Quarterly HighlightsThe fourth quarter of fiscal year 2015 saw largeamounts of transfers in from other state fundsto offset a portion of the income tax decline,reduce the year’s budget hole and assist withthe cash position of the General Funds. In thefourth quarter, $1.284 billion was statutorilytransferred to the General Revenue Fundpursuant to Public Act 99-002 and $454 millionwas borrowed from other state funds anddeposited into the General Revenue Fundpursuant to Public Act 98-682. The borrowingoccurred on June 30th which increased the endof year cash balance versus previous years.

The chart of adjusted General Revenue Fund(GRF) balances on June 30, 2015 shows anegative balance of $1.710 billion. At this timelast year, the adjusted GRF balance was anegative $1.697 billion. The increase in thecash balance at the end of fiscal year 2015 due

FISCAL YEAR 2015 REVENUES DROPFUND TRANSFERS PROP UP UNBALANCED BUDGETAt the close of fiscal year 2015, the Illinois Office of theComptroller (IOC) was holding $2.830 billion of unpaid GeneralFunds vouchers and transfers. This was an increase of $426million from the end of fiscal year 2014. When estimates of billsbeing held at state agencies are included, the state’s totalbacklog was approximately $5 billion.

The outlook for the state’s fiscal picture is heavily dependent onthe final fiscal year 2016 budget structure. Based on current law,income tax revenues are estimated to be significantly lowerthan fiscal year 2015 levels. Also, the next two months are thestate’s “lapse period” where the agencies close out paymentson fiscal year 2015 obligations – approximately $1 billion inGeneral Funds bills are expected to be submitted to the IOC.

Combining the backlog and lapse period spending,approximately $4 billion in fiscal year 2016 revenues will be

used to pay prior year obligations. While this is about the samefinancial position as last year, maintaining close to status quowas possible only by the use of fund sweeps and borrowing atthe end of fiscal year 2015. The borrowed portion must berepaid to the original funds within 18 months.

Illinois began fiscal year 2016 without a budget in place for mostof the state’s operational expenses. While this delay isproblematic in the short-term for limiting the state’s ability tomake timely payments for many of its obligations, there aremajor challenges facing budget makers crafting the budgetplan. Significant revenue and/or expenditure changes will benecessary for the state to avoid sliding into a worse fiscalposition. The decisions on the fiscal year 2016 budget will alsoimpact the structure of the fiscal year 2017 budget and Illinois’fiscal future.

-$6,000

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1 16 31 46 61 76 91 106 121 136 151 166 181 196 211 226 241

Millions

Number of Processing Days

12 Adj 13 Adj 14 Adj 15 Adj

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

12

13

14

Comparison of General Revenue Fund Daily Cash Balances FY 2012-FY 2015 Adjusted to Reflect Unpaid Bills

Number of Processing Days

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CQTHE ILLINOIS STATE

July 2015LESLIE GEISSLER MUNGER, COMPTROLLER

to the interfund borrowing offset theincrease in the vouchers and transfers onhold.

The General Funds backlog of unpaid billsat the end of June totaled $2.830 billion andconsisted of $2.200 billion on hold in theGeneral Revenue Fund, $286 million in theEducation Assistance Fund and $344million in the Common School Fund.

In fiscal year 2015, base General Fundsrevenues totaled $35.888 billion, a drop of$880 million, or 2.4 percent, from fiscal year2014 base revenues. January 1st began therollback of the temporary income taxincrease and then in February, a portion ofincome tax revenues began to be depositedinto two new funds outside of the GeneralFunds. Income tax deposits into the GeneralFunds were down $1.687 billion, or 8.5percent, for the year.

Base Revenues Individual income tax rates declined from5.0 percent to 3.75 percent and thecorporate rate decreased from 7.0 percentto 5.25 percent at the beginning of thecalendar year; this resulted in a decline inincome tax revenues. With a decrease infederal revenues, revenues experienced asignificant decline for the fiscal year andmore than offset the growth in transfers in,sales taxes and all other sources. GeneralFunds total base revenue for fiscal year2015 decreased $880 million, or 2.4percent. Factors impacting the state’s baserevenues this year include:

• INCOME TAX: Individual income taxreceipts fell $1.209 billion or 7.3 percent infiscal year 2015, while corporate incometax revenues decreased by $478 millionor 15.1 percent. It should be noted that$485 million of income tax revenues weredeposited into the new funds dedicated toeducation and human services programs.

• SALES TAX: For the year, sales taxrevenues increased by $354 million or 4.0

percent. However, the pace of growth hasslowed down as sales taxes grew by 3.0percent in the past six months, down from6.2 percent growth in the first half of theyear.

• TRANSFERS: Transfers in increased$829 million in fiscal year 2015.Legislation authorizing fund sweepsresulted in $1.284 billion being transferredinto the General Revenue Fund. Reducedtransfers from the Income Tax RefundFund partially offset these transfers. While$397 million was transferred from thisfund last year, only $63 million wastransferred in August this fiscal year. Also,transfers from the Capital Projects Funddeclined $95 million. Lottery Fundtransfers were up $10 million andriverboat gambling transfers decreased$29 million. It is also important to note thattransfers from the Budget StabilizationFund and the $454 million from interfundborrowing are excluded from baserevenue analysis.

• FEDERAL REVENUE: Federal revenuesdecreased $572 million, or 14.7 percent,in fiscal year 2015. The decline is due to adecrease in the payment from theGeneral Funds of Medicaid bills eligiblefor reimbursement.

• OTHER RECEIPTS: All other statereceipts are up $196 million, or 6.1percent from the previous fiscal year.Specifically, deposits from the Build IllinoisEscrow Account increased $81 million,inheritance tax receipts were up $57million and insurance taxes grew $20million.

Base ExpendituresGeneral Funds base spending – paymentsreleased by the IOC – decreased by $1.053billion, or 2.9 percent, for fiscal year 2015.Transfers out decreased by $352 millionwhile warrants issued, including prior yearadjustments, declined by $701 million.However, vouchers presented by the state

agencies were up $838 million, or 2.7percent, for the year.

• SOCIAL SERVICES: Vouchers presentedby the Department of Healthcare andFamily Services (primarily for Medicaidspending) were up $499 million, or 7.5percent, in fiscal year 2015. Voucherspresented by the Department of HumanServices were up $217 million, or 6.9percent, and Department of Children andFamily Services expenditures were down$2 million (0.3 percent). Department onAging vouchers were down $49 million(5.1 percent) for the year.

• EDUCATION: Vouchers presented by theState Board of Education were down$135 million, or 2.0 percent for the year.General Funds appropriations for GeneralState Aid for schools decreased this fiscalyear, but $200 million was appropriatedfrom the new fund that receives a portionof the income tax. Vouchers presented byhigher education agencies, excluding theretirement system, were down $67 millionor 3.3 percent.

• RETIREMENT SYSTEMS: TeachersRetirement System (TRS) vouchers weredown $4 million. The UniversityRetirement System expendituresincreased $36 million. Vouchers from theState Employees Retirement Systemwere up $52 million.

• ALL OTHER: Central ManagementServices had the largest increase amongthe major agencies of $168 million to fundstate employee health insurance bills thisyear. Department of Corrections spendingincreased $97 million, or 7.8 percent, forthe year.

• TRANSFERS OUT: Transfers out forfiscal year 2015 decreased by $352million, or 7.1 percent, when compared tolast year. Accounting for most of thedecline, transfers to the HealthcareProvider Relief Fund were down $319million for fiscal year 2015. n

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IOC WEBSITE: www.illinoiscomptroller.com

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Exhibit 1GENERAL FUNDS TRANSACTIONS

(Dollars in Millions)

June Change Twelve Months Change2014 2015 FY 2014 FY 2015 Amount Percent

AVAILABLE CASH BALANCE, BEGINNING $ 294 $ 279 $ (15) $ 154 $ 74 $ (80) (51.9) %

Revenues: State Sources: Cash Receipts: Income Taxes: Individual $ 1,521 $ 1,244 $ (277) $ 16,642 $ 15,433 $ (1,209) (7.3) % Corporate 413 336 (77) 3,164 2,686 (478) (15.1) Total, Income Taxes 1,934 1,580 (354) 19,806 18,119 (1,687) (8.5) Sales Taxes 691 705 14 7,676 8,030 354 4.6 Other Sources: Public Utility Taxes 55 80 25 1,013 1,006 (7) (0.7) Cigarette Taxes 29 29 0 353 353 0 0.0 Inheritance Tax (gross) 25 34 9 276 333 57 20.7 Liquor Gallonage Taxes 15 14 (1) 165 167 2 1.2 Insurance Tax and Fees 64 63 (1) 333 353 20 6.0 Corporation Franchise Tax and Fees 13 13 0 203 211 8 3.9 Investment Income 2 2 0 20 25 5 25.0 Cook County IGT 0 0 0 244 244 0 0.0 Other 93 181 88 624 735 111 17.8 Total, Other Sources 296 416 120 3,231 3,427 196 6.1 Total, Cash Receipts $ 2,921 $ 2,701 $ (220) $ 30,713 $ 29,576 $ (1,137) (3.7) % Transfers In: Lottery Fund $ 71 $ 72 $ 1 $ 668 $ 678 $ 10 1.5 % State Gaming Fund 29 20 (9) 321 292 (29) (9.0) Other Funds 111 151 40 1,163 2,011 848 72.9 Total, Transfers In $ 211 $ 243 $ 32 $ 2,152 $ 2,981 $ 829 38.5 % Total, State Sources $ 3,132 $ 2,944 $ (188) $ 32,865 $ 32,557 $ (308) (0.9) % Federal Sources $ 392 $ 105 $ (287) $ 3,903 $ 3,331 $ (572) (14.7) %Total, Base Revenues $ 3,524 $ 3,049 $ (475) $ 36,768 $ 35,888 $ (880) (2.4) %Short Term Borrowing 0 0 0 0 0 0 0.0Interfund Borrowing 0 454 454 0 454 454 0.0Transfer from Budget Stabilization Fund 0 0 0 275 275 0 0.0Total, Revenues $ 3,524 $ 3,503 $ (21) $ 37,043 $ 36,617 $ (426) (1.2) %

Expenditures: By Agency: Healthcare and Family Services $ 742 $ 926 $ 184 $ 6,674 $ 7,173 $ 499 7.5 % State Board of Education 772 615 (157) 6,686 6,551 (135) (2.0) Human Services 233 258 25 3,164 3,381 217 6.9 Teachers Retirement 288 255 (33) 3,541 3,537 (4) (0.1) University Retirement System 126 129 3 1,316 1,352 36 2.7 All Other Higher Education 33 33 0 2,007 1,940 (67) (3.3) Corrections 93 120 27 1,248 1,345 97 7.8 State Employees Retirement System 91 95 4 1,097 1,149 52 4.7 Central Management Services 101 5 (96) 1,476 1,644 168 11.4 Children and Family Services 28 29 1 682 680 (2) (0.3) Aging 78 51 (27) 968 919 (49) (5.1) State Police 21 26 5 245 289 44 18.0 All Other 131 132 1 1,707 1,689 (18) (1.1)Total $ 2,737 $ 2,674 $ (63) $ 30,811 $ 31,649 $ 838 2.7 % Regular Transfers Out 402 377 (25) 4,968 4,616 (352) (7.1) Prior Year Adjustments 0 0 0 (60) (11) 49 (81.7) Vouchers Payable Adjustment 330 (165) (495) 1,129 (459) (1,588) N/ATotal, Base Expenditures $ 3,469 $ 2,886 $ (583) $ 36,848 $ 35,795 $ (1,053) (2.9) %Transfers to Repay Budget Stabilization 275 275 0 275 275 0 0.0Transfers to Repay Short-Term Borrowing 0 0 0 0 0 0 0.0Total, Expenditures 3,744 3,161 (583) 37,123 36,070 (1,053) (2.8)

AVAILABLE CASH BALANCE, ENDING $ 74 $ 621 $ 547 $ 74 $ 621 $ 547 739.2 %

Exhibit 1AGENERAL REVENUE FUND TRANSACTIONS

(Dollars in Millions)

June Change Twelve Months Change2014 2015 FY 2014 FY 2015 Amount Percent

AVAILABLE CASH BALANCE, BEGINNING $ 51 $ 106 $ 55 $ 35 $ 12 $ (23) (65.7) %

Revenues: State Sources: Cash Receipts: Income Taxes: Individual $ 1,410 $ 1,118 $ (292) $ 15,427 $ 14,271 $ (1,156) (7.5) % Corporate 383 311 (72) 2,933 2,489 (444) (15.1) Total, Income Taxes 1,793 1,429 (364) 18,360 16,760 (1,600) (8.7) Sales Taxes 519 530 11 5,766 6,033 267 4.6 Other Sources: Public Utility Taxes 52 73 21 931 921 (10) (1.1) Cigarette Taxes 22 21 (1) 256 257 1 0.4 Inheritance Tax (gross) 25 34 9 276 333 57 20.7 Liquor Gallonage Taxes 15 14 (1) 165 167 2 1.2 Insurance Tax and Fees 64 63 (1) 333 353 20 6.0 Corporation Franchise Tax and Fees 13 13 0 203 211 8 3.9 Investment Income 2 2 0 19 24 5 26.3 Cook County IGT 0 0 0 244 244 0 0.0 Other 93 180 87 620 732 112 18.1 Total, Other Sources 286 400 114 3,047 3,242 195 6.4 Total, Cash Receipts $ 2,598 $ 2,359 $ (239) $ 27,173 $ 26,035 $ (1,138) (4.2) % Transfers In 111 151 40 1,161 2,009 848 73.0 Total, State Sources $ 2,709 $ 2,510 $ (199) $ 28,334 $ 28,044 $ (290) (1.0) % Federal Sources $ 392 $ 105 $ (287) $ 3,903 $ 3,331 $ (572) (14.7) %Total, Base Revenues $ 3,101 $ 2,615 $ (486) $ 32,237 $ 31,375 $ (862) (2.7) %Short Term Borrowing 0 0 0 0 0 0 0.0Interfund Borrowing 0 454 454 0 454 454 0.0Transfer from Budget Stabilization Fund 0 0 0 275 275 0 0.0Total, Revenues $ 3,101 $ 3,069 $ (32) $ 32,512 $ 32,104 $ (408) (1.3) %

Expenditures: By Agency Healthcare and Family Services $ 742 $ 926 184 $ 6,674 7,173 499 7.5 State Board of Education 370 455 85 2,244 2,326 82 3.7 Human Services 233 258 25 3,164 3,381 217 6.9 University Retirement System 126 129 3 1,316 1,347 31 2.4 All Other Higher Education 6 9 3 537 514 (23) (4.3) Corrections 93 120 27 1,248 1,345 97 7.8 State Employees Retirement System 91 95 4 1,097 1,149 52 4.7 Central Management Services 101 5 (96) 1,476 1,644 168 11.4 Children and Family Services 28 29 1 682 680 (2) (0.3) Aging 78 51 (27) 968 919 (49) (5.1) State Police 21 26 5 245 289 44 18.0 All Other 132 137 5 1,746 1,747 1 0.1Total $ 2,021 $ 2,240 $ 219 $ 21,397 $ 22,514 $ 1,117 5.2 % Regular Transfers Out 723 593 (130) 10,185 9,371 (814) (8.0) Prior Year Adjustments 0 (1) (1) (59) (12) 47 (79.7) Vouchers Payable Adjustment 121 (422) (543) 737 (522) (1,259) N/ATotal, Base Expenditures $ 2,865 $ 2,410 $ (455) $ 32,260 $ 31,351 $ (909) (2.8) %Transfers to Repay Budget Stabilization 275 275 0 275 275 0 0.0Transfers to Repay Short-Term Borrowing 0 0 0 0 0 0 0.0Total, Expenditures 3,140 2,685 (455) 32,535 31,626 (909) (2.8)

AVAILABLE CASH BALANCE, ENDING $ 12 $ 490 $ 478 $ 12 $ 490 $ 478 3,983.3 %

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Printed by Authority State of IllinoisJuly 2015, 20, 44551