranked 39 on this measure of non-trans - variation ranges from 8 percent to 17 per - parency, among the worst in the nation. cent and averages around 13 percent. Illi - th nois is ranked 49 among the 50 states on The importance of broad and consistent the special-General fund transfer share. consolidated reporting to promote budget transparency The final row of Table 1 summarizes Meas - ure D, the year-to-year variation in the transfer share. Large year-to-year jumps, Illinois scores poorly on academic and other as seen in Figure 8, result in Illinois being measures of budget transparency. This lack
Table 1 Fiscal Future Measures of Fiscal Transparency for Illinois (Higher scores imply more confusing budgets thus lower transparency)
Average Illinois Score FY Illinois’ Illinois’ ‘97-09 Rank Transparency
A. Special Fund Share of Total Spending .458 8 High B. Variation in Special Fund Share .061 47 Very Low C. Special-General Fund Transfer Share of Total .127 49 Very Low D. Variation in Inter-Fund Transfer Share .032 39 Low
Source: Dye, Hudspeth and Merriman,“Transparency in State Budgets,” September 2011 52 Institute of Government & Public Affairs
Figure 9 Special-General Fund Transfer Share
g .20 n
i General Funds, seven highway funds, five
d .18 n
e .16 debt-service funds, nine bond-financed p S
l .14 funds, and hundreds of others, including a t .12 o nearly 300 federal and state trust funds. T
f .10 o Some important categories of spending,
e .08 r
a such as transportation, do not come out of
h .06 S
r .04 the General Funds budget. Other agencies’ e f
s .02
n budgets use a combination of General
a 26 Ibid. r 0 T Funds and special funds. Over time, the 7 8 9 0 1 2 3 4 5 6 7 8 9 9 9 9 0 0 0 0 0 0 0 0 0 0
9 9 9 0 0 0 0 0 0 0 0 0 0 use of non-General Funds has increased, 1 1 1 2 2 2 2 2 2 2 2 2 2 and today General Funds represent less We believe Illinois than half of the total budget . Still, most discussion of Illinois’ budget concentrates that the 50-State Average only on the four General Funds . advantages of transparency Source: Dye, Hudspeth and Merriman,“Transparency in State Budgets,” September 2011 If properly used, fund accounting can help support our policymakers determine the use of scarce call for Illinois resources and bolster public trust. How - to adopt a ever, the complexity and multiplicity of broad-based, of transparency may have contributed to funds can also be used to mystify, obscure time- the difficult fiscal situation in which and even distort true budgetary actions. consistent Illinois now finds itself. More importantly, Reporting only the General Funds budget framework for —while increasingly using non-General the lack of clear, accessible information reporting its about the Illinois budget and fiscal condi - Funds—allows important budgetary revenue and tion may inhibit constructive discussions choices, such as changes in transportation about potential remedies. The Fiscal Fu - spending, to be made with little scrutiny. It expenditures. tures Project has developed both concep - also becomes harder to monitor actual tual and concrete proposals for reformed changes in spending from one year to the reporting of Illinois’ budget. We believe next. These limitations, in turn, make it that the advantages of transparency sup - more difficult to foresee future budgetary port our call for Illinois to adopt a broad- problems. based, time-consistent framework for reporting its revenue and expendi tures. Adding more funds to budget reporting presents a more accurate and complete If Illinois is to effectively deal with its fis - picture of the state’s fiscal situation. The cal challenges it will need widespread Fiscal Futures Project team created a con - compromise and cooperation. Trust among solidated funds budget that tracks 380 groups with differing political agendas funds and uses historically consistent cate - and constituencies will be required. Clear, gories of spending and receipts . This view accurate and complete budgetary informa - of the budget brings important categories tion will enable discussions that can lead of state spending —transportation, debt to trust and mutually acceptable sacrifice service, transfers to local government, and for the good of the state. federal grants —into budget analysis and discussion of priorities . Toward consolidation and greater transparency 26 The consolidated budget also provides more consistency over time. Assigning an The state of Illinois has hundreds of sepa - item to General Funds in one year and to a rate funds created to monitor the receipt special fund in the next does not change and use of public money. There are four total spending. But if the focus is only on 53 The Illinois Report 2012
the General Funds, it would appear that Government to 10 percent for Environ - spending went down . Fiscal Futures Proj - mental and Natural Resources, and is more ect consolidated budget reporting is not af - than 80 percent only for Higher Education fected by changes in the assignment of and Corrections. Overall, as shown in Fig - spending (or revenue) from General Funds ure 11, the General Funds share of final to special funds and vice-versa because it spending is only 41 percent of the consoli - tracks total spending, regardless of fund dated total. assignment. 27 Ibid. Special funds often hold federal dollars or 28 For example, Another advantage to consolidation is that other earmarked revenue that comes with Governor Pat Quinn, FY 2011 inter-fund transfers cancel out. Transfers be - strings attached . Some argue that for this State of Illinois tween General Funds and special funds can reason, non-General Funds should be ex - 28 Budget Address, obscure the magnitude of actual changes in cluded from budget presentations . We March 10, 2010, Transcript Final the state’s budget situation . This could be believe non-General Funds should be Draft. http:// manipulated when there is a political ad - included for two reasons: (a) the legislature www2.illinois.gov/ vantage to making the budget look bigger could change past decisions to earmark cer - budget/ Documents/FY or smaller . Fiscal Futures Project consoli - tain revenues and (b) dollars in special percent202011 dated budget framework is not distorted by funds are important substitutes for , or com - percent20 Transcript.pdf transfers because revenue and expenditures plements to, General Funds expenditures 27 accessed 4-4-11 . are treated comprehensively . and should be carefully considered in budgetary discussions . For example, if fed - Figure 10 illustrates the difference between eral dollars become available for a specific the General Funds and consolidated funds program, such as education, they will be budgets with data from Fiscal Year 2010. placed in a specially designated fund . The The General Funds share of final spending portion of the General Funds budget that is ranges from zero for Transfers to Local used for education could then be reduced.
Figure 10 General Funds Expenditures as a Percentage of Consolidated Funds Expenditures
Medicaid ($14.4) 47.1 K-12 Education ($9.8) 73.9 y r Human Services $9.3) 64.9 o ) g n
e Transfer to Local Govt. ($5.1) 0 t o i a l
l Transport'n & Tollway ($5.0) 1.5 C i B g
$ Debt Service ($4.8) 0 n i t d n Pensions ($3.5) 0 n u e o Higher Education ($2.5) 86.8 p m S
A Employee Health Care ($1.4) 0 d 0 e t 1 Mgt., Legis. & Judicial ($1.8) 49.8 a 0 d 2 i
l Corrections ($1.2) 94.2 Y o F s
( Public Safety & Health ($1.0) 42.3 n
o EPA, Nat. Res. & Agric. ($0.9) 9.8 C Ec. Development ($1.3) 3.8 Other Expenditures ($2.4) 55.9
0 20 40 60 80 100 General Funds Final Spending as Percentage of Consolidated Funds Spending
Source: Dye, Hudspeth and Merriman,“Why Ignore Almost Half of the Illinois State Budget Picture? Consolidation of General and Special Fund Reporting,” IGPA, July 2011 54 Institute of Government & Public Affairs
Which special funds are the most impor - A final note: combined or consolidated re - tant ? Adding the 22 largest non-General porting does not mean that any accounta - Funds into reporting with the General bility and control restrictions on the use of Funds covers more than 80 percent of total particular funds have to be changed . It just consolidated spending. Adding 55 funds means that those funds would be easier to into reporting with the General Funds cov - monitor and could be subjected to more ers more than 90 percent of total consoli - scrutiny . It is also important to note that dated spending . In our full report on with any form of budget consolidation, an - 29 Dye, Hudspeth, and budget consolidation , we provide tables nual monitoring is necessary to maintain Merriman,“Why that show how the General Funds budget consistency . Ignore Over Half of the Illinois State differs from the total budget, as well as Budget Picture? 29 Difficult Choices Ahead lists of key funds. Consolidation of General and Special Fund Reporting, “ Another alternative, perhaps easier to im - The true extent of Illinois’ fiscal problems Institute of plement, would be to expand the number cannot be seen with the General Funds-only Government and budget, which is less than half of the total. Public Affairs, of General Funds to include 10 or 20 of the University of largest non-transportation funds that are Worse, the scope of the General Funds can Illinois, July 2011, currently designated as special funds. change from one year to the next with reas - http://igpa. uillinois.edu/ signments or transfers from special funds to content/igpa- General Funds or vice versa. A broadly and report-examines- consistently defined all-funds measure of strategy- transparent- Figure 11 the state’s budget is needed. Comparing Fiscal Futures budgeting . Consolidated Funds Budget for Illinois to General Funds, General Funds plus Likewise, more transparent consolidated 22 Funds, and General Funds plus 55 budget reporting could help policymakers Funds, Fiscal Year 2010 understand the magnitude of the problems and the difficult choices that need to be 70 made going forward. Consolidated budget
60 reporting would also make the gaps and alternative solutions more comprehensible s
n 50 to voters and help avert fiscal crises in the o i l l i future. B 40 $ , s e r 30
u The Fiscal Futures Project has developed a t i
d broad measure of the state budget that n
e 20
p consolidates reporting of Illinois’ four x E 10 General Funds with about 380 special funds. This is a time-consuming exercise 0 requiring detailed information that is Consolidated Funds available only after a budget year has been Budget for Illinois completed, and is not available when the General Funds Budget governor is presenting or the General As - (41% of consolidated) sembly is voting on a budget for the up - Add 22 largest funds (84% of consolidated) coming year. However, adding 20 to 50 other funds to the General Funds could Add 33 more funds (55 total) (91% of consolidated) bring 80-90 percent of the full budget pic - ture into view. This is not complete trans - Dye, Hudspeth and Merriman,“Why Ignore Almost Half of the Illinois State Budget Picture? Consolidation of General and Special parency, but it would be far better than the Fund Reporting,” IGPA, July 2011 current 40 percent that the General Funds represent of the consolidated funds total. 55 The Illinois Report 2012
Using the consolidated funds budget con - The sobering news is there are no quick or cept, the Fiscal Futures Model estimates that easy solutions for Illinois. The changes of the state’s budget gap is (a) currently on the the past year mean that Illinois residents order of $4 billion; (b) will jump to $10 bil - and businesses are already paying higher lion in FY 2016 after the income tax rates are taxes and receiving fewer services. The tax scheduled to go down; (c) will rise each year increase was not the instant solution that after that if spending growth exceeds rev - some people thought it would be: cutbacks enue growth as historically has been the and late payments will continue to affect The sobering case; and (d) will reach about $13 billion in schools, human service providers, and news is there FY 2023. The actual budget problem is those who rely on state assistance. The are no quick or worse because these estimates do not ac - prospect of 10 years of additional belt easy solutions count for the current backlog of unpaid bills, tightening is daunting. If the higher tax for Illinois. increased borrowing or other consequences rates are phased out when scheduled, Illi - of dealing with the large and growing nois’ state of fiscal insolvency will con - deficit, or an unfunded pension liability that tinue for even longer than a decade. will continue to grow without policy action. Holding spending growth to the inflation rate might sound fairly painless, but The good news is that policy solutions to higher pension and debt service costs will address a budget gap on the order of $10 take a good chunk of that and it is hard to billion are potentially available. We esti - imagine medical costs not growing in ex - mate that if the large increases in income cess of the inflation rate, further squeezing tax rates adopted in January 2011 are not other types of spending. Bringing Illinois’ phased out and if the growth in total state budget into balance will impose great po - spending can be kept down to the consumer litical, economic, and human costs for price inflation rate, the budget gap could many years to come. be eliminated within 10 years. y o C c M y e s l e K y b h p a r g o t o h
56 P The Ilinois Report 2012 C H A P T E R 5
57 Illinois’Pension Puzzle By Darren Lubotsky
The funding of public-sector pensions has been among the most hotly debated issues in Illinois recently. State-funded pensions currently do not have enough assets on hand to pay all currently-promised bene- fits. The public perception is that these pension programs, as currently structured, 1 SURS offers are not sustainable and are a drain on state members a choice revenue. This chapter explains how these between a tradi- tional DB plan, the public programs work, reviews the rele- Self-Managed Plan vant financial issues, and gives an (which is a defined overview of options for reform. contribution plan), Darren Lubotsky, and the Portable Associate Professor of Economics, IGPA Plan (which is a There are five public-sector pension pro- hybrid DB-DC plan). grams in Illinois: the State Employees’ Re- tirement System (SERS) for employees of pension programs are funded by a combi- the state government; the Teachers’ Retire- nation of contributions from employees and ment System (TRS), which provides bene- contributions from each respective em- fits to most public school teachers ployer. For example, teachers contribute 9.4 (teachers in the Chicago Public Schools percent of their salary toward the pension participate in a separate plan); the State program. Universities Retirement System (SURS), which provides benefits to employees of The unfunded liability of each program public universities and community col- refers to the difference between the assets leges; the Judges’ Retirement System (JRS), that each fund has on hand and the esti-
Photo on page 57: which provides benefits to judges; and the mated present discounted value of prom- IGPA hosted General Assembly Retirement System ised benefits. Figure 1 shows the estimated informative panels (GARS) for members of the General As- accrued liabilities, assets, and the un- on public pension policy on all three sembly. Most SERS participants also pay funded liability for TRS, SERS, and SURS University of Illinois into the Social Security system. Partici- as of November 2011. These three pro- campuses in April pants in the other pension programs do grams account for 98.5 percent of total lia- 2011. not concurrently participate in Social Secu- bilities. For ease of exposition, balances for rity and thus their pension represents their JRS and GERS are omitted. The figure primary source of retirement savings. Par- shows that the accrued liability is $81.3 bil- ticipants in all programs are part of the lion in TRS, $31.4 billion in SERS, and Medicare system. $31.5 billion in SURS. Assets on hand are considerably less in each program – 46.1 All five of these programs offer defined percent of the TRS liability is funded; 34.9 1 benefit (DB) pensions. DB pensions are re- percent of the SERS liability is funded; and tirement annuities in which the employee’s 45.3 percent of the SURS liability is monthly pension payment is determined by funded. a function of their salary and years of serv- ice. For example, the current benefits for- It is important to understand what this un- mula for TRS is 2.2 times a measure of final funded liability represents. An unfunded 58 salary times years of creditable service. The liability means that the assets currently in the respective pension funds are not suffi- cient to pay the projected future benefits that state employers have promised. This Figure 1 Assets and Liabilities for the Three Large Illinois Pension unfunded liability results from revenue Programs, FY2011 flowing into the pension fund at a slower rate than future benefits are being accrued. 90 The existence of an unfunded liability does 80 Accrued liability not, on its own, imply that benefits are too 70 high or funding is too low; rather, there is Assets 60 a mismatch between revenue and costs. Ei- Fraction Funded 50 ther or both could be adjusted to bring the 46.1% system into balance (although, in this case, 40 30 Illinois’ unfunded liability is largely the re- 34.9% sult of the state not making its required 20 45.3% Values in Billions of Dollars pension contributions). An unfunded lia- 10 bility does not mean that funds are not 0 available to pay pension payments this TRS SERS SURS year; it also does not mean that the state is Note: Funding ratios are given above the bar indicating the unfunded liability. prevented from moving other funds into Source: Illinois Commission on Government Forecasting and Accountability, November 2011 Monthly the pension account to pay promised bene- Briefing, p. 9. fits. For example, the state could raise ad- ditional tax revenue or reduce spending on other programs to increase the balance in the pension fund. employees hired before 2011 is the highest four consecutive years out of the previous The following sections of this chapter re- 10. In addition, the salary used to compute An unfunded view the 2010 pension reform law and the benefits for newly hired employees liability means Senate Bill 512, a major piece of pending will be capped at $106,800 (this cap is tied that the assets legislation that may come up for a vote in to the Consumer Price Index and will in- currently in the 2012; ask what we should expect from a crease annually). These changes will gener- respective compensation system in general and pen- ally have the effect of reducing the final pension funds sion program in particular; discuss some salary used to compute benefits and there- are not potential policy options that have received fore reduce pension payments. Employees sufficient to less attention recently; and discuss options hired before 2011 will have their pension pay the benefits increased by 3 percent per year. to dispose of the accumulated unfunded projected liability. For new employees, benefits will be in- creased each year by the lessor of 3 percent future benefits Recent Reforms and Proposals in Illinois or one-half of the inflation rate. This will that state slow down the growth in benefits after an employers A state law enacted in April 2010 reduced individual retires. have promised. pension benefits in various ways for state employees hired in 2011 or later. For newly The 2010 law only affects benefits for em- hired workers, the normal retirement age ployees hired after December 31, 2010. is 67; employees hired before 2011 may re- There are also proposals to reduce benefits tire as early as age 55 if they have appro- for employees hired before 2011. Perhaps priate service credits. The final salary used the most well-known is Senate Bill 512, to calculate benefits for newly hired em- which was proposed in the 2011 General ployees will be the highest eight consecu- Assembly session but had not been voted tive years out of the previous 10 years; the on at year’s end. This legislation proposes final salary used to compute benefits for that employees hired before 2011 who 59 The Illinois Report 2012
participate in a defined benefit plan would have when she actually retires. It is very have the option to retain their current plan difficult, if not impossible, to freeze future and contribute a substantially higher por- accruals and leave all employees un- 3 tion of their pay, or switch to the same de- harmed. Most employees who opt for the fined benefit plan offered to new DC plan would contribute 6 percent of employees. For example, SURS partici- their pay toward their defined contribu- pants currently contribute 8 percent of tion account and the state would con- their salary to the plan; under the pro- tribute an equal amount (SERS employees 2 Note that the details of SB 512 are posed legislation this would rise to 15.31 who contribute to Social Security would under discussion percent for employees who elect to stay in contribute a little over 4 percent of their and periodically change. The text their current plan. TRS participants cur- pay toward the DC plan). above reflects the rently pay a 9.4 percent contribution; this amended version of would rise to 13.77 percent. The state There is no doubt that this proposal repre- the bill as of December 2011. would contribute 6 percent of employees’ sents a decline in the net value of the pen- This amended bill is salaries toward the plan. Beginning in sion program. Employees hired before available at 2017, employees’ contributions would be 2011 would either pay more money to http://www.ilga. gov/legislation/97/ adjusted annually to reflect the so-called keep their current plan or switch to a less- SB/PDF/09700SB05 normal cost; i.e. the cost of benefits earned generous plan. The Illinois Constitution 12ham002.pdf. in that year, less the state’s 6 percent con- contains what is known as the non-impair- 3 A nice summary of tribution. Employees who elect to switch ment clause, which reads “Membership in DB pension freezes to the less-generous and less-costly plan any pension or retirement system of the in the private sector is Alicia Munnell, offered to new employees would con- State ... shall be an enforceable contractual Francesca Golub- tribute 6 percent of their salary (Chicago relationship, the benefits of which shall not Sass, Maurico Soto, and Cook County employees would con- be diminished or impaired.” It is unclear and Francis Vitagliano (2006), tribute 7 percent of salary). They would whether this clause allows the kind of “Why are Health also keep the benefits they had earned be- changes proposed in SB512. I refer readers Employers Freezing their Pensions?” fore the switch, with the level of pay used interested in understanding alternative Boston College, to determine this portion of their benefits legal interpretations of the non-impair- 2 Center for Retire- frozen. ment clause to Laurie Reynolds’ chapter in ment Research, Issue in Brief, Num- “Public Pension Policy in Illinois: An Intro- 4 ber 44, March. Existing employees would also have the duction to a Crucial Issue.” Available at option to switch to a defined contribution http://crr.bc.edu /images/stories/ pension (DC) plan, referred to as the self- Because SB512 raises the cost for employ- Briefs/ib_44.pdf. managed plan. Employees currently in a ees to stay in their existing plan, it is likely
4 This report is defined benefit plan who opt to switch to that many employees will switch to either available at the defined contribution plan would still the less-generous defined benefit plan or http://igpa.uillinois. receive the defined benefit pension that to the self-managed plan. The proposal’s edu/system/files/ IGPA%20Report% they had already earned, based on their less-generous DB plan contains an earn- 20on%20Pensions current levels of pay. They simply would ings cap so it is certainly the case that most %202011.pdf. not accrue new benefits. It is important to employees who expect to have earnings understand, however, that since DB pen- above this limit will choose the self-man- sions base payments on a measure of aged plan. These incentives put front and salary, freezing future accruals necessarily center the question of what the appropri- reduces the value of previously earned ate pension program should look like. benefits for most groups of workers. Put What Do We Want From a Public Pension simply, a mid-career worker who switches System? from a DB to DC plan will have her DB benefits based on her relatively lower mid- career salary at the time of the switch, A compensation system should strive to 60 rather than the higher salary she would attract and retain appropriate public Institute of Government & Public Affairs
employees at the lowest cost to taxpayers. benefits, the commute time, whether the Within the context of a total compensation boss is friendly, the intrinsic enjoyment package, a well-designed pension plan, they derive from the work, among many and a benefits program more generally, can other things. They choose the job that make both employees and employers bet- gives them the greatest overall benefit or ter off. Employers can generally purchase satisfaction. When comparing jobs that group insurance and annuity products offer different compensation packages, (such as DB pensions) at a lower cost than such as one with a higher salary and less- One of the what an employee would pay to get the generous benefits versus one with a lower same product on their own. Both of these salary and generous benefits, people im- biggest products involve a shift in risk from the in- plicitly (or explicitly) trade off salary and misconceptions dividual to the insurance company or pro- benefits. about gram sponsor. Health insurance, of course, employee protects people from the risks associated There are two important consequences of benefits is that with uncertain medical expenses. Retire- this for public pension design. The first is employers give ment annuities protect against the risk that that reducing the generosity of the pension them as “free a person will outlive their assets. While is equivalent to cutting salary: both repre- add-ons” in a health expenses and longevity are highly sent a decline in total compensation. Cut- compensation uncertain for any particular person, the ting the generosity of the pension may not package and distribution of these events within a large save as much money as it first appears if that employees group of people is quite predictable. Pool- the employer is then forced to offer corre- ing risks within an employee pool lessens spondingly higher salaries to attract and do not give up the riskiness of the group. Thus, health in- retain the same quality workforce. anything to get surance and retirement annuities can be them. The provided at a lower per-person cost to a The second consequence is that the pen- truth is that, in group than to each individual on their sion program should be designed to maxi- large part, own. This provides a powerful incentive mize the retirement security of employees employees pay for businesses and public-sector employers for a given cost level. That is, for a given for all of their to offer a compensation package that in- cost to the employer, the pension should benefits in the cludes health insurance and a pension, and maximize the perceived value of the pen- form of a lower a correspondingly lower salary. Employees sion program to employees. While the cost cash wage or benefit because the salary reduction repre- of pensions to the employer is surely im- salary than sents a lower implicit price for these prod- portant, as is the total cost of compensa- ucts than what they would pay if they tion, discussion of how to reform the they otherwise bought the products on their own. (The system seems quite disconnected from un- would have federal tax code provides further financial derstanding the effect that various pro- received. incentives to offer health insurance and gram features will have on employees’ pensions in a compensation package.) retirement security.
One of the biggest misconceptions about It is important to understand that thinking employee benefits is that employers give about the right pension system for Illinois them as “free add-ons” in a compensation public-sector workers should not be con- package and that employees do not give nected to the existence of an unfunded lia- up anything to get them. The truth is that, bility. Whether we have a debt or not, we in large part, employees pay for all of their want a compensation system in general benefits in the form of a lower cash wage and a pension in particular that allows the or salary than they otherwise would have state to recruit and retain appropriate tal- received. When people choose which job to ent. A debt is a sunken cost. It needs to be apply for and ultimately accept, they con- addressed, but the logic that says we sider a range of factors: the salary, the should have a less-generous pension so 61 The Illinois Report 2012
that the state can more easily pay off its defined benefit plans in the private sector 5 debts is mistaken. A better policy would over the last 30 years. There are many say that if we need to spend less money, reasons for this: defined contribution cut the program or employees that provide pensions are portable, while DB pensions the least amount of value per dollar to tax- tend to penalize workers who change jobs. payers. Defined contribution pensions give work- ers a foray into the stock market that they Finally, one frequently hears the complaint may not otherwise have. Finally, it is easier 5 Alicia Munnell and Pamela Perun that public employees receive pensions for firms to administer these plans because (2006), “An Update that are too generous. This is not the cor- all contributions are made up-front, as on Private Pensions,”Boston rect way to think about the pension pro- opposed to DB plans in which funds need College, Center for gram. What should matter to the state to be set aside to cover estimated future Retirement government and to taxpayers is whether payments. Research, Issue in Brief, Number 50, the total compensation costs are appropri- March. Available at ate. There is some academic work that at- Nearly all private-sector workers partici- http://crr.bc.edu tempts to measure whether public-sector pate in Social Security and through this /images/stories/ Briefs/ib_50.pdf. pay is at the appropriate level. But there is program have a baseline, annuitized not a consensus among researchers about source of retirement income. In an impor- the appropriate way to credibly answer tant sense, private-sector DC plans are a One frequently this question or what the correct answer supplement to workers’ Social Security hears the happens to be. One issue is that it is inher- wealth. That is not the case for Illinois complaint that ently difficult to find a good comparison public-sector workers, except those in public group for many classes of public-sector SERS who do participate in Social Security. workers. A second issue is that there are For those employees not in Social Security, employees many attributes of workers that are diffi- giving powerful incentives to switch to a receive cult to measure, but that affect earnings. DC-style pension will make it more diffi- pensions that Understanding whether differences in cult for them to have a stable, annuitized are too compensation are due to these unmea- source of income during retirement. generous. sured factors or because one group is “overpaid” is quite difficult. The primary benefit of shifting employees Options for Reform of the Public Pension into a DC-style pension is that it would force System in Illinois the state to pay its pension obligations up- front. The state would pay its share of con- tributions to a DC pension each pay period, The preceding discussion makes clear that just as employees make their own contribu- the state faces two separate and distinct tions. This would prevent the state from questions: the first is what should be the falling behind in its pension obligations, as optimal pension program for state employ- it currently has done. Put differently, be- ees moving forward. The second question cause DC pensions are funded upfront, they is how the state should dispose of the ac- are always fully funded. There is a signifi- cumulated pension liabilities. This section cant value to having a pension program that addresses the first question. The next sec- is largely fully funded: it gives employees a tion addresses the second question. degree of certainty about their future pen- sion. Under the current system, employees An important issue raised by Senate Bill don’t know whether the governor and legis- 512 is what role should defined contribu- lature will alter the pension in a way that re- tion pensions play in the state of Illinois’ duces their future benefits. This uncertainty pension programs. Employee 401(k) plans is costly to the state because it reduces the and other types of defined contribution perceived value of the compensation pack- 62 pensions have almost completely displaced age. Some individuals who would accept Institute of Government & Public Affairs
employment with the current pension do A separate policy issue is whether the state not because they perceive that the pension should devolve responsibility for pension promise will not be fulfilled. funding to other areas of government. For example, most human resource decisions, An option that marries some of the bene- including salary levels, in local schools and fits of both DC and DB pensions is to intro- state universities are made by the respec- duce a hybrid pension system in which tive organizations (perhaps through a col- employees participate in smaller versions lective bargaining arrangement). But the 6 A full report on the of both types of programs. One example of pensions are designed and funded, in part, State Summit is this is the “stacked” program proposed by by the state. Michael Hogan, president of available from http://igpa.uillinois. Alicia Munnell, the Peter F. Drucker Pro- the University of Illinois, recently wrote in edu/system/files/ fessor of Management Sciences at Boston the Chicago Sun-Times that the reduced pen- IGPA_State_ College’s Carroll School of Management, sions proposed in Senate Bill 512 would Summit_on_ Pensions_ REPORT. at the 2011 IGPA State Summit on pension make it more difficult for the university to pdf. 6 reform. In a system like this, an employee attract highly skilled and highly mobile 7 would accrue benefits in a DB program faculty who have choices about where to Michael J. Hogan, 7 “Cutting Pensions based on some base level of income, say work. An alternative system is to let each Would Lead to U. of their first $50,000. Income above this university and local school district (or com- I. Brain Drain,” Chicago Sun-Times, threshold would not lead to any additional binations of them) operate and fund their October 31, 2011. DB benefits, but a portion would be con- own pension. This would give each organi- Available at tributed into a DC plan, perhaps matched zation the flexibility to design a pension http://www.uillinois .edu/president/ in part by contributions from the state. A that is most appropriate for their particular massmail/2011/ virtue of a hybrid system is that it pre- employees. If the University of Illinois Nov1.Pension serves a basic minimum annuitized source wanted to offer more generous pensions Funding.cfm of wealth for all state employees. A second than, for example, the Illinois Department virtue is that it allows employees to reap of Revenue, it would have the flexibility to some of the benefits of both styles of pen- do so and would pay the full cost. Reneging on past promises sions. In particular, it gives employees a What Are the Options for Disposing of the degree of flexibility in their investment in- Accumulated Pension Liabilities? means struments and, depending on how it is de- reducing signed, flexibility in their level of savings. benefits that The unfunded pension liability is a claim already have Because uncertainty is costly, as long as the by current employees and retirees on fu- been earned. state sponsors a DB plan it is important to ture government resources. As such, it is consider policies that give employees more conceptually the same thing as a loan certainty that their promised benefits will made by employees and retirees to the be paid. A large unfunded liability will al- government. There are four options for ways raise questions about whether the disposing of the accumulated liabilities. state will pay promised benefits. The Illi- The state could simply renege on past nois Municipal Retirement Fund, which promises (that is, default on the implicit administers pensions for local government loan), borrow additional money, raise ad- employees, is relatively well-funded be- ditional revenue, or reduce spending on cause local governments are required by other programs. All of these options raise law to make their annual payments. One both equity and efficiency issues. could imagine a law that prohibited the state from skipping payments to its own Reneging on past promises means reduc- DB plans, which would force the state to ing benefits that already have been earned. do some combination of cutting spending This raises legal issues that are beyond the on other programs, raising the necessary scope of this chapter. It also raises impor- tax revenue, or borrowing the money. tant equity issues because a large part of 63 The Illinois Report 2012
the unfunded liability is a direct result of making this decision and, in effect, pushes the past decisions by the state’s elected the cost onto the next generation of tax- leaders to spend money on other pro- payers and users of government services. grams, or keep taxes lower than they oth- erwise would have been, instead of Some state governments have turned to making their required pension payments. Pension Obligation Bonds as a way to fund The important efficiency consequence of their pension programs. These are contro- reducing previously earned benefits is that versial because government accounting The alternative individuals in the future who are contem- rules allow pension funds to essentially to borrowing plating public-sector employment will dis- count the spread between their assumed or reneging on count the value of deferred compensation rate of return on pension assets and the the debt is to because they will likely perceive a poten- cost of borrowing funds as an immediate fund it through tial for promised benefits to be reduced net gain in pension assets. Research by spending cuts, after the fact. Munnell et al indicates that these bonds increased tend to be used by governments that are Borrowing to fund the pensions simply re- cash-strapped and have taken on too much revenue, or a 8 combination places an implicit debt with an explicit investment risk. of these. one. The government’s total debt level is unchanged. Nevertheless, this has some The alternative to borrowing or reneging advantages. In particular, it gives employ- on the debt is to fund it through spending ees the certainty that funds are already set cuts, increased revenue, or a combination aside and makes it less likely that their of these. Both have equity and efficiency 8 Alicia H. Munnell, Thad Calabrese, benefits will be reduced at some future implications. Government services gener- Ashby Monk, and point. Borrowing also makes the total cost ate benefits that are, one would hope, Jean-Pierre Aubry of government operations more transpar- greater than their costs. Efficiency implies (2010), “Pension Obligation Bonds: ent and shows that future pension liabili- cutting those services that generate the Financial Crisis ties are not inherently different from any least benefit per dollar of expenditures. Exposes Risks,” other type of government borrowing. Since Raising revenue through taxation distorts Boston College, Center for Retire- debt payments must be made on a regular economic decision-making and leads some ment Research, schedule, whether the economy is doing people to avoid economic activity in which State and Local Pension Plans Issue well or poorly, borrowing may make it they otherwise would engage. The value of in Brief, Number 9, more difficult for the state to smooth its this reduction in economic activity is re- January. Available spending over the business cycle. This in- ferred to as deadweight loss and repre- at http://crr.bc.edu/ images/stories/slp_ flexibility may be a good thing, however, if sents the true cost of the tax. In general, to 9.pdf. it prevents the government from skipping minimize this deadweight loss, it is better pension payments when times are tough to have taxes that are assessed on as large but not making correspondingly larger a tax base as possible, with as low a rate as payments during economic booms. A key possible. That is, to raise a specific amount conclusion, though, is that when the state of money, deadweight loss is minimized borrows to fund its pension obligation, it by taxing (for example) all income or all simply kicks the can down the road and consumption, rather than introducing ex- still needs to make real funding decisions emptions that require the overall tax to be later. By borrowing, the state simply defers increased.
64 Photograph by Kelsey McCoy The Ilinois Report 2012 CHAPTER 6
65 An Illinois Health Care Report Card By Bryan N. Becker, Assistant Vice President for Health Affairs, University of Illinois
Recent national and state legislation has embodied efforts to reform and improve health care, focusing on objectives of ac - cess, cost, and outcomes. Researcher D.M. 1 Berwick and others have defined this re - fined focus as the triple aim of improving the experience of care, the health of popu - lations, and reducing per capita costs of 1 Berwick DM, Nolan TW, Whittington J. health care. Another way to put it would Health Affairs be delivering the right care in the right 27:759-69, 2008. place to the patient at the right time. 2 Health Forum, AHA Hospital Statistics To achieve the triple aim in either manner 2011 Edition , An American Hospital for the citizens of Illinois, it is necessary to Association Com - account for existing health resources and pany, Chicago, IL. care trends so areas of opportunity and im - 3 provement can be identified. This brief re - http://state Bryan N. Becker, snapshots.ahrq. port highlights key pieces of information gov/snaps10/ U of I Assistant Vice President for Health Affairs Methods.jsp?menu and resources to classify basic health care Id=67&state=#all usage trends and disparities in our state. states, last accessed or worse than average. State-level informa - Dec. 5, 2011. Health Care: The Basics for Illinois tion is based on data collected for the Na -
4 http://state tional Healthcare Quality Report (NHQR). snapshots.ahrq. Illinois had 189 community hospitals in Points are added together into a national gov/snaps10/ and regional meter score. An aggregate dashboard.jsp? 2009, the last year for complete data collec - menuId=4&state tion in this category, down from 196 a score of less than 20 is defined as very 2 =IL&level=0, last decade earlier. These hospitals provided weak, a score between 21 and 40 is weak, a accessed Dec. 1, score between 41 and 60 is average, a score 2011. 33,900 hospital beds, addressing 1,558,000 hospitalizations in 2009. The average hospi - between 61 and 80 is defined as strong, and tal daily census was 21,300 with an average a score greater than 80 is very strong. cost per day of $1,948. There were also 32.1 Overall, health care quality in Illinois was million outpatient visits at health care sites 4 in Illinois during the same year adding to rated as average. Illinois was weak in pre - the cost and resource needs necessary to ventive and chronic care measures and drive care for the residents of the state. average in acute care measures. Notably, when evaluating measures by setting of Health Care Quality Comparing Illinois to care, Illinois was very strong in home Other States health care measures, average in hospital care measures and weak in nursing home The Agency for Healthcare Research and care and ambulatory care measures. Quality (AHRQ) compiles state-specific re - 3 ports of health care quality. This scorecard When viewing care by clinical area, heart defines five categories—very weak, weak, disease and maternal and child measures average, strong and very strong—based on were average, whereas diabetes measures the number of points for each health-related were weak and cancer and respiratory dis - 66 measure that is better than average, average, ease measures were rated very weak. The Table 1 2010 National Healthcare Quality Report: Illinois Ranking Select Measures
Measure Definition All-States Illinois Illinois Average Rate Rank
Cancer Breast cancer deaths Breast cancer deaths/100,000 female population 22.7 24.6 41 Colorectal cancer deaths Colorectal cancer deaths/100,000 population/year 6.8 19 42
Diabetes Diabetes with flu shots Percentage of non-institutionalized high-risk adults ages 18-64 with diabetes who had influenza immunization in the past year 47.0 33.2 50
End Stage Renal Disease Adequate dialysis Percentage of adult hemodialysis patients with adequate dialysis 96.2 95.5 26
Timeliness Heart attack - PCI in 90 Percentage of hospital patients with heart attack minutes who received percutaneous coronary intervention (PCI) within 90 minutes of arrival 82.4 80 32 5 http://state snapshots.ahrq. Always got appoint- Percentage of adults who needed care right gov/snaps10/ ment for illness/injury/ away for an illness, injury, or condition in the last diabetes.jsp?menu condition - adults on 12 months who got care as soon as wanted, Id=26&state=IL& Medicare managed care Medicare managed care 69.7 68.3 31 level=10, last accessed Dec. 5, Heart Disease 2011. Heart attack - ACEI or Percentage of hospital patients with heart attack ARB at discharge and left ventricular systolic dysfunction 6 http://state prescribed ACE inhibitor or ARB at discharge 94.1 93.7 31 snapshots.ahrq. Heart failure - recom- Percentage of hospital patients with heart failure gov/snaps10/ mended care received who received recommended hospital care 95.3 95.8 16 diabetes.jsp?menu Id=29&state=IL& (Continued on page 68) level=11&page=2, last accessed Dec. 1, 2011.
7 Gilmer, T.P.; O’Connor, P.J.; Rush, most recently reported data for diabetes reduced by approximately $1.9 million per W.A.; Crain, A.L.; noted a hospitalization rate for diabetic year and excess costs due to lost productiv - Whitebird, R.R.; complications of 249 per 100,000 people in ity among employees with diabetes could be Hanson, A.M.; Solberg L.I. Illinois whereas the hospitalization for dia - reduced by $21.6 million per year. Diabetes Care , 28:59-64, 2005. betic complications was 237 per 100,000 for Additional Health Measures the Midwest and 238 per 100,000 for the 5 United States in general. Steps that improve st nd hemoglobin A1C (HbA1C) levels, a measure Illinois ranked 41 and 42 among the 50 of blood glucose control, can help to reduce states in deaths from breast cancer and col - health care costs as demonstrated in one orectal cancer in 2010 (Table 1). Illinois was st model evaluating excess costs associated ranked 31 when examining the percentage with diabetes for state government employ - of Medicare patients [68.3 percent] who re - ees. If the state of Illinois’ employees and ceived an appointment for an injury/illness nd dependents were able to reduce HbA1C val - and 32 for the percentage of hospital pa - ues by 0.5 percent, then spending on dia - tients with a heart attack who received a betes care for state government employees percutaneous coronary intervention (PCI) might be reduced by approximately $1 mil - within 90 minutes of arrival [80 percent]. lion per year and excess costs due to lost Illinois’ strongest measures were in improv - productivity among employees with dia - ing medication management for home health betes could be reduced by $11.8 million per care and improving pain management for 6 7 year . , If state employees and dependents ambulatory patients at home. Illinois had were able to reduce HbA1C values by 1 per - also previously scored high in following patients’ wishes in hospital care and with cent, then spending on diabetes care for 67 state government employees might be low rates of collapsed lungs among Table 1. (Continued) 2010 National Healthcare Quality Report: Illinois Ranking Select Measures
Measure Definition All-State Illinois Illinois Average Rate Rate
Maternal and Child Health Children fully vaccinated Percentage of children ages 19-35 months who received all recommended vaccines (4:3:1:3:3) 77.7 78.1 22
Mental Health and Substance Abuse Suicide deaths Suicide deaths/100,000 population 10.7 8.5 6
Respiratory Diseases Pneumonia vaccine ever - Percentage of adults ≥65 who ever received a age 65 plus pneumococcal vaccination 67.6 57.2 50 Pneumonia - recom- Percentage of hospital patients with mended hospital care pneumoniawho received recommended received hospital care 90.4 89 34 Kendall, HIV and AIDS DuPage, HIV deaths HIV infection deaths /100,000 population 2.6 2.3 14 Woodford, and
McHenry Patient Safety Counties were Inpatient surgery - Percentage of adult surgery patients who appropriate antibiotic received appropriate timing of antibiotics 91.9 91.7 26 ranked 1, 2, 3 timing and 4 as the Supportive and Palliative healthiest of Care the 102 Nursing home long-stay Percentage of long-stay nursing home residents residents - physically physically restrained 3.4 3.4 26 counties in restrained Illinois. Nursing home long-stay residents - low-risk with Percentage of low-risk long-stay nursing home pressure sores residents with pressure sores 2.0 2 14
Functional Status 8 http://www.county Preservation and healthrankings.org/ Rehabilitation illinois, last Home health care - Percentage of home health care patients who accessed improved mobility improve ambulation or mobility 44.3 43.3 31 Nov. 27, 2011. Patient Centeredness Always had good Percentage of adults who had a doctor's office or communication with clinic visit in the last 12 months whose health providers - adults on providers always listened carefully, explained Medicare managed care things clearly, respected what they had to say, and spent enough time with them. 75.4 76.4 17
Source: Adapted from the Illinois 2010 National Healthcare Quality Report Ranking on Selected Measures, http://statesnapshots.ahrq.gov/snaps10/ staterankings.jsp?menuId=61&state=IL, last accessed November 29, 2011.
A Deeper Dive: County Health Rankings hospitalized patients (iatrogenic pneumoth - orax). Illinois performed weakest in provid - 8 ing vaccination against the most common The County Health Rankings take a deeper cause of community-acquired pneumonia view of health in individual counties in Illi - (pneumococcal vaccine) to nursing home nois . These rankings are based on a model residents and to individuals over the age of of population health emphasizing many 65, as well as providing influenza vaccina - factors that, if improved, could help make 68 tion to individuals over 65 and diabetics. communities healthier places to live, learn, Institute of Government & Public Affairs
Figure 1 County Health Rankings for Illinois— Health Outcomes work and play. Counties in all 50 states are ranked according to various health meas - ures, relative to the health of other counties in the same state based on health outcomes and health factors. Health outcomes are equally weighted between a length of life measure (premature death before the age of 75) and quality of life measures (low birth weight, very low birth weight, gestational age, and health-related quality of life, mor - bidity). Health factors weigh a set of four factors, including health behaviors (30 per - cent: tobacco use, diet, exercise, alcohol use, Putnam and unsafe sexual activity); clinical care (20 per - Ford counties cent: access to care, quality of care); social were the Top and economic (40 percent: education, em - Two in terms ployment, income, family and social sup - of physical port, community safety); and physical environment environment (10 percent: environmental quality, built environment). Rank 1-26 factors. Rank 27-51 Rank 52-76 Kendall, DuPage, Woodford, and McHenry Rank 77-102 9 Counties were ranked 1, 2, 3 and 4 as the http://www.health carereportcard. healthiest of the 102 counties in Illinois. illinois.gov, last Source: http://www.countyhealthrankings.org/illinois, last accessed December 3, 2011 accessed Dec. 2, Despite a 21 percent rate of adult smoking, 2011. a 25 percent rate of adult obesity, a 26 per - 10 http://www.health cent rate of excessive drinking, and a pri - carereportcard. A Focus on Inpatient Care and illinois.gov/map mary care physician-to-patient ratio of Emergency Care _info, last accessed 2,360:1, individuals in Kendall County Dec. 2, 2011. were screened at higher than the national average for diabetes and mammography The Illinois Hospital Report Card and 9 testing, and had markedly fewer preventa - Consumer Guide to Health Care provides ble hospital stays compared to the national health consumers with information about average (Figure 1). They also had access to the quality of health care in Illinois. This healthy foods and access to recreational fa - information provides an overview of each cilities at rates greater than the national av - hospital environment in the state, includ - erage. When looking at health factors in ing name, address, state designated serv - aggregate, DuPage, Monroe, Kendall, and ices such as neonatology, and the patient Lake Counties were ranked 1, 2, 3 and 4 insurance mix from the previous fiscal (Figure 2). DuPage, Lake and Monroe year. The report and guide also includes counties scored highest with regard to information delineating process-of-care health behaviors. Sangamon and Peoria measures and quality-of-care measures, counties had the highest ranking focused patient safety, patient satisfaction, addi - on clinical care, while DuPage and Monroe tional services provided by the health care counties were ranked first and second entity and staffing ratios, as well as pedi - when considering social and economic fac - atric services. tors that affect health. Finally, Putnam and Ford counties were the Top Two in terms Additionally, the Illinois Public Health 10 of physical environment factors. Community Map, supported by data 69 The Illinois Report 2012
Figure 2 County Health Rankings for Illinois— Health Factors from the Illinois Hospital Report Card and Consumer Guide to Health Care, focuses on access to health care with data related to potentially preventable hospitalizations and emergency department use. The map references various health conditions and reports admission rates to hospitals. For instance, asthma is a common reason for In the area of hospitalization and emergency room visits. emergency The statewide rate for asthma-related hos - department pitalization is 153.8 per 100,000 popula - care deemed tion. However, only five counties—Cook, preventable or Kankakee, Marion, Pope and Hardin— avoidable, four have asthma-related admission rates sig - counties in the nificantly worse than the statewide state exceeded benchmark. Notably, the statewide rate of the 95th admission for chronic obstructive pul - percentile. monary disease (COPD) is 224.53 per 100,000. In contrast to asthma, however, 44 counties have COPD admission rates that Rank 1-26 exceed the statewide benchmark. Rank 27-51 Rank 52-76 Rank 77-102 Long-term complications of diabetes melli - tus also account for 115.59 admissions per Source: http://www.countyhealthrankings.org/illinois/health- 100,000. Only Cook, Winnebago, Macon, factors-map, updated 04/28/11, last accessed December 3, 2011 St. Clair, Marion and Jefferson counties perform significantly worse than the statewide rate. Other conditions evaluated as potentially preventable admissions in - percentile: Morgan (426.22 cases per 10,000 clude perforated appendix, dehydration, population), Marion (413.22), Clay (541.84) urinary tract infections, hypertension, and Hardin (551.76). Notably, Hardin angina, congestive heart failure, uncon - (718.19), Marion (726.89), Clay (678.8), and trolled diabetes, lower extremity amputa - Greene (610.47) counties led the state in tions, short-term complications of diabetes emergency department care provided that mellitus, and bacterial pneumonia. could not have been prevented by ambula - tory care treatment (care not preventable The other major category of metrics in the or avoidable) in unadjusted (crude) case Illinois Public Health Community Map is rates per 10,000 area population. related to emergency department use and care. Categories at present include total Mental health care is critical for many indi - emergency department volume, non-emer - viduals in Illinois, and the Illinois Public gent cases, emergent cases defined as pri - Health Community Map also defines men - mary care though treatable, emergent cases tal health care as a percentage of all emer - deemed preventable or avoidable, emer - gency room cases in particular areas as gent not preventable or avoidable, injury, well as a crude rate per 10,000 area popula - mental health and other. tion. Marion (158.87), Clay (153.25), Franklin (146.71), and Hardin (157.32) In the area of emergency department care counties led the state in cases with a prin - deemed preventable or avoidable, four cipal diagnosis indicated mental health as th 70 counties in the state exceeded the 95 a crude rate per 10,000 area population. The Ilinois Report 2012 CHAPTER 7
72 The Illinois Report 2012 1 Illinois Public Act The Challenging Road to Coherence 96-0107, Retrived Oct. 25, 2011 from http://ilga.gov/ in Illinois Education Policy legislation/ By Benjamin M. Superfine, Mark A. Smylie, Marlon I. Cummings, and Steven Tozer publicacts/96/PDF/ 096-0107.pdf; Illinois Public Act 96-0862, School Although the education policy landscape in The problems and pitfalls we are con - Code, Section 5. Retrived Oct. 25, Illinois is quickly changing, it is far from cer - cerned with in this chapter are those asso - 2011 from tain whether these changes will improve the ciated with policy incoherence—the http://www.ilga. educational opportunities that students will tensions, dilemmas, and conflicts that gov/legislation/ publicacts/96- receive. Illinois has recently enacted a range result when different federal, state, and 0862; Illinois Public of legislation aimed at improving schools, district education reform policies and pro - Act 096-0861, including laws focused on developing a lon - grams that are not aligned converge at the Retrieved Oct. 25, 2011 from gitudinal education data system, encourag - school and classroom levels . We begin http://www.ilga. ing alternative certification programs for with a brief overview of this problem of gov/legislation/ publicacts/96/PDF/ teachers, evaluating teachers and principals policy incoherence and evidence of its ef - 096-0861.pdf,; based on their performance, increasing the fects. We then turn to the logic and benefits Illinois Public Act number of charter schools in the state, and of policy coherence. This discussion is 96-0105, School 1 Code, Section 5. consolidating school districts. During this followed by a look at a concrete “case” of Retrieved Oct. 25, time, the Illinois State Board of Education educator workforce development policy in 2011 from (ISBE) has also pledged to adopt the Com - Illinois, particularly because this area is the http://www.ilga. gov/legislation/ mon Core State Standards in mathematics target of many of the state’s recent efforts. publicacts/96/PDF/ and English language arts, which are being We conclude with a discussion of ap - 096-0105.pdf; 2 Illinois Public Act developed by a multi-state consortium. proaches to achieve greater education 97-0503, School While Illinois adopted many of these initia - policy coherence in general and with Code, Section 5. tives in a failed effort to win funds from the respect to our case of workforce develop - Retrieved Oct. 25, 2011 from federal Race to the Top (RTTT) competition, ment policy. Overall, we argue that Illinois http://www.ilga. some of these initiatives were driven by a is generally moving in the right direction gov/legislation/ push to improve education from within the by focusing on improving the educator publicacts/97/PDF/ 3 097-0503.pdf . state. With another RTTT application cycle workforce. However, the state still faces on the horizon and the impending reautho - significant problems, especially grouped 2 Honig, M. I. & Hatch, T. C. (2004)“Craft - rization of the federal No Child Left Behind around issues of policy incoherence. ing coherence: Act (NCLB), Illinois likely faces another se - Unfortunately, addressing such problems How schools strate - ries of considerable education policy stands in stark contrast to the actions re - gically manage multiple, eternal changes in the near future. cently taken by state. demands.” Educa - tional Researcher, 33:8, 16-30.
3 The American Recovery and Rein - vestment Act of 2009, P.L. 111-5, Sec. 14006. Re - trieved Oct. 31, 2011 from http:// www2.ed.gov/ programs/raceto n n
a thetop/index.html . m n e s i E b e D y b Benjamin M. Superfine, Mark A. Smylie, Marlon I. Cummings, Steven Tozer, n o i t
a College of Education, College of Education, College of Education, College of Education, r t s u l UIC UIC UIC UIC l I 73 The Illinois Report 2012
4 Honig, M. I. & Hatch, The Problem of Policy Incoherence T. C. (2004)“Craft - can converge on schools is by accumula - ing coherence: tion and overload. Whether coherent or in - How schools strate - gically manage During the past 50 years, education poli - coherent, different policies can “pile up” as multiple, eternal cies have proliferated at the federal, state they converge, overburdening schools and demands.” Educa - and local levels, and the rate of prolifera - tional Researcher, swamping them with additional responsi - 33:8, 16-30. tion has accelerated substantially in the bilities. past 20 years. According to researchers 5 Susan Fuhrman (Ed.). (1993). Meredith Honig and Thomas Hatch, When multiple policies and reforms con - Designing coherent schools now face a growing “barrage of verge on schools, we might expect the in - education policy . demands” from several sources, including troduction of a wide range of challenges San Francisco: 7 Jossey Bass. federal and state governments, local school and demands. We would expect these 4 boards, unions and community groups. challenges and demands to be much 6 Knapp, M. S., They observe that these demands focus on Bamburg, J. D., greater under a condition of policy inco - Ferguson, M. C., numerous aspects of schooling, ranging herence and where accumulation and Hill, P. T. (1998). from curriculum and instruction, the use overload are beyond the ability of a school “Converging reforms and the of time, testing, accountability, manage - to manage well. Of course, the net effects working lives of ment, parent involvement, and a number of convergence, be they positive or nega - frontline profes - of aspects of education workforce develop - tive, are likely to be contingent on the ca - sionals in schools.” Educational Policy , ment from initial preparation to certifica - pacity of the school and its leadership to 12:4, 397-418. tion and licensure to evaluation and manage and mediate these challenges and compensation to professional develop - 8 7 Ibid. demands. These include increases in the ment, tenure and retention. While myriad number of responsibilities for professional 8 Honig, M. I. & Hatch, demands from multiple policies originat - staff, escalation in demands on time, chal - T. C. (2004)“Craft - ing Coherence: ing from different levels of the education lenges and trade-offs to the allocation of How schools strate - system may provide new opportunities for time and effort, increases in demand for gically manage improvement, they also pose substantial new knowledge and skills, questions re - multiple, eternal demands.” Educa - risk to improvement because of what some garding the goals of the school and goals tional Researcher, observers call a heightened state of policy for schooling, prospects for goal and role 5 33:8, 16-30.; Knapp, incoherence. M. S., Bamburg, J. ambiguity and conflict, questions regard - D., Ferguson, M. C., ing the nature and function of professional Hill, P. T. (1998). University of Washington Professor M.S. roles, increases in overall responsibility “Converging reforms and the Knapp and his colleagues contend that dif - and accountability, and expansion of working lives of ferent policies can “converge” on schools sources and forms of responsibility and ac - 6 frontline profes - in several different ways. One is by way countability. Under conditions of policy in - sionals in schools.” Educational Policy , of mutual reinforcement. That is, different coherence, school personnel accordingly 12:4, 397-418. policies can complement each other and must balance “all manner of contrary ten - thus be mutually reinforcing. They would 9 Cohen, D. K. & Ball, dencies” and may experience a sense of 9 D. L. (1990)“Rela - converge in alignment with each other. frustration, fear and heightened stress. tions between pol - This form of convergence is what might be icy and practice: A commentary.” Edu - expected when policies cohere around sim - There is a good bit of empirical evidence of cational Evaluation ilar goals, strategies, and resource de - the negative effects of policy incoherence and Policy Analysis, mands. Another way that policies can on schools. Early research on the individ - 12 : 334. converge on schools is by way of interfer - ual and aggregate effects of multiple fed - 10 Kimbrough, J. & ence. Policies can converge on schools in eral categorical programs on school and Hill, P. T. (1981). The conflict and contradiction. They can get in Aggregate Effects of district operations found that policy inco - Federal Education each other’s way and pull schools in differ - herence was associated with substantial Programs . Santa ent directions. This form of convergence is program “interference” and “cross-sub - Monica, CA: Rand . what might be expected when policies lack sidy,” which compromised the implemen - 10 coherence around goals, strategies, and re - tation and effects of these programs. 74 source demands. A third way the policies These programs not only interfered with Institute of Government & Public Affairs
each other, they interfered with basic and integrity, they do not cohere as a school-level operations and instructional group and many may conflict, rendering programs. Moreover, schools and districts their impact minimal or even negative. found that they had to reallocate resources The Logic and Benefits of Coherence from categorical programs and from gen - eral operating funds to meet implementa - tion demands. More recently, research has Just as education policy incoherence can be found that “cluttered and contradictory” seen as a source of problems for schools, More recently, federal, state, and district policy initiatives policy coherence can be beneficial. The are associated with fragmentation and logic of policy coherence is analogous to research has compromise improvement at the school the logic of component “fit” in organiza - found that 11 level. This “collision” of external policy tion theory. Fit is the degree to which an “cluttered and and local school improvement efforts is il - organizational component is consistent contradictory” lustrated well in research on accountability with or congruent with another. Most or - federal, state, reform in the Chicago Public Schools, ganizational theories of fit contend that and district where the rise of student testing and high- when organizations achieve fit among policy stakes-student school accountability poli - components, they are more efficient and initiatives are cies from the central office swamped more effective relative to when a lack of fit, associated a misalignment, or a conflict exists. The school-based improvement efforts with grounded in local collaborative, develop - idea of coherence is also considered a fragmentation ment-oriented projects, such as the problem of policy design and is premised 12 Chicago Annenberg Challenge. on the idea that multiple policies can be and developed around a common focus or ob - compromise 14 The problems of incoherence are also evi - jective. The primary example of such ef - improvement dent in studies of schools trying to import fort was the development of system and at the school and implement several improvement pro - standards-based reform policies of the level. 15 grams and services. For example, research 1980s and 1990s. The logic is that the on school reform in the Chicago Public alignment of standards, curricula, and as - Schools from the Consortium on Chicago sessments by states and districts could School Research identified the problem of help reduce the number of potentially con - 13 “Christmas tree schools.” These are flicting demands on schools and focus schools with myriad program and prac - schools in a more singular direction. tices that vary widely in content, purpose, and methods. While individual programs Although most of the research on education and practices may have their own strength policy coherence focuses on the problems
11 Newmann, F. M., Smith, B. A., Allensworth, E. & Bryk, A. S. (2001).“Instructional program coherence: What it is and why it should guide school improvement policy.” Educational Evaluation and Policy Analysis , 23:4, 297-321.
12 Smylie, M. & Wenzel, S. A. (2003).“The Chicago Annenberg Challenge: Successes, failures, and lessons for the future.” Final Technical Report of the Chicago Annenberg Challenge Research Project. Chicago: Consortium on Chicago School Resesarch ; Lipman, P. (2002).“Making the global city, Making inequality: The political economy and cultural politics of Chicago school policy.” American Educational Research Journal, 39, 379-418.; O’Day, J.. “Complexity, Accountability, and School Improvement.” Harvard Educational Review, 72:3, 293-329.
13 Bryk, A. S., Sebring, P. B., Kerbow, D., Rollow, S. & Easton, J. Q.. (1998). Charting Chicago School Reform: Democratic localism as a lever for change. Boulder, CO: Westview Press (1998).
14 Honig, M. I. & Hatch, T. C. (2004)“Crafting coherence: How schools strategically manage multiple, eternal demands.” Educational Researcher, 33:8, 16-30.
15 Ibid. 75 The Illinois Report 2012
associated with incoherence, there is some Evidence of the benefits of coherence can evidence of the benefits of policy coherence. also be found in literature on strategic In contrast to the “Christmas tree schools” human resource management, which is di - discussed above, Chicago schools that were rectly related to the “case” of educator more selective, strategic, and coherent in workforce development policy that will be 18 their programs and practices experienced discussed later in this chapter. Cross-in - more successful implementation and dustry studies find that strategic flexible fit greater improvement. Subsequent research among human resource management func - Cross-industry by the consortium has found that lack of co - tions are related to organizational produc - 19 studies find ordination and alignment of a school’s in - tivity, performance, and outcomes. Higher that strategic structional programs and practices can levels of fit are associated with higher levels flexible fit create gaps in the curriculum, lead to poor of performance and outcomes. Similar find - among human pacing of instruction and idiosyncratic ex - ings have been made of human resources resource pectations for student learning within and management in schools and school districts. management across grade levels, and incoherence be - More strategically coherent systems of tween regular and supplemental pro - teacher human resource management func - functions are 16 related to grams. Indeed, curriculum alignment, an tions have been found to be related posi - organizational important dimension of program coher - tively to the successful implementation of ence, was found in this research to be signif - education reforms, and instructional and or - productivity, 20 icantly and positively related to increases in ganizational improvement. performance, student attendance and to gains in student and outcomes. achievement in both reading and mathe - Despite such benefits of coherence, there 17 Higher levels matics. As elaborated in these studies, the are significant challenges to actually insti - of fit are logic of instructional program coherence tuting a coherent approach. In addition to associated that lies behind this evidence is consistent the challenge of marshalling the political with higher with research on learning and cognition, will to achieve grater policy coherence, levels of that students are more likely to learn and states generally have serious capacity chal - performance perform well when their experiences con - lenges to meet. If a state’s goal is to place and outcomes. nect with and build on each other. The logic principals in a policy climate that will en - can easily be extended to the learning and able them to build professional learning development of school personnel and to communities of teachers who can meet their efforts to promote school improve - students’ learning needs in all classrooms, ment through many initiatives. then the question needs to be asked,
16 Bryk, A. S., Sebring, P. B., Allensworth, E., Luppescu, S. & Easton, J. Q.. (2010). Organizing Schools for Improvement: Lessons from Chicago. Chicago: University of Chicago Press.
17 See Newmann, F. M., Smith, B., Allensworth, E., Bryk, A. S. (2001).“School instructional program coherence: Benefits and challenges. Improving Chicago’s Schools. Chicago: Consortium on Chicago School Resesarch and other research conducted under the auspices of the Consortium on Chicago School Research that found positive relationships between instructional program coherence and student outcomes.
18 Smylie, M. A., Miretzky, D. and Konkol, P. (2004),“Rethinking Teacher Workforce Development: A strategic human resource management perspective.” Yearbook of the National Society for the Study of Education, 103, 34–69.
19 Buller, P. F. (1998) “Successful partnerships: HR and strategic planning at eight top firms.” Organizational Dynamics, 17:2, 27-42; Delery, J. E. & Doty, D. H. (1996)“Modes of theorizing in strategic human resource manage - ment: Tests of universalistic, contingency, and configurational performance predictions.” Academy of Management Journal, 39:4, 802-835; Huselid, M. A. (1995).“The impact of human resource management practices on turnover, productivity, and corporate financial performance.” Academy of Management Journal, 38:3, 635-672.
20 Smylie, M. A., Miretzky, D. and Konkol, P. (2004).“Rethinking teacher workforce development: A strategic human resource management perspective.” Yearbook of the National Society for the Study of Education, 103, 34–69. 76 Institute of Government & Public Affairs
“What policies would align well to sup - devoted approximately $80 billion of its port that priority?” Such state policies $787 billion to public K-12 education and could include, for example, supporting included the $4.35 billion Race to the Top teacher preparation programs to produce Fund (RTTT), a competitive grant program teachers well schooled in collaborative targeted at spurring innovation in educa - 22 problem-solving around student perform - tion. In order to be eligible and competi - ance; providing incentives that motivate tive for an award, RTTT required states to collective rather than individual activity demonstrate their commitment to core 21 The American and success; developing district leaders areas of reform, including the adoption of Recovery and Rein - who understand how critical it is to pro - the Common Core State Standards, written vestment Act of 2009, P.L. 111-5. vide time for teacher collaboration; and specifications of the skills and knowledge Retrieved Nov. 1, generating a public policy campaign to students should learn in mathematics and 2011 from help school boards and the public under - English language arts that are being devel - http://www2.ed. gov/programs/ stand the characteristics of schools and oped by a collaboration of states. racetothetop/index school leadership that succeed well above .html . socio-economic predictors. As it stands, RTTT also required the development of 22 Ibid. states are generally far away from seri - strategies aimed at recruiting, training, and ously tackling such challenges. So, now we retaining effective teachers and principals. 23 Guthrie, J. (2010). “Good principals must ask: Where does Illinois stand? In contrast to No Child Left Behind, one of key to good Recent Efforts in Illinois to Improve the the capacity-building priorities of RTTT schools.” Politico. was the development of high quality Retrieved Nov. 30, Educator Workforce 2011 from http:// school leaders—something that researcher www.politico.com/ James Guthrie claims has been “neglected” news/stories Although this chapter is broadly focused on for far too long in the policy debate about /0910/42894.html . 23 the importance of coherence for education improving learning outcomes in schools. policy in Illinois, the range of education RTTT further emphasized that these strate - 24 Superfine, B. M. policies currently being implemented in the (2011).“Stimulating gies must link decisions about educator school reform: The state is quite large. We accordingly present performance to student achievement data American recovery the case that recently enacted laws focusing and involve the creation of a statewide and reinvestment act and the shifting on improving the teacher and principal data system that allows individual teach - federal role in edu - workforces is an example of how coherence ers to be matched to individual students. cation,” Missouri and incoherence can emerge. This area is Law Review 76:1, In order to receive an award, RTTT also re - 81-134. one that is especially important to consider quired states to commit to other areas of because of the concerted attention it has re - education reform, including increasing the ceived from both federal and state govern - number of charter schools, implementing ments around the country in the past few particular school “turnaround” strategies years, and likely in the years to come. and enhancing standards and assessments, improving the collection and use of data, Recent policy efforts to improve the educa - and increasing teachers’ and principals’ tor workforce in Illinois have been driven demonstrated effectiveness. While many of by pressures at both the state and federal the strategies promoted by RTTT appear to levels. Federal policy has set the stage for have little chance of actually improving much of what Illinois has recently done to students’ learning opportunities and improve the educator workforce. In order achievement, RTTT has done one thing it to stabilize and stimulate the U.S. economy was designed to do. It put into motion a during the worst financial crisis since the wide range of initiatives in at least 35 Great Depression, the U.S. Congress en - states that were required to show that they acted the American Recovery and Rein - had built or were building the policy ca - vestment Act of 2009, which is generally pacity for significantly improved student 21 24 known as the “stimulus.” The stimulus learning outcomes. 77 The Illinois Report 2012
27 In the context of the political pressure and and professional degrees. Shortly after opportunities for funding generated by the passage of this law, the state adopted RTTT, Illinois enacted several education re - the Alternative Certification Programs Act, forms. As with every other state, Illinois al - which allows alternative teaching and ad - ready had in place a comprehensive set of ministrative certification programs to be standards. However, led by the Illinois offered by various types of providers, in - State Board of Education (ISBE), the state cluding both higher education institutions
25 moved aggressively toward replacing its and those operating independently of The New Illinois 28 Learning Standards existing standards with the Common Core higher education. Such programs include Incorporating the State Standards with the expressed goal of the Alternative Teacher Certification Pro - Common Core, Illinois State Board better preparing Illinois students for suc - gram, the Alternative Route to Teacher of Education. cess in college and the workforce in a com - Certification, the Alternative Route to Ad - 25 Retrieved Oct. 31, petitive global economy. This initiative ministrative Certification, and the Alterna - 2011 from http://www.isbe. has implications for several significant tive Route to Administrative Certification net/common_core/ components of the state’s education sys - for National Board Certified Teachers. default.htm . tem, including assessment, curriculum, 26 Illinois Public Act professional development, and Response to The Performance Evaluation Reform Act 96-0107, Retrived Intervention programs. The adoption of the (PERA) involves the most significant re - Oct. 25, 2011 from http://ilga.gov/ Common Core State Standards is particu - forms to how Illinois manages the educator 29 legislation/ larly aimed at ensuring that such compo - workforce. Motivated primarily by the publicacts/96/PDF nents are aligned with each other in a way idea that many school district performance /096-0107.pdf ; amended 2010 . that can consistently enable high quality in - evaluation systems fail to adequately dis - struction and learning at the classroom tinguish between effective teachers and 27 Ibid. level. In order to ensure that student as - principals, this law calls for the transforma - 28 Illinois Public Act sessments are aligned to the Common Core tion of current evaluation systems in ways 96-0862, School State Standards, Illinois has joined the Part - that are particularly tied to the growth of Code, Section 5. Re - trived Oct. 25, 2011 nership for Assessment of Readiness for student achievement. Under this law, all from College and Careers (PARCC), a consor - school districts must evaluate non-tenured http://www.ilga. tium of states working together to develop teachers at least once each year and gov/legislation/ publicacts/96-0862 . a common set of assessments. tenured teachers at least once every two years. Such evaluations must incorporate 29 Illinois Public Act While the adoption of the Common Core the use of data and indicators of student 096-0861, Retrieved Oct. 25, State Standards is indirectly aimed at influ - growth as a significant factor in rating 2011 from http:// encing educators’ instructional and admin - teacher performance. Once districts per - www.ilga.gov/ legislation/ istrative practices, Illinois also enacted form evaluations, they must rate teachers publicacts/96/PDF several laws more directly aimed at im - as excellent, proficient, needs improve - /096-0861.pdf . proving the quality of the educator work - ment, or unsatisfactory. By September 2012, force in the wake of RTTT. The P-20 principals also must be evaluated annually Longitudinal Data System Act requires the with a plan that uses data and indicators of state to develop a longitudinal data system student growth as a significant factor in that complies with the requirements of the rating performance. Principals must be America COMPETES Act, and thereby in - similarly rated on a scale that includes the volves linking individual teacher and stu - performance levels of excellent, proficient, dent performance data as part of a strategy needs improvement, and unsatisfactory. to incentivize stronger teacher perform - 26 ance. This state law and its later amend - While PERA involves several significant ments also authorize the Illinois Board of changes to the state’s previous methods of Higher Education to collect data on the educator evaluation, this law has already performance of public and private post- been supplemented by subsequent legisla - 78 secondary institutions that confer graduate tion. “SB7” ties teacher performance to Institute of Government & Public Affairs
tenure and certification decisions to teach - guarantee that the state will win an RTTT ers’ evaluations, and includes a procedure award. While receiving RTTT funds would to revoke teaching certificates with multiple allow the state to devote more money to the 30 unsatisfactory ratings. The law also en - educator workforce reform efforts it has al - sures that performance evaluation plays an ready begun, the state will soon face future important role in decisions about teacher reform efforts in this area regardless. layoffs and teaching assignment, and streamlines the dismissal process for teach - Congress is currently considering bills to Motivated ers with tenure. Public Act 96-0607 estab - reauthorize NCLB, and this reauthoriza - lishes the Illinois Professional Educator tion will significantly influence educator primarily by License, an endorsement issued to qualified workforce reform not only through modifi - the idea that educators for each area and grade level for cations of principal preparation programs, many school which they are eligible to seek employment existing testing and school accountability district in teaching, administration, or school serv - requirements but teacher quality require - performance 31 33 ice. This law particularly reduces the 66 ments as well. Given recent federal ef - evaluation types of available certificates to three types forts in this area, there is a significant systems fail to of licenses and eliminates the general ad - possibility the reauthorization will include adequately ministrative endorsement that was previ - teacher evaluation and accountability pro - distinguish ously issued. Another law overhauls the visions of its own. Moreover, Illinois is cur - between requirements for principal-preparation pro - rently implementing other laws that effective grams by broadly requiring these programs indirectly influence the teacher workforce, to prepare future principals to meet stan - such as those that aim at consolidating teachers and dards for principal skills, knowledge, and some of the state’s 869 school districts and principals, responsibilities, including a focus on in - increasing the number of charter schools this law calls 32 34 struction and student learning. This law permitted in the state. Taken together, for the requires such programs to have specific re - these state laws and initiatives, which are transformation quirements for selecting and assessing its partially responsive to federal initiatives, of current students, training and evaluating staff, pro - comprise a complex education policy land - evaluation viding students with an internship, and scape ultimately aimed at changing teach - systems in partnering with a school district. ing and learning at the classroom level. But ways that are what are the prospects for success? particularly Despite such legislative attention to reform - The Prospects for the Current Direction in tied to the ing the educator workforce, Illinois was not Illinois Education Policy one of the 11 states awarded RTTT funds growth of from the first two rounds of the competi - student tion. Although there is a possibility that On a very broad level, Illinois appears to achievement. there will be a third RTTT round, there is no be moving in a positive direction. These
30 Illinois Public Act 97-0008, Illinois Pension Code, Section 3. Retrieved Oct. 31, 2011 from http://www.ilga.gov/ legislation/publicacts/97/PDF/097-0008.pdf .
31 Illinois Public Act 97-0607, Counties Code, Section 10. Retrived Oct. 31, 2011 from http://www.ilga.gov/ legislation/publicacts/97/PDF/097-0607.pdf.
32 Illinois Public Act 96-0903, School Code, Section 5. Retrieved Nov. 1, 2011 from http://www.ilga.gov/legislation/ publicacts/96/PDF/096-0903.pdf .
33 Unites States Congress, S. 541.IS, 112 th Congress, 1 st Session. Retrieved Nov.3, 2011 from http://thomas.loc.gov/ cgi-bin/query/z?c112:S.541.IS .
34 Illinois Public Act 96-0105, School Code, Section 5. Retrieved Oct. 25, 2011 from http://www.ilga.gov/ legislation/publicacts/96/PDF/096-0105.pdf 79 The Illinois Report 2012
recently enacted laws are broadly intended organizations rather than primarily a prop - to align with improved school teaching in erty of individual teacher talent. This vision Illinois. The state has begun to focus in - foregrounds the capacity of school leaders tensely on improving the quality of teach - to lead effective professional learning com - ers and principals, which several munities marked by high levels of trust, to researchers have argued is one of the most work productively with parents and com - important factors driving student munity agencies, and to meet the social and 35 learning. Moreover, by giving educator emotional learning needs of students and 35 See Darling- Hammond L. workforce development such a prominent adults in their schools. In contrast, the stan - (2000).“Teacher position, the state has altered the general dards-based, assessment-driven accounta - quality and student achievement.” politics surrounding this area, not only by bility vision conceptualizes the solution to Education Policy putting it on the policy agenda but also by under-performing schools as improving Analysis Archives. 8, creating emphasis and defining the “rules teacher talent, motivating individual teach - January. Retrieved on Nov. 3, 2011 of engagement. ” ers and principals through external ac - from http:// countability measures, and inducing epaa.asu.edu/ojs/ Some aspects of Illinois’ approach are also competition through charter schools and al - article/view/392; Goe, L. (2007). “The particularly likely to promote coherence. ternative certification routes to motivate link between The focus on the Common Core State Stan - higher performance by individuals. teacher quality and student outcomes: dards and assessments aligned to these A research synthe - standards signals some sort of attention to The policy landscape also raises serious sis. ” Washington, coherence because standards are broadly problems of incoherence because of issues DC: National Comprehensive meant to serve as policy anchors. Many of to which it does not attend. Although the Center for Teacher the intersecting state and federal laws, Common Core State Standards form the Quality. Retrieved such as RTTT, PERA, and SB7, were also basis for some of the state’s new policies, Nov. 15, 2011 from http://www. conceived within a policy context that gen - they do not form the basis for many others, tqsource.org/ erally includes the improvement and eval - such as the policies governing the alterna - publications/Link BetweenTQand uation of teachers and principals in ways tive certification programs. Indeed, Illinois StudentOutcomes. that are directly linked to the Common has been implementing state standards for pdf . Core State Standards. And laws that focus years without anything approaching a co - on consolidation of requirements and herent education policy landscape. More - sources of authority, such as those that aim over, besides provisions that tie particular at consolidating districts and reducing the functions to state standards and test scores, number of administrative certificates, such as teacher and principal evaluation, could decrease uncoordinated and conflict - the policies are largely silent on the quality ing programs and practices across the of particular workforce development func - state, districts, and schools. tions, teachers’ work, principals’ work, the development of teachers’ occupational However, a careful look at the educator knowledge (especially around student per - workforce policy landscape in Illinois re - formance evidence), how multiple work - veals that there are also significant concerns forces (e.g. the teacher and principal grouped particularly around incoherence. workforces) should be related, and the On a fundamental level, conflicts and ten - workplace conditions of schools and school sions in the policy landcape arise because at districts that affect performance and effec - least some of these different policies are tiveness of a highly developed workforce. grounded in conflicting conceptions of what improves student learning in schools. Similarly, while the principal certificate For example, the new principal certificate law does require preparation programs to law in Illinois was driven by a view of have specific requirements for functions school leadership that identifies instruc - such as selecting and assessing its students 80 tional quality as a property of schools as and partnering with a school district, it Institute of Government & Public Affairs
does not require alignment of such pro - map directly on to SREB, ISBE, PEAC, or grams with the teacher and principal ac - CPS standards. Such incoherence will tax countability provisions of the other the capacity of school leader programs and policies. By focusing so narrowly on a school districts that are seeking to work to - small handful of functions like teacher gether to make sense of which standards evaluation and accountability, the policy should be used to hold Illinois principals landscape generally does not not promote accountable . strong fit across the range of important Illinois has functions of the teacher workforce. By While the problems of incoherence dis - heavily emphasizing teacher and principal cussed above are important, it should be been evaluation, a function that in turn directly noted that they are only examples. The implementing relies on student achievement data, these policies currently at play were enacted in a state policies further presume that the knowl - shifting political climate with multiple in - standards for edge and organizational capability to im - terests at work at federal, state and local years without plement efficacious functions and practices levels, and some incoherence is inevitable. anything already exist or could be readily developed However, these examples should reflect approaching at state, district and school levels. the fundamental point that the policies a coherent were enacted without an overarching vi - education Where the policies do not presume the ex - sion, “theory-of-action,” and strategy, policy isting capacity to implement new account - which are the cornerstones for any coher - landscape. ability measures, they seek to build such ent approach to policy. So while the recent capacity with still more accountability educator workforce policies are a positive measures. However, these accountability development by drawing attention to in - measures may compound the problem. For creasing the quality of the educator work - example, the new Illinois Pre-K-12 Princi - force, the effectiveness of these policies pal Certificate requires that principal will ultimately be limited by their lack of a preparation programs adhere to the State shared and comprehensive strategy. School Leader Standards that are a close Ideas for the Future adaptation of the six standards of the Inter - state School Leader Licensure Consortium. But the programs must also demonstrate We have focused on educator workforce that candidates are evaluated on the 13 policies as an example of Illinois’ incoher - Critical Success Factors for School Princi - ent approach to education policy because pals published by the Southern Regional this area has received so much attention Education Board (SREB). In addition, any lately. But there is incoherence across the principals who want to apply for eligibility state education policy landscape. This for Chicago Public Schools, which have landscape includes laws focused on a wide about 20 percent of the new vacancies in range of programs and practices, including the state each year, will have to be assessed preschool, district consolidation, and fund - by five CPS Principal Competencies that ing. If Illinois is to improve the coherence are different from ISBE’s six or SREB’s 13. of its education policies, it must focus not Moreover, the new state SB7 law ensures simply on increasing alignment within that all principals will be evaluated not each of these areas, but across areas as well. just on student performance gains, but also on yet another set of six standards gener - While the problems of incoherence dis - ated by the ISBE Performance Evaluation cussed above are important, it should be Advisory Committee. And finally, the noted that the actual substance of educa - newly developed National Board Stan - tion policies is, of course, very important as dards for Accomplished Principals intro - well. As Marc Tucker argues in his recent duce a set of nine standards that do not book Surpassing Shanghai , and Finland’s 81 The Illinois Report 2012
Pasi Sahlberg argues in Finnish Lessons , the the capacities, processes, leadership and market-model, standardized-assessment incentives for schools to craft and manage 36 and accountability-driven policies that use coherence. This structure would focus on charter schools and alternative routes to putting schools in strong positions to bal - certification are not what is working for na - ance local goals and strategies against the tions that are outperforming the United external demands of policy. This recom - States. Yet, all of these are part and parcel mendation particularly encourages local of the current policy climate in Illinois and adminstrators to employ reasoned discre - The state must the U.S. more broadly. Although it may be tion in their approach to create “bridges” act with a plan politically impossible for Illinois to com - or “buffers” between their schools and pol - that stretches pletely rethink its approach to education on icy. Still, this strategy could potentially re - across the this fundamental level, it is not impossible sult in too much variability in how schools major for the state to further develop and align react to policy—it leaves room for the possi - education the sorts of policies it is already implement - bility that schools could create incoherence policy areas in ing. Without doing so, much of Illinois’ by ignoring particular policy demands Illinois and considerable efforts to improve education while paying only symbolic attention to from the state will likely be squandered. others . to schools. With this need in mind, we offer three po - Third, the state could shape the role of the tential strategies for Illinois to improve its central office as an arbiter of developing education policy coherence. First, the state and managing coherence at the local level. 36 See Honig, M. I. & could directly promote coherence by de - Instead of simply assisting localities in Hatch, T. C. (2004) veloping meaningful anchors for policies searching for and using information, the “Crafting coher - based on principles and theories of effec - central office would promote certain prin - ence: How schools strategically tive schooling and school improvement. ciples as anchors around which local prac - manage multiple, Given the state’s commitment to the Com - tices cohere. The central office would also eternal demands.” Educational mon Core State Standards, this substantive be required to support school-level leader - Researcher, 33:8, vision of the skills and knowledge stu - ship in the development of processes and 16-30. for a more dents should possess makes sense as one capacities for managing coherence. More - detailed discussion of“crafting coher - such anchor. Promising theories of effec - over, the central office would hold local ence” at the school tive schools and school improvement, such schools accountable for aligning their pro - level. as those focused on the development of grams and practices with policy anchors practicing teachers’ and principals’ knowl - and would need to negotiate with policy - edge and skills could constitute other an - making bodies when they make contradic - chors, especially if construed in ways that tory demands. align with the Common Core State Stan - dards. Then, the state would need to de - While none of these options by themselves velop policies consistent with these would likely be sufficient to make the Illi - anchors and not develop policies that are nois education policy landscape coherent inconsistent with them. Moreover, the state to the extent that is needed, a combination would need to ensure that it addresses pol - of strategies would likely be effective. icy areas comprehensively instead of nar - Above all else, the state must act with a rowly to lower the chances that local plan that stretches across the major educa - programs or practices could work against tion policy areas in Illinois and from the y o C
this alignment. state to schools. By approaching education c M y e
policy in this fashion, Illinois could in - s l e K
Second, the state could develop the struc - crease the quality of education for students y b h p
tures to indirectly encourage education across the state and become a true national a r g o policy coherence at the local level. In doing leader in education reform. t o h 82 so, the state would focus on developing P The Ilinois Report 2012 CHAPTER 8
83 Playful Learning in Early Childhood By Rachel A. Gordon
The pressure for accountability in educa - tion extends down into early childhood . Increasingly policymakers, practitioners and parents hope that enriched early child - hood experiences will better prepare chil - dren for school. Often the goal of such enriched experiences is to close gaps in school readiness between more - and less - 1 Hirsh-Pasek, Kathy, Golinkoff, Roberta advantaged children . Some middle - and Michnick, Berk, upper -middle income parents also seek out Laura E., & Singer, Dorothy G. (2009). such experiences , believing that doing so A Mandate for will put their child a step ahead when it is Playful Learning in time to begin school. Preschool: Present - ing the Evidence. New York, NY: Evidence supports some early interven - Oxford University tions, as I discuss below . However, critics Press, page x. challenge some extreme outcomes of these Rachel A. Gordon, 2 Fisher, K., Hirsh- efforts, such as pushing school-like sched - Pasek, K .,Golinkoff, Associate Professor of Sociology, IGPA R. M., Singer, D., & ules and activities into preschool . Develop - Berk, L. E. (2011). mental scientists and early childhood “Playing around in professionals argue that these approaches free play from guided play. Free play oc - school: Implica - tions for learning run counter to the way in which young curs without teacher structure or input. In and educational children learn. guided play, the teacher arranges materials policy. ” In A. and activities in the room to foster child- Pellegrini (Ed.), The Oxford Handbook of Why have we seen these trends? Why are initiated discovery and watches for oppor - Play . New York: NY: there strong feelings on either side of the tunities to interact with children during Oxford University Press, 341-363. debate about how children learn best? This naturally occurring “teachable moments,” chapter examines how early childhood edu - when the child is poised to learn new con - cation policies in Illinois and other states cepts. Children benefit from both kinds of contribute to that debate, and highlights play, but it is guided play that best fosters 2 some promising directions for future policy. learning. What is Playful Learning The playful learning approach rests on decades of developmental research in Playful learning, as the term suggests, is which scientists have documented the learning that occurs during play. It con - ways in which infants, toddlers, and trasts with rote learning, which focuses on preschoolers engage their environment at repetition and memorization, and even the cusp of their developmental under - with other didactic learning approaches in standing. Most of us have likely observed which the teacher highly structures and children do this as they experiment with tightly directs activities. The playful learn - new concepts. For example, as a three- ing approach recognizes that there is a false year-old develops the concept of “one to dichotomy between play and learning: “to one correspondence” she might repeatedly the child, the two activities are one and the line up toys in a row, such as a set of 1 84 same.” Playful learning also distinguishes horses and then one rider for each of 3 5 them. Developmentalists such as Jean with staff guidance and support. The inter - Piaget documented how the normal course vention was associated with numerous of development emerges through such short- and long-term outcomes, including play, in which children use direct experi - higher cognitive scores in kindergarten and ence with the world to learn complex, higher earnings and lower arrest rates by ® abstract concepts. The early childhood pro - middle age. The HighScope Curriculum fession and many early childhood curric - has also been evaluated in comparison to ula encourage such playful learning. other curricula, including a model of direct Typically, the majority of time is spent ei - instruction (in which teachers focused on ther providing the materials and space that academics and rote learning). Children in will allow children to engage in such all groups had immediate boosts in cogni - unstructured free play as well as offering tive outcomes, but a follow-up found that guided play opportunities in which teach - young adults who had received the High - 3 Hirsh-Pasek, Kathy, ® ers “scaffold” learning by gently guiding Scope Curriculum as preschoolers (and in & Golinkoff, Roberta Michnick. children at the edge of their developmental many cases another child-directed curricu - (2003). Einstein understanding. lum) showed greater social responsibility Never Used Flash Cards. Emmaus, PA: than young adults who had received the Rodale Press. For example, the two interventions that direct instruction curriculum, including have been widely touted in support of pub - fewer arrest rates. 4 http://www. teachingstrategies lic investments in early childhood educa - Challenges to Playful Learning .com/page/ tion—the Perry Preschool Program and LearningGames Abecedarian Project—both used such ap - .cfm. ® ® proaches. For the Abecedarian project, a The LearningGames and HighScope cur - 5 http://www. ® series of LearningGames were created that ricula reflect the practice model endorsed highscope.org/ 4 by the early childhood profession. This ap - content.asp? helped teachers engage in playful learning. contentid=219. In some cases, parents also learned the proach has been challenged, however, as games. For example, the “What would hap - policymakers and the public increasingly pen if?” game helps children think about look to close school readiness gaps by in - logical order. A teacher might ask “What vesting in early childhood education. would happen if you put on your shoes before your socks?” The “Double Treasure” Since the 1980s, there has been a substantial game helps children classify in more com - movement toward providing “universal plex ways by asking them to find things preschool” or “state pre-kindergarten”— that all have two characteristics (e.g., round publicly funded preschool for every family ® and a container). LearningGames , alone or who wants to use it. Figure 1 (page 86) shows in combination with additional intervention the trend in enrollment of three- and four- components, has been associated with im - year-olds in state funded pre-kindergarten mediate benefits of improved cognitive and between 2002 and 2010 nationally and in social development and long-term benefits Illinois. Nationally, the percentage of four- such as reduced chances of dropping out of year-olds enrolled nearly doubled, from 14 school or of pregnancy during adolescence. percent to 27 percent. Illinois exceeds the ® LearningGames is presently used as part national average (with 31 percent of four- of the Creative Curriculum for family day year-olds currently enrolled), and has been care homes, a broader curricular approach particularly successful in reaching three- that features child-initiated and teacher- year-olds, whose enrollments increased guided learning. from 8 percent to 19 percent (compared with just 4 percent nationally). Demand for Similarly, the Perry Preschool Study used non-parental child care has also increased ® the HighScope curriculum, which empha - as more children reside in single-parent, sized children choosing their own activities single-earner or dual-earner families. The 85 The Illinois Report 2012
welfare reform of the mid-1990s increased the movement of parents from welfare to Figure 1 work and associated child-care subsidies Percent of National and Illinois Population Enrolled in State provided publicly funded attendance at Funded Pre-Kindergarten, 2002 –2010 center-based preschool for more children. Figure 2 shows the growth in federal ex - National Population Enrollment 25% 27% penditures on child care subsidies between 22% 24% 17% 17% 20% 14% 16% 1997 and 2008, an increase from $4 billion to nearly $13 billion. 3% 2% 3% 3% 3% 3% 4% 4% 4%
2002 2003 2004 2005 2006 2007 2008 2009 2010 These investments have increased public scrutiny of what happens in preschools Illinois Population Enrollment 31% 31% and child care. Parents and policymakers 26% 27% 29% 22% 24% 21% 23% 21% 18% 20% 19% do not always consider the type of playful 11% 12% 14% learning they observe when they visit pro - 8% 8% grams to be consistent with the learning 2002 2003 2004 2005 2006 2007 2008 2009 2010 activities they expect. Preschool usually happens in school buildings, so observers 3-year-olds 4-year-olds may expect it to be school-like, with desks and worksheets. Even when preschool (or
Source: http://nieer.org/yearbook/pdf/yearbook.pdf page 4 and page 52 other organized care of four-year-olds) happens in community-based child care centers, public funding that is connected with school readiness may lead observers to look for school-like signals of teaching and learning. For instance, in his discus - Figure 2 Total Combined Child Care Spending, 1997 –2008 sions with parents, researcher Bruce Fuller found that some “want preschool to look 14 $12.6 more like school, with more focus on cog - s
n 12 nitive growth and activities that resemble o i l
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$ 8 so much ‘free play’ and facilitated explo - n i 6
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S 0 8 7 6 5 4 3 2 1 0 9 8 7 Indeed, the early childhood field of study 0 0 0 0 0 0 0 0 0 9 9 9 0 0 0 0 0 0 0 0 0 9 9 9 2 2 2 2 2 2 2 2 2 1 1 1 became more explicit in its explanation and defense of its approach as public pro - TANF (Temporary Assistance for Needy Families) vision of preschool increased. The term CCDBG (Child Care and Development Block Grant) “developmentally appropriate practice” was formally defined through a series of Source: CLASP calculations based on HHS data, 7 http://www.clasp.org/admin/site/publications/files/Child-Care-Assist-in-2008.pdf iterations beginning in 1987. The term is now widely used to refer to an approach that includes a predominance of child-
6 Fuller, Bruce. (2007). Standardized Childhood: The Political and Cultural Struggle over Early Education. Stanford, CA: Stanford University Press. Quote is from page 99 (emphasis in original).
7 Copple, C. & Bredekamp, S. (Eds.). (2009). Developmentally appropriate practice in early childhood programs serving 86 children from birth through age 8. Washington, D .C.: National Association for the Education of Young Children. Institute of Government & Public Affairs
initiated activities selected from a wide tion required for such skillful teachers is array of options; a “whole child” approach out of sync with pay in the field. NAEYC that integrates physical, emotional, social also recommends limits on class size and and cognitive development; and, highly teacher-to-child ratios to ensure that teach - trained teachers who aid development by ers can provide children with the attention being responsive to children’s age-related needed to guide their play and scaffold and individual needs. Sue Bredekamp their learning. These limits also require from the National Association for the Edu - more teachers, and thus more dollars. There has been cation of Young Children (NAEYC) wrote Do Existing Policies Encourage (or Leave increasing in a reaction to an early critique of the ap - Space for) Playful Learning proach that the term has a long history but policy interest was first explicitly defined in 1987, partly in articulating in response to the increase of public Illinois, like other states, responded to the what we schools offering pre-kindergarten pro - U.S. Department of Education’s Race to the expect children 9 grams for four-year-olds. “The trend to - Top Early Learning Challenge. The appli - to learn in ward push-down academic curriculum in cation required states to articulate systems preschool kindergarten and the primary grades was for assessing children and monitoring pro - through early grams. Importantly, the call for proposals cited by many teachers as the major barrier learning to implementing developmentally appro - required states to think across systems, to 8 standards and priate practice,” Bredekamp noted. help move beyond variation associated with different funding sources (state pre- to document There has been increasing policy interest in kindergarten versus child care subsidies that programs articulating what we expect children to versus Head Start). Here, I will focus on funded with learn in preschool through early learning recent trends and the current status of two public dollars standards and to document that programs aspects of policy over which states have are of high funded with public dollars are of high control: (1) quality definitions (and meas - quality. quality. Developmentalists and early child - ures used) in quality rating and informa - hood professionals are concerned that ac - tion systems and (2) early learning countability standards may push programs standards. Although these specifics may 8 Bredekamp, Sue. toward rote rather than playful learning. If change as Race to the Top Early Learning (1991). “Redevelop - Challenge grants are announced (and as ing Early Childhood accountability standards do have this re - Education: A sult, then the evidence reviewed above states implement promised changes in Response to suggests that they may ironically lead to their applications), there are several per - Kessler. ” Early Childhood Research poorer rather than better child outcomes, sisting issues related to whether and how 10 Quarterly, 6 , especially in the long run. Accountability policies can promote playful learning. 199-209. Quote is standards that ensure playful learning hap - State quality-rating and information sys - from p. 202. pens are difficult to write, monitor and im - tems meet several objectives, including 9 http://www2.ed. plement, however. Playful learning may offering child care providers incentives to gov/programs/ improve quality and parents information racetothetop-early also cost more than custodial child care or learningchallenge even “out of the box” curricula. The Learn - to choose quality. Like restaurant ratings, /index.html . ® ® ingGames and HighScope curricula these systems attach stars to centers (and 10 http://www2. described above and the broader develop - family day care providers) that reflect their illinois.gov/ mentally appropriate practice approach level of quality, and parents can use these earlychildhood/ stars to choose a setting. Providers also re - Pages/Early require a preschool or child care classroom LearningChallenge teacher who is knowledgeable about child ceive a higher subsidy for each higher star .aspx . development and skillful in engaging rating. Typically, the programs include a young children. Although pay for teachers rating of the learning environment. in state pre-kindergarten has improved in many states, most salaries in early child - Illinois began its Quality Counts system in hood are low. Thus, the training and educa - July 2007 with four star levels. Currently 87 11 Thelma Harms, The Illinois Report 2012 Richard M.Clifford, and Debby Cryer. Early Childhood Environment Rating Scale, Revised Edition , (NewYork, N.Y.: Teachers Col - (in 2011), ratings on the Environment Rat - state toward aligning quality assessment lege Press, 1998). 11 ing Scales contribute to star ratings. This across the subsidy and pre-kindergarten 12 Gordon, Rachel A., measure is used by most states, but has systems, there is an opportunity to put into Ken Fujimoto, been widely critiqued, and many states are place policies and regulations that further Robert Kaestner, Sanders Korenman, shifting to a new measure, the Classroom ensure alignment of curricula with stan - 12 and Kristin Abner. Assessment Scoring System (CLASS). dards and of practice with curricula. (Forthcoming) “An Assessment of the This shift offers several potential advan - Which Policies Could Support Playful Validity of the ECERS- tages. For example, although the Environ - Learning R with Implications ment Rating Scales were designed under for Assessments of Child Care Quality the umbrella framework of developmen - and its Relation to tally appropriate practice, the scale uses As noted above, playful learning has been Child Development.” concrete items that make it easy for shown to promote child development. Developmental Psychology. providers to raise their scores in ways that Thus, it meets political and public goals of may be unrelated to child development promoting school readiness and reducing 13 Scott-Little, Cather - achievement gaps. Children also enjoy ine, Kagan, Sharon (e.g., items on health and safety like con - Lynn, and Frelow, sistently washing hands and covering out - play, and many parents and advocates Victoria Stebbins. lets). In contrast, the CLASS broadly want young children to not only be safe (2003). “Creating and learn in preschool or child care, but the conditions for assesses the emotional and instructional success with early support the teacher provides to students as also to “have a good day” while they are learning standards: well as the level of organization in the there. Strategies like those discussed in the Results from a national study of classroom. Although the CLASS has not prior section can help promote playful state-level standards yet been fully validated for widespread learning in preschool. for children’s learning prior to policy adoption, a shift to such a new kindergarten. ” Early measure in the quality rating system has Scholars, child advocates and community Childhood Research the potential to increase providers’ incen - leaders are also beginning to think in cre - & Practice, 5 . tives to deliver playful learning. ative ways about how playful learning can 14 Illinois State Board be broadly encouraged in society. At pres - of Education. The move toward accountability in educa - ent, home-visiting programs work with par - (2004). Illinois Early Learning Standards. tion also has led to an explosion of states ents, but relatively few programs target the Quote from Page 5. implementing early learning standards dur - broader array of caregivers, including rela - 13 15 ing the 1990s. Illinois was one of the early tives, neighbors and family day care pro- Abner, Kristin, Rachel ® A. Gordon, Robert adopters of early learning standards, draft - viders. Approaches like LearningGames Kaestner and Sanders ing standards in 2000 and releasing them in can be used in homes as well as child care Korenman. 2011. centers, however, and could be used to pro - “Association of Child final form in 2004. The Illinois standards in - Care Type, Intensity, cluded a number of guiding principles, one mote playful learning among children who and Quality with of which is that “Young children learn spend their entire day in home-based child Child Outcomes: A Replication and through active exploration of their environ - care. Some parents may also prefer that Extension.” ment in child-initiated and teacher-selected their three- and four-year-olds split their 14 time between a home setting and preschool, 16 Gordon, Rachel A., activities.” Illinois’ pre-kindergarten pro - Colaner, Anna, gram—Preschool for All—requires curric - rather than spending their entire day in a Usdansky, Margaret ula to align with the early learning school or center, recognizing that spending L., Melgar, Claudia. standards, but does not require specific cur - long hours in large group settings is stress - 2011.“Beyond an 15 “Either/Or” ricula. Although such avoidance of pre - ful for young children. In fact, my col - Approach to Home- scribing a single curriculum is consistent leagues and I recently found that nationally and Center-Based Child Care Choices: with professional recommendations, it is nearly one-fifth of four-year-olds split their Characteristics of not clear how the state verifies that curric - time between child care in a home and a Families who center, and their parents report that both Combine Types or ula align with standards (and that day-to- Use Just One.” day practice in classrooms follows these getting their child ready for school and hav - curricula and standards). As the Race to the ing a provider who shared their beliefs was 16 88 Top Early Learning Challenge pushes the important to them. Institute of Government & Public Affairs
One innovative model pioneered by Illinois books and materials. An implementation Action for Children, called Community study of the program was recently released, Connections, helps parents combine care documenting the positive experiences of 17 arrangements in this way. The program al - parents, teachers and providers. Both par - lows preschoolers to stay in family day care ents and home-based providers report part of the week while attending preschool learning new ways to engage the child. Par - the rest of the time. Under the model, three- ents report having thought about enrolling and four-year-olds attend Illinois’ state pre- their children in preschool full time, but 17 http://www.nccp. kindergarten program—Preschool for All— hesitating to switch from their family day- org/publications/ in half-day sessions four days a week. The care provider and being concerned about pdf/text_1036.pdf . program transports children between fam - the fit with their work schedules. This pro - 18 McCoy, Kelsey J. ily day care and preschool. While the child gram allowed them to keep their existing “Summary of 2011 is in preschool, their home-based provider provider and routine, while allowing the Illinois Family Im - pact Seminar ,” http: can focus attention on the other children, child to attend preschool. To date, the pro - //igpa.uillinois.edu/ usually infants and toddlers, in her care. On gram has served just a small number of content/2011- family-impact- the fifth day, center teachers visit the family families. A larger scale evaluation of the seminar . day-care setting, demonstrating pieces of program, which may provide evidence to the preschool curriculum and offering expand it, is planned.
This chapter is a component of the 2011 years. Some of this time is being Society. She is the author of popular Illinois Family Impact Seminar, on the replaced by test preparation. books about child development, includ - topic of Learning to Play, Playing to Learn: • Our society confuses learning with ing: Einstein Never Used Flashcards (which The Importance of Play in Early Childhood memorization and test scores with won the Books for Better Life Award as the and the Transition to School . success. This does not prepare chil - best psychology book in 2003) and A dren to meet the challenges of the Mandate for Playful Learning in Preschool . The seminar began with an event in 21st century. Aurora on Saturday, February 19, 2011 • Research has shown that students Acknowledgments attended by more than 150 Illinois child who engaged in guided play at an care providers and educators. Keynote early age consistently perform better The Illinois Family Impact Seminar is an speaker Kathy Hirsh-Pasek argued for as they advance through the school annual series directed by Dr. Rachel Gor - changing the lens we use to look at system. 18 don at the University of Illinois’ Institute learning in early childhood. of Government and Public Affairs. The Hirsh-Pasek is a decorated academic series connects decision makers with She presented scholarly evidence docu - scholar and a best-selling author. She is research evidence to inform pressing menting that play is an integral part of the Stanley and Debra Lefkowitz Profes - family policy issues. The Illinois Family cognitive, emotional, and social develop - sor in the Department of Psychology at Impact Seminars benefit from the good ment. When children are playing, Hirsh- Temple University, where she co-directs advice of members of the Policy Network Pasek said, they are building their skills in the Infant Language Laboratory and is for Family Impact Seminars, directed by “The 6Cs:” collaboration, communication, the co-founder of CiRCLE (The Center for Karen Bogenschneider at the University critical thinking, content, confidence, Re-Imagining Children’s Learning and of Wisconsin-Madison and the members and creative innovation. She argued that: Education). Her research has been of the Illinois Family Impact Seminars • As we enter the“knowledge age,” in - funded by the National Science Founda - advisory committee. tegrating information and innovation tion and the National Institutes of Health is key, which requires much more and Human Development and published The 2011 seminar was co-sponsored by than simply memorizing facts and in leading journals such as Child Develop - Illinois Action for Children (http://www. words. It requires creative, critical ment , Developmental Psychology , and the actforchildren.org). We are also grateful thinking skills in collaborative envi - SRCD Monographs . Her academic awards to Representatives Linda Chapa La Via, ronments. Laying the foundation for include the American Psychological D-Aurora, and Roger Eddy, R-Hutsonville, this type of thinking begins in the Association’s Award for Distinguished who co-hosted a legislative reception on earliest stages of life. Service and Bronfenbrenner Award for the topic. Additional materials and video • Time for play in classrooms has de - Lifetime Contribution to Developmental of the 2011 seminar can be found at clined significantly in the past 10 Psychology in the Service of Science and http://igpa.uillinois.edu/PE/fis2011 .
89 The Ilinois Report 2012 CHAPTER 9
90 The Illinois Report 2012 The American Research University: A Renewable Resource of Innovation Caralynn V. Nowinski & Lawrence B. Schook
A young man named Jonathan Baldwin Turner left New England for the wild fron - tier of Illinois. After witnessing oppression and the lack of opportunity for the children of the “Industrial Class,” Turner became an outspoken advocate for higher education with an “industrial” focus . In other words, “Industrial he promoted teaching practical courses in education agriculture, science and engineering, in prepares the addition to classics, so that the nation way for a might have a workforce prepared to millennium of address the challenges of the industrial rev - labor” olution and support the nation’s expansion into the West. This plan ultimately became –Jonathan the Morrill Act, which established the land- Baldwin Turner grant universities that now include many (1805-1888) of the world’s best-known research institu - Caralynn V. Nowinski tions, the University of Illinois among Illinois U of I Office of the Vice President for Research them. The vision was simple : use universi - advocate for ties to support the sustainability (economic public funding development) of communities. of “industrial” education The juxtaposition of labor and learning became the foundation of our modern-day communities. With the American univer - sity at its center, industry emerged all around. Land-grant universities were, first and foremost, dedicated to agricultural experimentation, the primary industry of th the 20 century, having profoundly affected the livelihood of so many Ameri - cans. Likewise, university research sought to solve grand challenges in manufactur - ing and engineering that were core to the nation’s defense, its people’s health and its overall prosperity. i n Vice President Lawrence B. Schook o s The “industrial” education vision sup - r u U of I Office of the Vice President for Research B
e ported expansion of the nation (and its n i t s u position in the world) and recognized the J y b
h need for education related to the sciences p a r g and engineering . Remarkably, as the Civil o t o h War loomed, President Abraham Lincoln P 91 Figure 1 Federal Investment in Research & Development
3
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Federal R&D Spending as a Percentage of GDP
Source: GDP figures from Bureau of Economic Analysis, Survey of Current Business, 26 March 2009; R&D figures from National Science Foundation, Division of Science Resources Statistics, National Patterns of R&D Resources (annual series).
1 National Academy of Sciences. History. not only signed the Morrill Act into law world . It clearly addressed needs not met Retrieved (1862), but he also led efforts to develop by private universities that focused on pro - Nov. 30, 2011, from http://www. the National Academy of Sciences (1863) fessional studies of law, clergy, medicine nasonline.org/ and the transcontinental railroad (1863). and the arts. The land-grant universities about-nas/history/ . Originally formed to expedite solutions also provided access to more than the priv - th that addressed the Civil War crisis, the Na - ileged class and nobility. Our mid-19 cen - tional Academy served to “investigate, ex - tury leaders identified needs and created amine, experiment, and report upon any the American research university as the so - subject of science or art” as directed by the lution. So the challenge confronting us 1 federal government. Hand in hand with now is : what does it mean to be a land- the land-grant university, the formation of grant university 150 years after the pas - the National Academies was a clear signal sage of the Morrill Act? that scientific pursuit and achievement The Rise and Fall of Federal Research Support was—and remains, to this day—a neces - sity for American prosperity. From the Morrill Act to the creation of the The land-grant university is truly an National Science Foundation (NSF), Amer - American idea, one of the primary reasons ica invested in research, education and that the higher education system in the infrastructure that gave way to a growing 92 United States has long been the envy of the economic base and its position as one of Institute of Government & Public Affairs
the world’s leading competitive forces toward developmental and applied re - (Figure 1 - Timeline). The Cold War and search rather than basic scientific research the years that followed solidified the na - (i.e., the source of new discoveries and in - tion’s global leadership position as Amer - novation; also funding the training of future ica advanced its understanding of science industrial researchers and engineers). Still, and contributed to successes of the Space total national investment in R&D is less Age and the Information Revolution. The than 3 percent of GDP and has remained increase in federal research and develop - relatively flat in recent years, as opposed to 2 Sources include the ment (R&D) investment in the 1950s, 1980s Asian countries, such as China, Taiwan and Congressional and again in the early 2000s demonstrated South Korea, whose government invest - Budget Office and the National Sci - the government’s commitment to have re - ments in R&D are growing by more than 10 ence Foundation . search foster innovation and maintain percent annually (Figure 3 on page 94). At 2 3 competitiveness. the same time, the U.S. economy’s share of Margolis, R.M., & Kammen, D. M. global GDP continued to decline. (Figure 3a (1999). “Underin - As federal investment in R&D increased, on page 95) . vestment: The energy technology the number of patents, a suitable proxy for and R&D policy innovation, from American research uni - One may argue that the U.S. has grown ig - challenge. ” Science 3 versities grew substantially (Figure 2). norant of the formula for prosperity that it magazine 285(5428), 690-692. However, the government was not opti - created. Not only does this country face Retrieved from mized to capitalize on such intellectual continued challenges in the areas of na - http://www.science property (IP) and move research to com - tional defense and infectious disease, but mag.org/content/ 285/5428/690.full mercial development. The Bayh–Dole Act new challenges have emerged: globaliza - .pdf . of 1980 was designed to foster such tech - tion, an economic crisis and the growing nology commercialization and shifted con - U.S. budget deficit, energy security, climate trol for commercializing IP developed as a result of federal research funding to univer - sities rather than the government. This leg - Figure 2 islation empowered universities to license Federal R&D Investment and the Number of U.S. Utility their technology for commercial develop - Patents Granted ment, an opportunity which previously
had been significantly neglected. 250 450 s n o
Total Patents Granted i s l l d 400 i n B
a U.S. R & D Expenditures
Despite the clear relationships between n s 200 350 i u t o
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U.S. government’s plans to double the Na - n t e
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tional Institutes of Health (NIH) budget x a E
P 100 D from 1999-2004 along with an increase in l 50 a & t o defense R&D led to an increase in federal 50 R T . S R&D spending to just above 1 percent of . 0 0 U GDP; however, the fiscal year 2012 R&D in - 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 6 6 6 7 7 7 8 8 8 9 9 9 9 0 0 0 vestment to GDP ratio is likely to once 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 again fall below 1 percent. Source: Patent figures from U.S. Patent & Trademark Office, Electronic Information Products Division / Patent Technology Monitoring Team, TAF Database; R&D figures from National Science Foundation, Di - R&D investment by industry has partially vision of Science Resources Statistics, National Patterns of R&D Resources (annual series). compensated for the decrease in government investment, although it is critical to note that industry funding is often biased 93 The Illinois Report 2012
Figure 3 Major Global Economies’ R&D Expenditures as Percentage of GDP start new companies and engineer 3.5 breakthroughs; 3.0 • Government support for basic re - search and development; 2.5 • Implementation of necessary regula -
) tions on private economic activity . %
( 2.0 P D G / 1.5 An examination of America’s response to D &
R global competitiveness since the Cold War 1.0 demonstrates clear deficiencies. The cost of .5 attending American public institutions of higher education is increasing due to de - 0 clining state government support. In addi - 1 3 5 7 9 1 3 5 7 9 1 3 5 7 8 8 8 8 8 9 9 9 9 9 0 0 0 0 9 9 9 9 9 9 9 9 9 9 0 0 0 0 tion, federal and state governments 1 1 1 1 1 1 1 1 1 1 2 2 2 2 invested little incremental value into the nation’s infrastructure, neglecting the United States South Korea needs for improved transportation of peo - Japan United Kingdom China Russian Federation ple, goods and data. American institutions Germany Canada continue to welcome students from around France Italy the globe, providing world-class educa - tional experiences, yet U.S. immigration
Source: OECD, Main Science and Technology Indicators, volume 2009/1, via National Science policy significantly hampers these highly Foundation, Division of Science Resources Statistics. trained individuals from launching or working at innovative startup companies. More than half of federal R&D funding continues to pay for defense research amid 4 Thomas Friedman and Michael change and the depletion of natural re - ongoing cuts in the overall federal research Mandelbaum. sources, and the digital revolution and budget, threatening America’s (and indi - 2011. That Used to workforce evolution. American compla - vidual states’) pace of innovation. Finally, Be Us: How America Fell Behind in the cency has placed the future of its competi - U.S. public policy appears poorly coordi - World It Invented tiveness at risk. nated without a defined end-game with re - and How We Can Come Back . New Maintaining U.S. Global Competitiveness spect to using federally funded research York: Farrar, Strass (basic discovery for innovation) to stimu - and Giroux. late industry-supported development. In their 2011 book, That Used to Be Us: How America Fell Behind in the World It Invented This vision of using federally funded re - and How We Can Come Back , Thomas Fried - search and education to foster economic man and Michael Mandelbaum write, development appears at a crossroads. Yet, “there is no chance—none—that America America’s founders provided a clear for - can address the great challenges it faces mula. The Morrill Act defined a role for without renewing, refreshing, and rein - the land-grant university as the driver of 4 vesting in its formula.” They define Amer - economic development and to serve as a ica’s formula for prosperity as having five renewable resource of innovation. Thus, it pillars : is the responsibility of America’s research • Providing public education for more universities to reinvest in the formula for and more Americans; prosperity through : • Building and continual moderniza - • Providing for education for entrepre - tion of our infrastructure; neurial science and technology ; • Keeping America’s doors open for • Creating infrastructure to support 94 immigration to enrich our universities, information exchange and innovation; Institute of Government & Public Affairs
• Retaining the best and brightest trainees and students through job creation and company formation ; Figure 3A Major Economies’ Share of Global GDP • Developing novel funding mecha -
nisms to support and optimize inno - 40 vative research endeavors; and 35 • Embracing a culture that invests in P
and rewards entrepreneurial pursuits . D 30 G l a
b 25 o l
In an April 2011 letter to Secretary of Com - G f 20 o
merce Gary Locke, the National Advisory e r
a 15 Council on Innovation and Entrepreneur - h S t ship provided ideas to enable university- n 10 e c r based technology commercialization e P 5 through student and faculty engagement and awareness, technology transfer sup - 0 0 5 0 5 0 5 0 5 0
port, industry collaboration and connec - 7 7 8 8 9 9 0 0 1 9 9 9 9 9 9 0 0 0 tions to economic development initiatives. 1 1 1 1 1 1 2 2 2 For the land-grant university, the way for - United States China ward is clear: it must integrate into broader European Union Japan entrepreneurial ecosystems at local, na - South Korea tional and global levels. It will be impera - tive to deliver appropriate resources into the ecosystem—talent, technology and in - Source: World Bank national accounts data, and OECD National Accounts data files. frastructure—to catalyze collaborative inno - vation, foster commercialization and drive economic competitiveness . to put that research to work for the good of For the The University of Illinois Response the people of the state had been newly ar - land-grant ticulated. The dot -com bubble of the mid- university, the In March 2000, the Illinois Senate made a to-late 1990s led to an increased awareness way forward is clear proclamation about the University of of the power of innovation to create jobs, clear: it must Illinois’ (U of I) economic development ef - and the pressure to pursue applied re - integrate into forts. Senate Resolution 296 stated that search grew. By early 2000, it was clear that broader the university had a major role to play in “…the State research-based universities of entrepreneurial Illinois (shall) be encouraged to use their fa - forming companies, creating jobs and gen - ecosystems at cilities, equipment, research scientists’ and erating revenue. staff’s time and services, and other resources local, national for the development and commercialization The timeline (Figure 4 on pages 96 –97) and global of new technological and scientific innova - highlights the U of I’s investment in educa - levels. tions, and that such uses be deemed to be in tion, research, infrastructure and commer - the public interest and not in conflict with cialization initiatives since 2000. Over this other uses or purposes that derive from period, the university has increased its re - their traditional responsibilities for instruc - search budget by more than 50 percent to tion, research, and public service…” more than $900 million, making it the top Illinois research university in terms of In practical terms, that proclamation repre - funding. (Figure 5 on page 98) . Likewise, sented both a reassurance and a challenge . the pace of startup company formation, Basic science research had long been part patents and licensing activity, and of the fabric of the U of I, but the direction collaboration with industry continues to 95 Figure 4 University of Illinois: Technology Development, Infrastructure & Commercialization Initiatives
Early Years: Middle Years: Establishment of‘Economic Development’ Mission Investments in Infrastructure
March 2000 – Illinois Jan 2001 – Oct 2002 – Illinois June 2003 – Dec 2003 – UIUC Senate adopted SR Motorola Governor George H. Groundbreaking named one of eight 296; Economic opened its Ryan announced ceremony for the Kau!man Campuses, Development added facility in the $123 million in new $73.5 million, supported by a $5 as the fourth mission UI Research funding as part of the 107,000-square - million grant from of the University of Park as the state’s VentureTECH foot Institute for the Kau!man Illinois (UI) anchor tenant Program Genomic Biology Foundation
March 2000 – Feb 2001 – July 2003 – May 2004 – University of Illinois First 65,000 - Enterprise - Dedication of Research Park, LLC, square-foot Works the $80 incorporated in the multi-tenant opened as a million, State of Illinois by the building in the 43,000 - 225,000 - UI Board of Trustees UI Research square-foot square-foot (BOT) Park opened technology Thomas M. Siebel Center for Computer Science
May 2000 – Dec 2001 – Chicago Biomedical Oct 2003 – IllinoisVen - Consortium established at the Groundbreaking tures, LLC, University of Illinois at Chicago ceremony for the incorporated (UIC), University of Chicago and new $30 million, in the State of Northwestern University with 142,000-square - Illinois by the support from The Searle Funds foot NCSA UI BOT at The Chicago Community Trust building 2 3 4 5 6 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2
increase over time, providing significant improved access to industry, startup com - and demonstrable economic impact and munities and capital resources. The re - serving as a national benchmark. maining sections of this chapter illustrate The U of I is committed to increasing con - selected initiatives and describe how such nections between discovery/innovation efforts may be expanded (and replicated and commercialization, and forging new by other universities) to deliver greater public-private initiatives as a means of economic impact. stimulating and contributing to Illinois’ Providing for Education for Entrepreneurial and the nation’s economic development. Science and Technology Furthermore, a vision has emerged for translating and extending the success of the University of Illinois Research Park in The University of Illinois is working to 96 Urbana-Champaign to Chicago, enabling make entrepreneurship pervasive across Middle Years: The Next 10 Years: Investments in Infrastructure Program Achievements and Next Steps
Jan 2007 – Completion of a Feb 2010 – Oct 2010 – $20 million expansion of the First acquisition Proof-of-concept Micro and Nanotechnology of an award program Laboratory (MNTL), providing a IllinoisVentures launched by Dec 2011 – net total of 117,000 square feet portfolio UIUC O"ce of “2011 of o"ce and laboratory space company (sale of Technology University iCyt to Sony) Management Research Park of the Year” awarded to the UI June 2007 – UIUC partners Apr 2010 – Research with BP, U. of California, EnterpriseWorks Park by the Berkeley and Lawrence recognized by Forbes Association Berkeley National Magazine as one of of Laboratory to form the “10 technology University $500M-funded Energy incubators that are Research Biosciences Institute changing the world” Parks
Fall 2008 – UIC Innovation Jul 2011 – Center opened as a strategic EnterpriseWorks alliance among the UIC named by Inc. Colleges of Art and Architec - Magazine as one ture, Business Administration of“10 start-up and Engineering, in partnership incubators to with Motorola watch” 8 9 0 1 2 7 0 0 1 1 1 0 0 0 0 0 0 0 2 2 2 2 2 2
all of its campuses. This reflects the recog - workforce. The university’s I-STEM Initia - nition that cultivating a culture of entrepre - tive aims to foster accessible, effective neurship requires many entrepreneurial STEM teaching and learning at local, state support/programming initiatives and op - and national levels, thereby preparing a portunities that enable the intersection of highly able citizenry and STEM workforce science and commercialization . to tackle pressing global challenges . By joining with units across the university STEM Education and external partners that include indus - try, government, professional associations The U of I has a responsibility as a land- and local school districts, the initiative pro - grant university to deliver science, technol - vides STEM experiences for students as ogy, engineering and mathematics (STEM) early as preschool, STEM teacher develop - education to prepare the next-generation ment programs, and undergraduate and 97 Figure 5 Growth in R&D Expenditures at Leading Illinois Research Universities
1,000,000 University of Northwestern University Illinois System University of Chicago 900,000
800,000 s
d 700,000 n a s u
o 600,000 h T $ 500,000 n i g n i 400,000 d n e p
S 300,000
200,000
100,000
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Fiscal Year
Source: National Science Foundation
Entrepreneurial education and programming graduate STEM research experiences. Preparation of students for STEM-related jobs is critical for competitive economic In addition to STEM education , a need ex - growth, and programs such as I-STEM ists to foster entrepreneurship broadly have the potential to fill our pipeline with across disciplines. This need may be ad - workers to address the growth expected in dressed by non-traditional studies in entre - high-wage, knowledge-based occupations preneurial programs, such as those offered (Figure 6). by the U of I’s Academy for Entrepreneurial Leadership (AEL) in Urbana-Champaign, the Technology Entrepreneur Center (TEC) at the College of Engineering in Urbana- Figure 6 Champaign, and the Institute for Entrepre - Growth in Employment in STEM Occupations, Projected neurial Studies (IES) at the College of 2008-2018, as Percent Change Business in Chicago.
Science, natural 15% These institutes offer formal curricula as Technology (computer specialist) 22% well as co-curricular opportunities to Engineering 11% expose students at all levels—from under - Mathematical science 20% graduates to post-doctoral fellows—to en - Total STEM occupations 17% trepreneurial endeavors and experiential Non-STEM occupations 9.8 % learning. From business plan competitions
Source: U.S. Department of Labor, Employment Projections Program (EPP), available at: and classroom lectures to hands-on work - http://www.bls.gov/emp/#tables shops and meetings with prominent global entrepreneurs, these programs are intended to foster innovative small busi - ness pursuits as well as corporate entre - 98 preneurship. Institute of Government & Public Affairs
The U of I has recently announced several counties in central Illinois. Among other ini - programs aimed at extending the reach of tiatives, the East Central Illinois University its entrepreneurial education throughout Center will create a community incubator Illinois. In partnership with government, and expand existing entrepreneurial re - industry stakeholders, business accelera - sources at Enterprise-Works, such as the EIR tors, and community-based organizations, Program, making them more accessible to the university is launching a series of community entrepreneurs. events designed to enable more connec - tions between U of I students, faculty and EntepriseWorks was named by Inc . maga - In partnership research with Chicago-based and down - zine as one of “10 Start-up Incubators to with state industry, startups and investors. Watch” in July 2011, and Forbes magazine government, Company incubation and business called it one of “10 technology incubators industry development assistance that are changing the world.” The success stakeholders, of EnterpriseWorks on the Urbana-Cham - business paign campus has instigated the formation In 2003, EnterpriseWorks opened in the of EnterpriseWorks-North, which will accelerators, University of Illinois Research Park (UIRP) launch on the Chicago campus in 2012. and in Urbana. This 43,000-square-foot small The Chicago satellite will leverage the suc - community- business incubator is designed to help cess of the EIR and I-Start Programs, by in - based startup companies succeed by providing corporating these programs into broader organizations, an array of shared facilities, equipment community efforts through partnerships the university and support services as well as weekly with other stakeholders. is launching a programming, educational forums and so - Creating Infrastructure to Support series of events cial networking opportunities to encour - Information Exchange and Innovation designed to age collaboration. More than 120 startup companies have launched with the sup - enable more port of EnterpriseWorks, over half of In addition to educational, training and pro - connections which spun out of a university depart - gramming opportunities, faculty, students, between U of I ment or lab and 45 percent of which report entrepreneurs and industry need physical students, having IP licensed from the Urbana- infrastructure to interact, to exchange infor - faculty and Champaign campus. mation and to foster innovation. Since 2000, research with the University of Illinois, with support from Chicago-based Programming includes the I-Start Program , the state and federal funding organizations, and downstate which provides a suite of company forma - has invested more than $500 million toward industry, tion services for new U of I entrepreneurs , research facilities infrastructure in Urbana- startups and including business development, legal Champaign alone (see Figure 4/Timeline). investors. setup, SBIR application, bookkeeping and The university’s investments in refining the marketing assistance , and the EIR Program , processes for technology transfer and indus - in which companies work with EIRs (entre - try collaboration also enable innovation and preneurs-in-residence/executives-in-resi - commercialization endeavors. In this section, dence) to vet commercial potential, develop we highlight the university’s role in leverag - business plans, identify critical milestones ing information exchange networks as well and seek seed financing. as the direct economic impact of the Univer - sity of Illinois Research Park (UIRP). In September 2011, the U.S. Commerce De - Illinois’ information hub partment’s Economic Development Admin - istration (EDA) awarded the U of I a five- year, $638,000 University Center Program The U of I’s participation in initiatives grant to expand EnterpriseWorks programs such as I-WIRE and the Starlight program, to a 2,900-square-mile region that includes 12 plus its leadership role in deploying robust 99 Figure 7 University of Illinois Research Park Economic Output, FY09-FY13
140
120
s 100 n o i l l
i 80 M $ 60 n i t u
p 40 t
In fiscal year u 2010, the U of I O 20 was ranked the 0 l l l l l s s s s s c c c c c a a a a a n n n n n ! ! ! ! ! i i i i i n n n n top university n o o o o o t t t t t i i i i i o o o o o i i i i i t t t t t n n n n n t t t t t a a a a a e e e e e i i i i i a a a a a d d d d in the nation in d c c c c c c c c c c o o o o o S S S S S u u u u u d d d d d m m m m m & & & & & E E E E NSF support E f f f f f m m m m m o o o o o o o o o o r r r r r c c c c c P P P P with $185 P c c c c c A A A A A million in FY09 FY10 FY11 FY12 FY13 grants, 54 percent of Source: An Economic Impact Report for the Research Park at the University of Illinois at Urbana-Champaign, prepared by Champaign County Regional Planning Commission, November 2011 which was directed to NCSA staff. high-performance computing resources the nation in NSF support with $185 mil - through the National Center for Supercom - lion in grants, 54 percent of which was di - puting Applications (NCSA) in Urbana- rected to NCSA staff. Since 1999, NCSA Champaign, showcases its commitment to has provided fellowships to more than 100 accelerating research and providing testing Illinois faculty and research staff, served as facilities for next-generation ideas and ap - a launching pad and incubator for multi - plications. The NCSA is also the home of ple campus initiatives, attracted partner - the Blue Waters project, which is intended ships with Fortune 50 companies , and to provide the national research commu - spawned technologies commercialized by nity with a sustained-petaflop supercom - startup companies. puter. It leads the NSF’s Extreme Science University of Illinois Research Park and Engineering Discovery Environment (XSEDE), a five-year, $121 million, 17-insti - tution partnership. The university facili - One of the university’s most tangible en - tates a wide variety of collaborative deavors to promote economic develop - projects, including those in the arts and ment is the UIRP, which celebrated its 10th humanities, biology, nanotechnology and anniversary in 2011 and was recently environmental engineering, all designed to named “2011 University Research Park of enable science and engineering discovery the Year” by the Association of University and innovation—and completely free to re - Research Parks. The UIRP is an example of searchers through a competitive peer-re - the powerful link between robust corpo - view process. rate partnerships, technology innovation, student research and entrepreneurial sup - Since the NCSA opened in 1986, the center port . The significant and direct economic has attracted nearly $1 billion in external impact that the UIRP has made on the funding from NSF, other federal agencies, local community and the state illustrates and the private sector. In fiscal year 2010, its success (Figure 7 ). 100 the U of I was ranked the top university in Institute of Government & Public Affairs
Since 2001, a little more than $100 million opportunity stay in Illinois and to con - has been invested in construction of 12 tribute to the economy should be one of buildings spanning 603,721 square feet. the goals of the new land-grant university. Less than $40 million was funded by the Discussing visa and immigration issues is university or public sector. More than 200 beyond the scope of this chapter; however, companies have occupied the UIRP, in - the following section discusses key initia - cluding 127 startups and 75 current ten - tives to attract and retain talent through ants. UIRP-based startups have reported new technology transfer programs, early- No public more than $110 million in venture capital stage company funding, innovative federal funding from 2005-2011. Current publicly grant mechanisms, and public-private col - university is traded corporations at the park include laborations. host to more international Abbott Laboratories, ADM, Caterpillar, Developing Novel Funding Mechanisms to Deere and Company, Eastman Chemical, Support and Optimize Innovative Research students than Littlefuse, Pearson, Raytheon, Riverbed, Endeavors the U of I’s SAIC, Sony, State Farm and Yahoo! . Urbana- Champaign The venture capital (VC) industry, a histor - UIRP operations annually contribute $1.3 campus, and million in tax revenue to Champaign ical source of funding for early-stage prod - uct development, has evolved significantly U of I hosts County and $4.1 million to the state of thousands of Illinois . The park’s 1,235 employees have since 2001 but has fallen dramatically since international created an additional 241 indirect and 508 2008. Faced with capital constraints, pro - induced jobs in the region, resulting in an fessional investors must seek more ad - faculty and annual payroll of $54 million and a direct vanced product development before staff every economic benefit of $101 million. Indirect investing in novel technology. Accordingly, year. and induced jobs garner an additional research universities, their surrounding economic impact of more than $68 million communities (e.g., angel investors, busi - annually . ness incubators and accelerators , and eco - nomic development groups) , corporations Retaining the Best and Brightest through and federal agencies are now charged with Job Creation and Company Formation the responsibility of shepherding these technologies to a more advanced stage of Unlike many Midwest states, Illinois is market-readiness before venture capital is growing, and its minority and immigrant likely to invest . populations are growing fastest of all . Edu - Technology transfer office initiatives cating first- or second-generation Ameri - cans presents an opportunity to invest in the “industrial class,” but just as Turner Most university faculty members have wanted to reshape higher education to been trained to focus on basic science equip students for the realities of the mod - research and the publication of such re - ern world, so too must the U of I evolve its search, but a new generation is emerging— programs and its strategic vision. One of one that acknowledges the application of those new realities is the influx of interna - research and is interested in engaging with tional students, future members of a global industry and investors. The Offices of workforce . Technology Management (OTM) at the U of I are developing programs to encour - No public university is host to more inter - age faculty to consider the commercial national students than the U of I’s Urbana- possibilities of their work. Champaign campus, and U of I hosts thousands of international faculty and staff In 2010, the OTM at the Chicago campus every year . Ensuring that they have the co-founded Chicago Innovation Mentors 101 The Illinois Report 2012
Figure 8 Five-Year Technology Commercialization Experience at the (CIM) , a multi-institution initiative that University of Illinois, FY07-FY11 cultivates university technology commer - cialization by matching experienced entre - Licenses and Options preneurs, executives and domain experts 100 99 with innovating faculty. CIM supports bio -
medical opportunities from the University 80 44 of Chicago, Northwestern University and 61 61 60 the University of Illinois at Chicago, in col - 49 18 49 The University ® 21 laboration with the iBIO Institute. By 40 12 16 of Illinois is the pairing university researchers with a team 43 55 sixth-leading of qualified mentors, the program aims to 20 37 33 40 source of better direct early commercial develop - 0 patents in ment efforts and identify value-added 2007 2008 2009 2010 2011 Illinois and the milestones that may be achieved before only academic professional investment. University of Illinois at institution in Urbana-Champaign the Top 10. With a similar goal of advancing commer - University of Illinois - Chicago cial readiness, two proof-of-concept award programs were launched at the Urbana Number of Start-Ups campus in 2010-2011. A third such pro - 20 gram will launch in 2012 on the Chicago 20
campus to provide development grants, 16 8 typically between $25,000 and $ 75,000, to evaluate and develop commercial possibil - 12 11 8 8 ities of university technologies by allowing 8 7 5 2 development, testing or prototype con - 1 3 12 4 struction. In each case, projects are selected 6 6 6 5 on the basis of having clear market poten - 0 tial, targeted milestones and well-defined 2007 2008 2009 2010 2011
deliverables, signifying the greatest poten - Source: Offices of Technology Management at the University of tial to secure a license from industry, lead Illinois to the formation of an investor-backed startup company , or secure competitive small business grant funding, such as funding from the Small Business Innova - The numbers of licenses and options as tion Research (SBIR) and Small Business well as startup companies formed also have Technology Transfer (STTR) Programs . more than doubled over the past five years (Figure 8). This is particularly impressive The efforts of the OTM have significantly in - given that the U.S. Department of Labor’s creased revenue from licenses and options Bureau of Labor Statistics reported a record to more than $19.08 million in fiscal year low number of new business establish - 2011, up from $9.03 million just five years ments launched nationwide in the 12 ago . The University of Illinois is the sixth- months ending March 2010. Furthermore, leading source of patents in Illinois and the data from the 2010 report of the Association only academic institution in the Top 10. A of University Technology Managers sug - report by the Intellectual Property Owners gest that technology licensing “plays a Association (IPO) listing the top 300 organi - strong role in regional economic develop - zations granted U.S. patents in 2010 in - ment as 77 percent of startup companies cluded the University of Illinois as one of formed in 2010 were located in each institu - 102 only 14 universities among that group. tion’s home state, up from 73 percent in Institute of Government & Public Affairs
5 Association of 5 2009. ” The OTM’s achievement over the publicly shared to foster collaboration. In University Technology past five years provides further evidence contrast, the industry sponsor often plays Managers, AUTM that the research conducted by U of I fac - a primary role in designing the research U.S. Licensing ulty is truly an engine of job creation and protocol, directed at providing a solution Activity Survey: FY2010, editors economic development. to a near-term commercial problem, and Richard Kordal, IllinoisVentures controls the ultimate use and disclosure of Arjun Sanga, and such research. Industry is now challenged Paul Hippenmeyer. by the dichotomy between funding cost- 6 Based upon In 2000, the U of I conceived a venture cap - effective research and the need for more international study ital fund that would invest in companies of University“gap” open innovation pursuits that may fill funding vehicles, derived from faculty-based research, and product pipelines and solve longer-term reported by IllinoisVentures invested in its first portfo - problems. The U of I engages in ‘open in - innovosource . lio company in 2003. To date, IllinoisVen - novation’ pursuits as well as ‘contract’ or tures has had extensive impact on the goal-directed R&D via research collabora - vitality of the Illinois economy. Through tions with industry . the creation of two limited-partner invest - ment funds, IllinoisVentures has invested $38 million in 69 startups that employ technology from the U of I and other Mid - Figure 9 west universities and federal laboratories. Sources of R&D Investment These companies have created more than
450 jobs and have raised more than $450 80 million from other funding sources—an impressive 12:1 leverage ratio. 70
While 2-4 percent of VC funds nationally 60 (15-18 percent of funds from Illinois-based VC firms) are invested in Illinois-based 50 companies, more than 70 percent of active clients have operations in Illinois, and 82 40 percent of invested capital involves U of I faculty or IP. With this track record, in - 30 novosource , a nationally recognized tech transfer consultant, has referred to Illi - 20 noisVentures as a “trend-setter” among 6 university-based gap-funding vehicles. 10
Public-private partnerships 0
As discussed2 p2 rev2 io1 usl1 y, 1 Fig1 ure1 91 illu1 s -1 1 1 1 1 1 1 1 1 0 0 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 9 9 9 9 8 8 8 7 7 7 6 6 6 6 5 5 trates how i8n d5u st2r y 9h a6s e3c lip0 se7d t4h e1 8 5 2 9 6 3 0 7 4 federal government as a source of R&D Federal (percentage of total US R&D) funding. A critical distinction between Non-Federal (percentage of total US R&D) industry-funded and federally-funded re - search lies in the subject of such research. Source: National Science Foundation, Division of Science Resources Statistics Federal research dollars largely support P basic research designed to address global e r c e and national grand challenges or simply n t a gaining fundamental knowledge. Further - g e
o 103 more, federal research is designed to be f T o t a l U S R & D The Illinois Report 2012
In 2007, the Urbana-Champaign campus the NSF Innovation Corps and the NIH joined with BP, the University of California- National Center for Advancing Transla - Berkeley and the Department of Energy’s tional Sciences (NCATS), as well as a pro - Lawrence Berkeley National Laboratory in posed expansion of the SBIR/STTR the largest public-private partnership of its program . kind in the world . The Energy Biosciences Institute (EBI) is a 10-year, $500 million The SBIR and STTR programs are competi - partnership, in which BP scientists work tive federal granting mechanisms, cur - 7 University of Illinois Office for University alongside academic researchers to address rently with more than $1 billion in annual Relations. large-scale problems in the development of funding available. These annual grants are 2011, Sept. 16. “University of next-generation biofuels . The EBI hosts 60 awarded to early-stage companies for proj - Illinois lauds patent research groups, which are composed of ects designed to advance basic research reforms” [Press 120 faculty members and 200 post -doctoral toward commercialization. Several univer - release]. researchers, graduate, and undergraduate sity units, including EnterpriseWorks and students . To date, 23 inventions have been the OTMs, direct services toward faculty- disclosed to the Urbana-Champaign OTM based startups to encourage grant applica - The U of I sits as a result of the EBI partnership, half in the tions. Cumulative awards to the upon a areas of gene enzymes and gene regulation. University of Illinois Research Park have tremendous BP is pursuing patents on nine of these totaled $28 million from 2004-2010 . foundation as discoveries. Future Perspective: Embracing a Culture it looks that Invests in and Rewards Entrepreneurial forward to the Similarly, the university’s investment in Pursuits next decade of facilities, training and basic research infra - economic structure has fostered corporate partner - The university’s initiatives each contribute development ships. For example, in 2010, Abbott opened the Abbott Nutrition facility at the UIRP to to the evolution of a new university cul - and the 150th ture—one that invests in and rewards en - anniversary of research and develop nutritional products for infants through adults. Abbott Nutri - trepreneurial pursuits. The evolving the Morrill Act. tion’s initial experience in the UIRP American research university is responsi - prompted the corporation to explore part - ble for crafting and supporting this culture nership opportunities with the university, in its efforts to foster economic develop - including the recently announced Center ment and advance its country’s global for Nutrition, Learning, and Memory, competitiveness. which will be funded by a grant from Abbott of up to $50 million over the next Christopher G. Kennedy, the chairman of five years . the U of I’s Board of Trustees, has stated, “Public research universities, like the Uni - Smaller -scale public/private partnerships versity of Illinois, are our state’s only re - are also exemplified in the UIRP, which en - newable resource for innovation . The gages with new commercial enterprises in University of Illinois provides new knowl - addition to larger corporations . The prox - edge, which leads to development of new imity of these partnerships to university products, which leads to new jobs. We have the potential to be a perpetual job research faculty and students has been 7 cited as a critical commercial success factor. creation machine.” SBIR/STTR funding The U of I sits upon a tremendous founda - tion as it looks forward to the next decade of th Several initiatives have arisen at the fed - economic development and the 150 an - eral level to address the gap between inno - niversary of the Morrill Act (Figure 10 ). Con - 104 vation and commercialization , including necting research funding and infrastructure Institute of Government & Public Affairs
Figure 10 American Research University Innovation Ecosystem with entrepreneurial training for faculty and student innovators will breed opportunity for enterprising endeavors. University re - Federally Public/ search leads to innovations and technologi - Funded Basic Private cal advances . When this research is Research Partnerships commercialized, it can lead to new jobs and even new industries . These industries need skilled workers, and universities train those workers to succeed, innovate and start the University cycle over again . Entrepreneurship means Innovation Ecosystem sustainability for our communities . Entrepre - Entrepreneurial Technology neurs are the key to robust and lively com - Education & Transfer munities . This is the American research Programming Support university’s role in economic development in its most basic form. It is time for the reinser - tion of the American research university as Infrastructure- Facilities, the renewable source of innovation and eco - Funding, nomic development. Information
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