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Illinois State Budget

Governor Pat Quinn

Fiscal Year 2012July 1, 2011 June 30, 2012

www.state.il.us/budget

Printed/Created by Authority of the State of Illinois


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Table of Contents

State of Illinois

Chapter-PageThe Governors Letter of Transmittal

READERS GUIDE ......................................................................................................................................................... Chapter 1Budget Documents ........................................................................................................... 1-1

Budget Document Organization ........................................................................................ 1-1State of Illinois Organization Chart ................................................................................... 1-2Basis of Accounting .......................................................................................................... 1-3Guide to Understanding Agency Budget Submissions ........................................................ 1-3Agency Budget Tables ...................................................................................................... 1-4Description of Funds ........................................................................................................ 1-6

BUDGET SUMMARY .................................................................................................................................................... Chapter 2Fiscal Overview ................................................................................................................. 2-1Summary Tables

I-A Operating Appropriations by Agency All Funds ................................................... 2-24I-B Supplementals to Complete Fiscal Year 2011 ......................................................... 2-33II-A Revenues by Source All Appropriated Funds ....................................................... 2-34

II-B Revenues by Source General Funds ..................................................................... 2-35II-C Budgeted Funds Revenues Generally Accepted Accounting Principles (GAAP) Basis 2-36II-D Budgeted Funds Expenditures Generally Accepted Accounting Principles (GAAP) Basis 2-36III-A Road Fund ........................................................................................................... 2-37III-B Motor Fuel Tax State Funds ............................................................................... 2-38IV-A Appropriated Operating Funds by Fund Group for Fiscal Year 2012 ..................... 2-39IV-B Appropriated Operating Funds by Fund for Fiscal Year 2012 ................................ 2-40

BUDGETING FOR OUTCOMES ............................................................................................................................... Chapter 3

PUBLIC RETIREMENT SYSTEMS ............................................................................................................................ Chapter 4

ECONOMIC OUTLOOK AND REVENUE FORECAST ...................................................................................... Chapter 5

EDUCATION ................................................................................................................................................................... Chapter 6Elementary and Secondary Education

Illinois State Board of Education .................................................................................. 6-1Teachers Retirement System ...................................................................................... 6-8

Higher EducationIllinois Board of Higher Education ............................................................................... 6-9Public Universities

Chicago State University ........................................................................................ 6-15Eastern Illinois University ...................................................................................... 6-17Governors State University .................................................................................... 6-19Illinois State University .......................................................................................... 6-21Northeastern Illinois University ............................................................................. 6-25

Northern Illinois University .................................................................................... 6-25Southern Illinois University .................................................................................... 6-27University of Illinois .............................................................................................. 6-29Western Illinois University ..................................................................................... 6-32

Illinois Community College Board ............................................................................... 6-34Illinois Student Assistance Commission ...................................................................... 6-36Illinois Mathematics and Science Academy .................................................................. 6-38State Universities Retirement System .......................................................................... 6-39State Universities Civil Service System ......................................................................... 6-40


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Table of Contents

State of Illinois

ECONOMIC DEVELOPMENT ................................................................................................................................... Chapter 7Agriculture, Department of ............................................................................................... 7-1Commerce and Economic Opportunity, Department of ..................................................... 7-8East St. Louis Financial Advisory Authority ........................................................................ 7-15

Illinois Commerce Commission ......................................................................................... 7-16Illinois Power Agency ........................................................................................................ 7-19Illinois Finance Authority .................................................................................................. 7-21Illinois Sports Facilities Authority ...................................................................................... 7-22Illinois State Toll Highway Authority ................................................................................. 7-23Labor, Department of ....................................................................................................... 7-25Metropolitan Pier and Exposition Authority ....................................................................... 7-28Southwestern Illinois Development Authority .................................................................... 7-29Transportation, Department of ......................................................................................... 7-30Upper Illinois River Valley Development Authority ............................................................. 7-38

PUBLIC SAFETY and REGULATION ..................................................................................................................... Chapter 8Corrections, Department of .............................................................................................. 8-1

Environmental Protection Agency ..................................................................................... 8-6Financial and Professional Regulation, Department of ....................................................... 8-12Illinois Criminal Justice Information Authority ................................................................... 8-17Illinois Educational Labor Relations Board ......................................................................... 8-21Illinois Emergency Management Agency ........................................................................... 8-23Illinois Labor Relations Board ........................................................................................... 8-28Illinois Violence Prevention Authority ................................................................................ 8-30Illinois Workers Compensation Commission .................................................................... 8-34Insurance, Department of ................................................................................................. 8-37Law Enforcement Training Standards Board ...................................................................... 8-40Military Affairs, Department of ......................................................................................... 8-42Prisoner Review Board ...................................................................................................... 8-46Property Tax Appeal Board ............................................................................................... 8-49

State Fire Marsal, Office of the .......................................................................................... 8-51State Police, Department of .............................................................................................. 8-55State Police Merit Board .................................................................................................... 8-61

HUMAN SERVICES ....................................................................................................................................................... Chapter 9Aging, Department on ...................................................................................................... 9-1Children and Family Services, Department of .................................................................... 9-6Comprehensive Health Insurance Plan .............................................................................. 9-11Employment Security, Department of ................................................................................ 9-13Healthcare and Family Services, Department of ................................................................. 9-17Human Rights, Department of .......................................................................................... 9-23Human Rights Commission ............................................................................................... 9-26Human Services, Department of ........................................................................................ 9-28

Illinois Deaf and Hard of Hearing Commission .................................................................. 9-39Illinois Council on Developmental Disabilities ................................................................... 9-41Illinois Guardianship and Advocacy Commission ............................................................... 9-44 Juvenile Justice, Department of ......................................................................................... 9-47Public Health, Department of ............................................................................................ 9-51Veterans Affairs, Department of ...................................................................................... 9-61


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Table of Contents

State of Illinois

QUALITY OF LIFE ........................................................................................................................................................ Chapter 10Illinois Arts Council ........................................................................................................ .. 10-1Illinois Historic Preservation Agency ................................................................................. 10-4Natural Resources, Department of .................................................................................... 10-8

GOVERNMENT SERVICES ........................................................................................................................................ Chapter 11Elected Officials:

Governor, Office of the ........................................................................................... 11-1Lieutenant Governor, Office of the .............................................................................. 11-3Attorney General, Office of the ................................................................................... 11-5Secretary of State, Office of the .................................................................................. 11-8State Comptroller, Office of the .................................................................................. 11-14

State Officers Salaries .......................................................................................... 11-17State Treasurer, Office of the ...................................................................................... 11-22

Judicial Agencies: Judges Retirement System ......................................................................................... 11-25 Judicial Inquiry Board .................................................................................................. 11-26State Appellate Defender, Office of the ....................................................................... 11-27

States Attorneys Appellate Prosecutor, Office of the .................................................. 11-30Supreme Court & Illinois Court System ........................................................................ 11-33Supreme Court Historical Preservation Commission .................................................... 11-35

General Assembly and Legislative Agencies:Auditor General, Office of the ..................................................................................... 11-36General Assembly ....................................................................................................... 11-38General Assembly Retirement System ......................................................................... 11-40Government Forecasting and Accountability, Commission on ...................................... 11-40 Joint Committee on Administrative Rules .................................................................... 11-41Legislative Audit Commission ..................................................................................... 11-41Legislative Ethics Commission .................................................................................... 11-41Legislative Information System ................................................................................... 11-42Legislative Printing Unit .............................................................................................. 11-42

Legislative Reference Bureau ....................................................................................... 11-43Legislative Research Unit ............................................................................................ 11-43Architect of the Capitol, Office of the .......................................................................... 11-43

Other Boards and Commissions:Civil Service Commission ............................................................................................ 11-44Court of Claims .......................................................................................................... 11-46Elections, State Board of ............................................................................................. 11-52Executive Ethics Commission ...................................................................................... 11-56Procurement Policy Board ........................................................................................... 11-58

Drycleaner Environmental Response Trust Fund Council ................................................... 11-60Executive Inspector General, Office of .............................................................................. 11-67Governors Office of Management and Budget .................................................................. 11-64Capital Development Board .............................................................................................. 11-66

Central Management Services, Department of ................................................................... 11-69Revenue, Department of ................................................................................................... 11-74Illinois Gaming Board ....................................................................................................... 11-80Illinois Racing Board ........................................................................................................ . 11-82State Employees Retirement System .................................................................................. 11-84

DEBT MANAGEMENT................................................................................................................................................. Chapter 12

DEMOGRAPHIC INFORMATION ............................................................................................................................ Chapter 13

GLOSSARY ...................................................................................................................................................................... Chapter 14


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Office of the Governor207 State Capitol, Springfield, Illinois 62706

February 16, 2011

To the Honorable Members of the General Assembly and the People of the State of Illinois:

I respectfully submit to you the fiscal year 2012 Operating Budget, a $26.9 billion general funds plandesigned to help Illinois return to fiscal stability. In this budget - Illinois Working we lay out a plandesigned to provide streamlined, efficient state government, foster economic growth, and developthe jobs of today and tomorrow.

For decades, Illinois budget suffered from fiscal mismanagement, a situation compounded by therecent national recession. Today, we are acting to put our financial house in order, returning ourstate to budget stability, allowing us to pay our bills on time and continue our economic growth.

I have signed into law a major spending reform called Budgeting for Results. This lawfundamentally changes the way we spend taxpayer dollars by mandating that budget decisions bebased on performance and impact, not politics. We also passed a new revenue law, which, for thefirst time in Illinois history, places limits on state spending. Immediately after implementing thesereforms, Fitch and Standard & Poors rating agencies took positive action on the states bond ratings,acknowledging Illinois is on the track to fiscal recovery.

In times like these, accountability and responsibility are critical. We must continue to tighten ourbelts in all areas of state government. Since taking office, I have worked with members of theGeneral Assembly to reduce general funds appropriations by nearly $3 billion, a 10.5 percentreduction. We have passed historic pension reform, which will save taxpayers more than $200 billionover the next generation, and we have passed major Medicaid reform which will save $800 million

more. We have also passed ethics reform to regain the trust of our citizens. While tough decisionshave been made, we will continue to maintain our commitment to quality education, public safetyand protecting our most vulnerable citizens and the essential services upon which they rely.

In Illinois, we are competing in a global marketplace by taking the necessary steps to strengthen oureconomy, attract new investment and put more people to work. Last year, Illinois added 46,000jobs, more jobs than any Midwestern state. December marked the ninth straight month of decliningunemployment, and the unemployment rate dropped in every county for the first time since 1974.While these are steps in the right direction, too many Illinois men and women are still looking forwork. My promise to you is that I will continue investing in job-generating initiatives to bringeconomic recovery to everyones doorstep.

The task before us will not be easy, but I am confident we have the right plan to meet our challenges.

As we move forward to build a more prosperous and dynamic economy, let us come together tomake this Land of Lincoln proud and continue to get Illinois Workingtoward an even-brighter future.

Sincerely,

Pat QuinnGovernor, State of Illinois


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The State of Illinois fiscal year 2012 budgetbook can be accessed online at

www.state.il.us/budgetor

www.budget.illinois.gov


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READERS GUIDE


CHAPTER 1State of Illinois


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Readers Guide

State of Illinois

AREADERS GUIDE TO THE FISCAL YEAR2012ILLINOIS STATE BUDGET

INTRODUCTION

The Illinois budget process is driven by stateconstitutional and statutory requirements, awide array of general guidelines and technicalconsiderations. This Readers Guide is designedto help readers understand the structure andcontent of the operating budget. It includes thefollowing sections:

A description of the budget documents An explanation of how the fiscal year 2012

budget document is organized An organization chart of state government

An explanation of the basis of budgeting A guide to reading and understanding

agency budget submissions, includingnarratives and budget tables

A description of the various fund types inthe Illinois accounting system

BUDGET OPERATIONS

This document presents the Fiscal Year 2012Illinois State Budget. It sets forth the governorsoperating budget recommendations for theperiod July 1, 2011, through June 30, 2012.

The states operating and capital budgets aresubject to the same procedures. However, theFiscal Year 2012 State of Illinois Capital Budgetis presented in a separate document for thereaders convenience. Both documents areavailable at www.state.il.us/budget orwww.budget.illinois.gov.

BUDGET DOCUMENT ORGANIZATION

The Fiscal Year 2012 Illinois State Budget isorganized as follows:

The Governors Letter of Transmittal tothe General Assembly and the residents ofIllinois.

Table of Contents. Chapter 1: The Readers Guide. Chapter 2: The Budget Summary of the

states current fiscal plan. This chapterpresents the governors budget prioritiesand key recommendations. It also

highlights key financial issues and includesseveral tables that summarizeappropriations, expenditures, revenues andfunds. Chapter 2 concludes with the

following Summary Tables:o Table 1-A: Appropriations by Agencyo Table 1-B: Supplemental Appropriations

for Fiscal Year 2011o Table II-A: Appropriated Revenues by

sourceo Table II-B: General Funds Revenue by

Sourceo Table II-C: General Funds Revenue -

Modified Accrual Basiso Table II-D: General Funds Expenditures -

Modified Accrual Basiso Table III-A: Road Fundo

Table III-B: Motor Fuel Tax Fund - StateFundso Table IV-A: Appropriated Operating

Funds by Fund Group for Fiscal Year2012. This is a presentation of theprojected operating cash flow for eachfund group

o Table IV-B: Appropriated OperatingFunds by Fund for Fiscal Year 2012.This table presents the fund balance foreach fund in the Illinois accountingsystem. The end of year cash balance isequal to the beginning of year cash

balance, plus receipts, minusdisbursements Chapter 3: Budgeting for Outcomes. Chapter 4: A report on the states Public

Retirement Systems. Chapter 5: Illinois Economic Outlook and

Revenue Forecast. This chapter describesIllinois economy within the context of thenational economy. Details are also providedon revenue sources and revenue forecastingmethodology used by the state.

Chapters 6 through 11 cover the budgetrecommendations for each agency and for

other branches of government, includingelected officials. The agencies are groupedby objectives, with a chapter dedicated toeach group. The objective categories are:o Educationo Economic Developmento Public Safety and Regulationo Human Serviceso Quality of Life

Illinois Budget for Fiscal Year 2012 Chapter 1 - 1


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o Government Services (including electedofficials, legislative agencies and judicialagencies

Chapter 12: The Debt Management reportdescribes the states debt affordability

model, borrowing activities and financingschedule.

Chapter 13: Demographic Information onthe Illinois population

Chapter 14: A Glossary of special terms.

__________________________Adapted from the Fiscal Year 2003 Illinois Comptroller Comprehensive Annual Financial Report modified February 2011

STATEOFILLINOISORGANIZATION

CHART



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Readers Guide

State of Illinois

BASIS OF BUDGETING

The Illinois Constitution requires the governorto prepare and submit a state budget to the

General Assembly for the upcoming fiscal year.The budget sets forth the estimated balance offunds available for appropriation at thebeginning of the fiscal year, the estimatedreceipts and a plan for expenditures during thefiscal year. The Illinois Constitution requires thegovernor to submit a balanced budget.

PA 90-479, enacted in 1999, amended the CivilAdministrative Code (state budget law) toprovide guidance on balanced budgetrequirements to the governor as he proposesthe budget, and to the General Assembly as itmakes appropriations. Public Act 90-479 appliesonly to six funds, defined as budgeted funds:general revenue, common school, educationassistance, road, motor fuel tax and agriculturalpremium.

For the budgeted funds, revenue estimatesinclude the beginning fund balance, revenues tobe received during the budgeted year andrevenues to be collected in the two-month lapseperiod following the budgeted year.

Public Act 90-479 also requires the use of themodified accrual basis of budgeting.

Revenues are accounted for in the year they aredue not when they are received. However, theamounts due to the state in one fiscal year, butactually received in the following fiscal year, aretypically small and consistent over time, and aredue to the normal payment cycles set forth inlaw. For instance, final monthly sales taxpayments are due the state on the 20th day ofthe month following the sale. Consequently,final sales tax payments for June sales arereceived in July, the first month of the ensuingfiscal year.

Likewise, revenue estimates include only thoserevenues due to the state during the fiscal year, July 1 through June 30. They do not includerevenues collected in the lapse period of thebudgeted fiscal year (through August 31), whichwere due to the state as of June 30 of that year.

Revenue estimates also include federalreimbursements pursuant to Section 25 of theState Finance Act. The main Section 25

programs are Medicaid and employee healthinsurance.

Expenditure estimates for budgeted funds takeinto account the costs to be incurred in thebudgeted fiscal year, including those to be paidfrom future fiscal year appropriations.Expenditure estimates in Table II-D do notinclude costs paid in the budgeted fiscal yearthat were incurred in the prior fiscal year.

Of the budgeted funds, only the GeneralRevenue Fund has expenditures pursuant toSection 25 of the State Finance Act. Thus,expenditure estimates for the other funds areunaffected by PA 90-479.

Revenue and expenditure estimates also include

transfers between funds that are based onrevenues received or costs incurred during thebudgeted year.

All other funds must be balanced so thatproposed expenditures and appropriations donot exceed funds estimated to be available.

A GUIDE TO UNDERSTANDING AGENCYBUDGET SUBMISSIONS

The budget recommendations of the Fiscal Year2012 IllinoisState Budget include a narrative ofeach agencys operations and summary tablesof its budget.

AGENCY NARRATIVE

The narrative for each agency includes thefollowing sections:

Primary Budget Outcome: A briefdescription of the agencys objective.

Meeting the Outcome: A brief descriptionof how the agency is meeting its objective.

Program Proposals: A description ofagency initiatives for the following fiscal

year(s). About the Agency: Provides the agency

address and a link to the agency web page. Agency Resources Employed: A table

summarizing funding sources,recommended appropriations and two-yearhistory of actual appropriations. Alsoincluded is a three-year headcount trend.



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Performance Measures: A table thatcaptures the agencys progress in key areasthat relate to meeting its outcome.Emphasis is placed on results that impact

the public. Programs: A summary table of resources

allocated to each program within theagency.

AGENCY BUDGET TABLES

The budget tables provide summary detail oneach agencys budget. The budget tables listeach agencys appropriations and expendituresby major fund group, by fund and by division, aswell as the agencys headcount by division.Personnel detail forms, which list the agencysstaff by division and position title, are available

in a separate volume.

Appropriations by Major Fund Group The appropriations recommendations

requiring General Assembly action areshown by type of expenditure for each ofthree major fund groups: general funds,other state funds and federal funds.

Within each fund group, the appropriationsand expenditures are further subdivided intomajor categories such as personal servicesand fringe benefits, contractual services,

other operations and refunds, designatedpurposes, and grants. Each appropriationfor designated purposes and grants is listedindividually.

Appropriations by Fund The agencys resources are shown in total

for each fund requiring appropriations bythe General Assembly.

Appropriations by Division The agencys new appropriations and

reappropriations requiring General Assembly

action are shown by division as classified bythe comptroller.

Headcount by Division The agencys headcount by division is

presented, showing actual headcount at theend of fiscal year 2010, estimated

headcount for fiscal year 2011 andrecommended headcount for fiscal year2012.

Column Descriptions The fiscal year 2010 appropriations column

reports all original and supplementalappropriations and reappropriations enactedby the General Assembly and signed into lawby the governor for fiscal year 2010. Theamounts also reflect approved two percenttransfers and executive orders issued by thegovernor.

Fiscal year 2010 expenditures include thoseincurred from July 1, 2009 through June 30,2010, and during the two-month lapseperiod ending August 31, 2010. During the

lapse period, outstanding fiscal year 2010remaining state obligations were liquidated.

Fiscal year 2011 appropriations reflect alloriginal and supplemental appropriations forfiscal year 2011 enacted by the GeneralAssembly and signed by the governorthrough January 31, 2011. This column alsoreports changes due to approved twopercent transfers and executive ordersissued by the governor.

Fiscal year 2011 estimated expenditures

reflect the expenditures projected to beincurred through the fiscal year, includingthe lapse period, and also account foranticipated two percent transfers, but do notinclude the requested fiscal year 2011supplemental appropriations shown in TableI-B.

Fiscal year 2012 appropriations show therecommended budget, or in the case ofother elected officials or legislative/judicialbranches of government, requested budget.

An example of the Budget Table follows.



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Readers Guide

State of IllinoisActual MaximumSpending Authority

Estimated CurrentYear Spending(including lapseperiod spending)

Appropriationrecommended bythe governor

Prior year ActualSpending(including lapseperiod spending)



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Readers Guide

State of Illinois

DESCRIPTION OF FUNDS

The funds in the Illinois accounting system

are classified into two broad categories:appropriated and non-appropriated funds.

Appropriated funds are further classifiedinto eight fund groups: general, highway,special state, bond financed, debt service,federal trust, revolving and state trust funds.

Non-Appropriated funds are composedprimarily of federal and state trust funds,and include a few special state funds.

The following chart describes the majorappropriated fund types, as well as the sourcesand uses of those funds.

STATE OF ILLINOIS MAJOR FUND GROUP

Fund Group Sources Purposes/Uses

General Funds State income taxes,

sales taxes, othertaxes and fees

Support the regular operating and administrative expenses of

most state agencies. Include General Revenue Fund, EducationAssistance Fund, Common School Fund and GeneralRevenue-Common School Special Account Fund.

Highway Funds Motor fuel taxes,vehicle registrations,licenses and fees

Receive and distribute special assessments related totransportation. Support transportation-related activities at thestate and local levels.

Special StateFunds

Taxes and fees Represent accounts restricted to the revenues and expendituresof a specific source. Support such diverse activities as medicalassistance, childrens services, environmental cleanup, financialregulation and health insurance. They are designated in Section5 of the State Finance Act (30 ILCS 105/5) as special funds in theState Treasury and not elsewhere classified.

Bond FinancedFunds

Build Illinois andGeneral Obligation

(GO) bonds

Receive and administer the proceeds of various state bondissues. Pay for capital improvements to local schools, state

facilities, higher education facilities, and for development of coal-burning power plants, local water and wastewater treatmentfacilities, public transportation, airports, environmental programsand economic development projects.

Debt ServiceFunds

Transfers in fromother funds

Account for the resources obtained and accumulated to payinterest and principal on debt obligations. Provide for debtservice payments on state bonds.

Federal TrustFunds

Federal grants Support grants and contracts between state agencies and thefederal government. Administered for specific purposesestablished by terms of grants and contracts. Support a varietyof programs including education, healthcare, human services,community development, transportation and energy.

Revolving Funds Repayments onproject loans

Finance the operations of state agencies that render services toother state agencies on a cost reimbursement basis; supportlocal capital projects. Appropriation of these funds dependsupon intra-governmental service requirements and appropriationof other state agencies.

State Trust Funds Various Hold funds on behalf of other entities or individuals (such aspensions). Established by statute or under statutory authority forspecific purposes.



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BUDGET SUMMARY


CHAPTER 2State of Illinois


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FY2012: Fiscal Overview & BudgetSummary

State of Illinois

WHAT A DIFFERENCE A YEAR MAKES

In last years proposed budget, Illinois faced a

staggeringly large deficit that could only beaddressed by either a) monumental cuts thatwould have crushed the educational, health andsocial services systems while the state wadedthrough a difficult recession, or b) through anumber of borrowing strategies.

The large budget shortfall was the result of acontinual structural deficit that was built up overmany years. The budget crisis was compoundedthrough a back-log of accounts payable thattotaled approximately six billion dollars. Themajority of the states vendors and service

providers found themselves waiting six monthsor longer to receive payment. Such a situationcould be devastating to a small company thatprovides food to the states prisons, or to afamily-run business that cares for frail, elderlyadults. K-12 schools and universities were leftin the unfortunate circumstance of not knowingwhen payment from the state would be received,potentially affecting operations and adverselyimpacting school programs.

The fiscal year 2011 budget crisis, along withthe persistent structural deficit, required action

through a multi-faceted approach. GovernorQuinn proposed five keys to fiscal recovery:

1. Creating jobs2. Cutting costs3. Strategic borrowing4. Continued federal assistance through the

recession5. Increased state revenues

All five were done and as a result the state is ina better position to solve our fiscal crisis.

CREATING JOBS

Illinois Jobs Now!, the $31 billion capitalprogram that kicked off in 2009, contributedto the busiest road construction season instate history. With nearly $7 billion inprojects completed or underway, capitalinvestment in roads has created more than135,000 thousand jobs in Illinois.

As the nation and the state pull out of therecession, total employment in Illinois isincreasing. Total employment as ofDecember 2009 was 5.866 million. As ofDecember 2010, total employment hadgrown to 6.067 million, an increase of over200,000.

CUTTING COSTS

Hundreds of programs and grants have beenreduced across state government, includingthe Department of Agricultures WorldTrotting Derby, medical scholarshipsprovided through the Illinois Department ofPublic Health and funds for regulartransportation through the Illinois StateBoard of Eduation.

In April 2010, Governor Quinn signed intolaw Senate Bill 1946, an historic pensionreform measure affecting all stategovernment employees hired after December31, 2010. This reform will reduce thepension liability by $220 billion over thenext 35 years.

House Bill 5420 introduced Medicaid reformthat will expand coordinated care to cover atleast 50 percent of recipients by 2015. Thebill also improves the prescription drugprogram, increases civil penalties for those

who abuse the system, requires proof ofIllinois residency and a months worth ofincome information (instead of a singlepaystub), and annual redetermination ofeligibility. Other reforms include amoratorium on eligibility expansions,limiting income of future All Kids enrolleesto 300 percent of federal poverty level andextending the sunset of All Kids from 2011to 2016.



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State of Illinois

In January, the General Assembly passed andGovernor Quinn signed into law hardspending caps for the next four fiscal years.The spending caps restrain growth to around2 percent each year. With spendingpressures in education, health care, humanservices, personnel expenditures andpension contributions, agencies and stateleaders must continue to be diligent seekingoperational efficiencies and spendingreforms.

STRATEGIC BORROWING

Through gaining the first-ever authorizationof Interfund borrowing, excess balances inhundreds of existing special-use state fundswere tapped, putting money to work to paybills at almost no cost. This techniquereplaces fund sweeps used previously; themoney will be repaid within 18 months.

To provide a large one-time revenue sourceto pay down existing vouchers, the statesold the rights to a portion of its futuretobacco settlement payments netting $1.25billion to the state.

Annual pension costs continue to rise and itwill take time to realize the savings of thepension reform described above. In fiscalyear 2011, they accounted for nearly 13percent of the general funds budget. Toprevent catastrophic cuts to education,healthcare and human services, legislationwas passed to allow for the financing of thepension system payment. Taking a pensionholiday would only lead to bigger futurefunding needs.

FEDERAL ASSISTANCE

ARRA provided enhanced matching dollarson state Medicaid spending through fiscalyear 2010. The federal government electedto extend the enhanced match through fiscalyear 2011, phasing out the enhancementfrom January through June. By the end offiscal year 2011, the enhanced Medicaidmatch will have provided $1.25 billion for allfunds.

The Federal Education Jobs Fund Programprovided $415.4 million for Illinoiselementary and secondary schools. Thismoney has been used to create and retaineducation-related jobs.

INCREASED REVENUES

In January, Governor Quinn signed into lawincreases to individual and corporate incometax rates. Illinois has long been one of thelowest-taxing states in the nation. This lowlevel of revenue meant inadequate funding,budget deficits and growing payment cyclesfor the states vendors and serviceprovidersproblems that only grew worseduring the recession. For fiscal year 2012,the income tax increases will provide nearly$7 billion of additional revenues for thestates general funds.



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State of Illinois

PAYMENT CYCLE

For nearly a year, many state vendors and

service providers have had to wait six month ormore for payments due to cash flow problemsresulting from the budget crisis. Such delayshave been devastating to some vendors.Waiting six months has meant depleting cashreserves, exhausting lines of credit, reduction inor denial of some services, layoffs, delays infilling job openings and delays in issuingpaychecks. For too long, the State of Illinois hasbeen borrowing from its vendors and serviceproviders. While the state pays prompt paymentpenalty interest on many of its vouchers over 60days old (over $62 million paid in fiscal year

2010, all funds), the true costs are known onlyto the small business owner who wonders whenthe next payment from the state may comeand what he or she will do if it comes too late.

Our procurement system is strained with fewerand fewer vendors willing to bid on statebusiness. With billions of dollars inprocurement spending each year, hundreds ofmillions in excess costs are added to statespending. Failing to honor our commitments,the states credit reputation suffers, costing ushundreds of millions in additional interest costs

on our capital debt issuance. Such unnecessarycosts are acceptable.

Governor Quinn has asked for immediatepassage of Senate Bill 3, which providesauthorization for debt restructuring bonds. Byrefinancing over $8 billion of its existing bills,Illinois can borrow at a set rate to pay off severalbillions in vouchers, the group insurancebacklog and the business income tax refundbacklog. That $8 billion will go into the stateseconomy over the next year, and the paymentcycle for vendors invoices will return to normal.

Instead of waiting half a year for payment,vendors will be paid within 30-60 days. Thisisnt just borrowing, this is transferring debtfrom unwilling lenders to willing lenders.

GLOBAL COMPETITIVENESS

In his 2010 State of the Union address,President Obama announced his goal to doublethe nations exports over the following five

years. Governor Quinn has embraced this goaland set the same for the state. Illinois is thesixth largest exporting state (as of 2009) and

the largest inland exporter of goods andservices, and our ability to compete in worldmarkets is helping our economy recover. Butdoubling exports will require tremendouscommitment and a coordinated effort to leadtrade, export and international tourisminitiatives within the state. The Department ofCommerce and Economic Opportunitys Officeof Trade & Investment will lead these efforts.

EDUCATION IMPROVEMENTS AND STABLE FUNDING

Our public education system is responsible for

preparing children for success in school and inthe workplace beginning as early as birth andcontinuing through adulthood. In order toachieve fundamental and lasting improvement inour states educational systems, it is necessaryto coordinate and leverage our policies andresources. Focus on student assessment andstudent growth will help us transform theeducation accountability system and developstudents who are college and career ready.

College affordability remains a critical issue forstudents and families across Illinois. Governor

Quinn has supported full-funding for theMonetary Award Program (MAP), but even at thislevel it has not been possible to meet thegrowing demand for financial support for post-secondary education. The fiscal year 2012budget includes increased MAP funding whichwill benefit community college students.



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State of Illinois

ONGOING CAPITAL INVESTMENT NEEDS

A comprehensive capital program funds more

than just roads and schools. It is flexibleenough to address changing needs of a complexstate. Proposed expansion of the capitalprogram focuses on deferred maintenance atstate buildings to replace roofing systems,upgrade electrical and alarm systems, andimprove compliance with the Americans withDisabilities Act. Addressing deferredmaintenance will save money in operations (seeAppendix A for state facility savings). Capitalcan also fund long-term infrastructure needssuch as a statewide information technologysystem. State government lacks an integrated

accounting system, as well as the capability todevelop such a system. Antiquated, non-unifiedsystems create inefficiencies and perpetuatedifficulties in managing state spending,programs, contracts and performancemeasurement.

Agency

FY 2012

Total

Appropriations

Board Of Higher Education 306,617,653

Capital Development Board 1,967,927,237

Chicago State University 64,726,507

Department Of Agriculture 42,339,825

Department Of Central Management Services 327,822,069

Department Of Children And Family Services 25,452,874

Department Of Commerce And Economic Opportunity 1,769,455,585

Department Of Corrections 414,852,905

Department Of Human Services 126,442,079

Department Of Juvenile Justice 2,500,000

Department Of Military Affairs 71,169,609

Department Of Natural Resources 926,473,245

Department Of Public Health 168,437,510

Department Of Revenue 138,865,064Department Of State Police 58,785,862

Department Of Transportation 16,488,706,145

Department Of Veterans' Affairs 97,276,077

Eastern Illinois University 20,209,302

Governors State University 28,461,852

Illinois Commerce Commission 50,857

Illinois Community College Board 649,091,302

Illinois Emergency Management Agency 21,875,000

Illinois Environmental Protection Agency 1,779,830,791

Illinois Finance Authority 13,010,142

Illinois Historic Preservation Agency 37,223,991

Illinois Mathematics And Science Academy 9,968,843

Illinois Medical District Commission 3,864,045

Illinois State University 79,059,524Northeastern Illinois University 90,510,937

Northern Illinois University 63,207,146

Office Of The Architect Of The Capitol 103,902,851

Office Of The Attorney General 2,114,116

Office Of The Secretary Of State 337,647,472

Southern Illinois University 176,685,680

State Board Of Education 175,000,000

Supreme Court 17,050,275

University Of Illinois 399,869,668

Western Illinois University 135,873,178

Total Capital Appropriations 27,142,357,218

Tot al FY12 Capital Appropriations



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State of Illinois

HEALTHCARE COSTS

Controlling healthcare costs presents one of the

biggest challenges to the states and nationsbudgets. With the passage of federal healthcarereform, states will face greater challenges asthey work to implement reform measures andfund required services. Governor QuinnsHealthcare Reform Implementation Councilconducted meetings across the state for keystakeholders including consumers, insurancecompanies, healthcare providers and otheradvocates to receive feedback on how the stateshould implement reforms. They haveaddressed operational challenges including theestablishment of a health insurance benefit

exchange, and the expansion of the Medicaidprogram to those below 133 percent of thefederal poverty level.

The council also heard feedback fromstakeholders on how to improve the quality ofcare by utilizing various coordinated caremodels that will provide patient-centered care aswell as reduce inefficiencies. Based on all ofthe feedback it received, the council issued areport with recommendations forimplementation. The recommendations reflectthe efforts the state will make to protect

consumers and improve access, quality andeffectiveness for Illinois residents.

REBALANCING THE LONG-TERM CARE SYSTEM

Illinois must be more aggressive in shiftinglong-term care patients from institutions tocommunity-based care. From both policy andbudgetary perspectives, we know thatdeinstitutionalization of our most vulnerablepopulations will not only allow us to reducespending but will also allow individuals toreceive care they need in their homes and in

their communities. The challenge is to findcreative financial solutions to assist thesepopulations to be able to afford their care, butalso to invest in housing solutions that will allow

them to continue to live alone or in a supportiveenvironment.

UNFUNDED PENSION LIABILITY

Consider the states unfunded pension liabilityas a mortgage on future public employeespension payments. Illinois has a long history ofhigh unfunded liabilitya big, decades-longmortgage problem, a big risk. After fiscal year2010, following losses from a deep recession,the unfunded liability sat at over 60 percent.While the pension reform of 2010 improved thesituation by decreasing future liabilitiesandcertainly the economic recovery improved netassets for the pension fundssignificant long-

term improvements will come only fromadditional pension reforms, refinancing theliability and seeking a federal guarantee of thedebt, or increasing the annual required statecontributions. Until one or more of theseoptions is achieved, pension funding issues willpersist.

IMPLEMENTING BUDGETING FOR OUTCOMES

Governor Quinn and the General Assembly havedemanded budget reforms. Recent reformmeasures call for timelier reporting of state

spending, annual spending caps andimplementation of Budgeting for Outcomes.This new process of creating a state budget willnow base appropriations and spending onresults-driven outcomes, not on the previousyears appropriations. This reform cannot beimplemented overnight, but this years budget isa first step toward Budgeting for Outcomes. Weare presenting not just of agencies, but sixgroups of agencies that comprise our prioritizedoutcomes. Over the next few fiscal years, wewill establish more robust performance metricsand develop ways to tie spending to those

metrics for comprehensive analysis. Budgetreform will mean better value for taxpayerdollars, and a better state government.



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State of Illinois

The fiscal year 2012 Budget Plan is set to thebelow. This plan reflects the basis forappropriations and is the same informationprovided in prior years budgets, althoughutilizing standard business language and plainEnglish to reflect

the governors commitment to and principle oftruth in budgeting. Revenues are estimated onthe cash basis of revenues recognition.

See the schedule below for a fiscal year 2012Operating Budget Plan for all appropriatedfunds.



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State of Illinois

See following page for footnotes that are integral to the budget.

2/12/2011

OPERATING REVENUE S & TRANSFERS IN (OPERATING RECEIPTS)

REVENUESState Sources 19,334$ 22,655$ 22,799$ 27,278$

Federal Sources 5,920$ 5,976$ 5,506$ 4,844$

TOTAL REVENUES 25,254$ 28,631$ 28,305$ 32,122$

STATUTORY TRANSFERS INStatutory Transfers In 1,836$ 1,622$ 1,803$ 1,810$

Inter Fund Borrowings -$ 500$ 505$ -$

TOTAL TRANSFERS 1,836$ 2,122$ 2,308$ 1,810$

TOTAL OPERATING REVENUES & TRANSFERS IN 27,090$ 30,753$ 30,613$ 33,932$

OPERATING EXPENDITUR ES & TRANSFERS OUT (OPERATING PAYMENTS)

CURRENT YEAR EXPENDITURES

APPROPRIATIONS (Total Budget)1 26,354$ 1 26,614$ 26,071$ 26,733$

Minus: Unspent Appropriations (Unspent Budget plus Uncashed Checks) ($1,189) ($891) ($1,758) ($802)

Equals: Current Year Expenditures before Pension Contributions 25,165$ 25,723$ 24,313$ 25,931$

PENSION CONTRIBUTIONS (General Funds only) -$ 1 4,157$ 3,919$ 4,594$

Equals: CURRENT YEAR EXPENDITURES (Net Appropriations Spent) 25,165$ 29,880$ 28,233$ 30,525$

STATUTORY TRANSFERS OUTLegislatively Required Transfers (Diversions to Other Funds) 975$ 1,823$ 2,061$ 2,317$

Plus: Transfers Payable (at fiscal year end)2

1,267$2

-$ -$ -$Debt Service on Pension Obligation Bonds (includes FY10 & FY11 Pension Bonds) 564$ 1,725$ 1,734$ 1,559$

Debt Service Transfers for Capital Projects 670$ 570$ 570$ 578$

Debt Service on proposed FY11 GO Restructuring Bonds3 -$ 120$ 3 98$ 3 403$ 3

Debt Service on FY10 Medicaid Borrowing 63$ 189$ 189$ -$

Inter Fund Borrowing Repayments including Budget Stabilization Fund 2 -$ -$ 781$ 2 -$

TOTAL STATUTORY TRANSFERS OUT 3,539$ 4,426$ 5,433$ 4,857$

TOTAL OPERATING EXPENDITURES & TRANSFERS OUT 28,705$ 34,306$ 33,666$ 35,382$

BUDGET BASIS FINANCIAL RESULTS AND BALANCE

BUDGET BASIS OPERATING SURPLUS (DEFICIT) [Oper. Receipts less Oper. Pymts.] ($1,615) ($3,553) ($3,054) ($1,450)

OTHER FINANCIAL SOURCES (USES)

Short-Term Borrowing Proceeds $1,250 $1,300 $1,300 $0

Short-Term Borrowing Repayments (including interest) ($2,276) ($1,317) ($1,317) $0

Pension Obligation Bond procee ds for FY11 $0 $4,050 $3,680 $0

Tobacco Revenue Securitization (in FY11) proceeds $0 $1,250 $1,250 $0

Proposed FY11 General Obli gation Restructuring Bond 3 $0 $4,380 $4,000 3 $1,450 3

TOTAL OTHER FINANCIAL SOURCES (USES) ($1,026) $9,664 $8,914 $1,450

BUDGET BASIS SURPLUS (DEFICIT) FOR FISCAL YEAR4 ($2,641) $6,110 $5,860 $0

Plus: Budget Basis Fund Balance at Beginning of Fiscal Year ($3,673) ($6,131) ($6,314) ($454)

BUDGET BASIS FUND BALANCE (DEFICIT) AT END OF FISCAL YEAR ($6,314) ($21) ($454) ($454)

CASH BASIS FINANCIAL RESULTS

BUDGET BASIS SURPLUS (DEFICIT) FOR FISCAL YEAR ($2,641) $6,110 $5,860 $0

Change in Accounts Payable (Change in Lapse Period Amounts)

Accounts Payable at End of Current Fiscal Year 2,5 $6,444 2 $1,800 $600 $600

Minus: Accounts Payable at End of Prior Fiscal Year 2,5,6 minus $3,953 6 minus $6,410 minus $6,444 2 minus $600

Equals: Increase/(Paydown) of Accounts Payable During Fiscal Year $2,491 ($4,610) ($5,844) $0

CASH BASIS SURPLUS (DEFICIT) FOR FISCAL YEAR7 ($150) $1,500 $16 $0

CASH POSITION

CASH BASIS SURPLUS (DEFICIT) FOR FISCAL YEAR ($150) 1,500$ 16$ 0$

Plus: Cash Balance in General Funds at Beginning of Fiscal Year 280$ 130$ 130$ 146$Equals: Cash Balance in General Funds at End of Fiscal Year $130 1,631$ 146$ 146$

Plus: Cash Balance in Budget Stabilization Fund at End of Fiscal Year 2 2 -$ 276$ 2 276$ 276$

Equals: Total Cash at End of Fiscal Year 130$ 1,907$ 422$ 422$

ACCOUNTS PAYABLE AT FISCAL YEAR END (Budget Basis)5 $6,444 $1,800 $600 $600

GENERAL FUNDS - BUDGET RESULTS & BUDGET PLANS FY2010-FY2012

(February 2011)

Fiscal Year 2010

Preliminary Results

(Unaudited)

Fiscal Year 2011

Revised Budget

Fiscal Year 2011

Revised Budget

Fiscal Year 2012

Proposed Budget

(January 2011) (February 2011) (February 2011)



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State of Illinois

General Funds Budget Results & Budget Plans 2010 2012 Footnotes

1

2

3

4

5

6

7

The proposed General Obligation Restructuring Bond will earmark approximately $4,000 million of procee ds in FY2011 to the G eneral Fund and another $1,450 million in FY2012, to reduce Accounts Payable to

approximately $600 million by June 30, 2012. The balance of the Restructuring Bond proceeds will be deposited in Other State Funds including the Health Care Provider Fund (for Medicaid supplemental match to

receive higher Federal match), the Income Tax Refund Fund (for Corporate tax re funds) and the Group Health Insurance Fund (to reduce backlog).

Budget Basis Surplus (Deficit) equals "Operating Revenues and Transfers In" minus"Operating Expenditures and Transfers Out" plus (minus)"Other Financing Sources (Uses)"

Budget Basis Accounts Payable excludes incurred liabilities of that fiscal year that do not have sufficient appropriation authority remaining to be paid during the Lapse Period (i.e., 60 days after the close of that fisca

year). However, such incurred liabilities (termed "Section 25 liabilties," pursuant to statute) are refle cted in the audited Comprehensive Annual FInancial Report (CAFR) that is prepared on the basis of gene rally

accepted acounting principles for gov ernments. Historically, Me dicaid and group health insurance payments constitute the majority of Se ction 25 liabilities.

FY2009 Transfers Out and FY2009 Accounts Payable include $185 million of FY 2009 Statutory Expenditures that were not executed (i.e., cash transfers were not made) as of June 30, 2009, per the Tr aditional Budget

Financial Report for FY 2009 issued by the Illinois Office of the Comptroller. T hose transfers were subsequently effectuated in July of 2009.

Cash Basis Surplus (Deficit) equals "Budget Basis Surplus (Deficit)" minus (plus)Other Cash Uses ( Sources) relating to changes in Accounts Payable during the fiscal year.

FY2010 appropriations do not reflect the FY2010 statutory pension contribution for t he Ge neral Funds. T hat amount was financed and paid through issuance of approximately $3,466 million in Gener al Obligation Bon

Taxable Ser ies of January 2010. However, during the fiscal year, approximately $843 million was initially paid from the General Funds to the State's pe nsion systems, pursuant to a continuing appropriation for FY2009

pension contributions. Subsequently, the G eneral Funds were reimbursed by that same amount from proceeds of the January 2010 bond issuance. Given that e xact offset, and since neither the fund balance nor cas

position of the General Funds was therefore affected as of June 30, 2010, both the appropriation expenditure and reimbursement are excluded from the respective accounts for purposes of this presentation andcomparability purposes. In addition, FY2011 incorporate s approximately $383 million in supplemental appropriations as propose d in Table I-B .

FY2010 Transfers Out and FY2010 Accounts Payable include $991 million of FY2010 statutory transfers that were not executed (i.e., cash transfers were not made) as of June 30, 2010, per the Illinois Office of the

Comptroller. Such unexecuted statutory transfers are considered Transfers Payable for this presentation and reflected in the estimated June 30, 2010 Accounts Payable amount. In addition, approximately $276 millio

of cash was not transferred back to the Budget Stabilization Fund as of June 30, 2010, such that the total of FY2010 statutory transfers not e xecuted by year end totaled approximately $1,267 million; that amount is

reflected in the e nding Accounts Payable reported as of that same date. T he FY2011 Revised Budget assumes the Budget Stabilization Fund will be re plenished by June 30, 2011 and the $505 million of Inter Fund

Borrowing assumed in Fiscal Year 2011 will be repaid.



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FSSTeafb

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tate of Illin

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17,123

6,423

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17,409

6,568

3,964

1,477

808

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2012 willan Servicections adeasing staff.

FY 2011

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Estimated

25,665

17,671

7,091

4,087

1,587

897

56,996

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24,807

17,557

6,682

3,993

1,485

808

55,332

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Total

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Agency

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25,882

17,880

7,261

4,108

1,615

897

57,642

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State of Illinois

BUDGET POLICIES

Operating Budget Policies

The Illinois Constitution requires a balancedbudget. Expenditures proposed by theGovernor shall not exceed funds estimated to beavailable for the fiscal year. Public Act 90-479amended the Civil Administrative Code toprovide guidance to the governor as heproposes the budget. Tables II-C and II-Dprovide revenue and expenditure informationpursuant to Public Act 90-479.

The state will impose budgetary reserves:General Funds and Special State Funds will be

required to maintain a two percent reserve toensure that spending does not exceed estimatedrevenue.

Strategic Fiscal Policies

The states strategic fiscal policies will bedesigned to eliminate the fiscal imbalancecaused by expenditures growing at a faster ratethan revenues. These policies will include thefollowing:

Help families during times of recession

Fund key priorities including education andhealthcare

Invest in the economy and the statesinfrastructure

Reduce the states pension liability

Implement new revenue streams that reflectthe states economic base

Contain core costs

Improve the efficiency of state procurement

Maintain debt affordability processes forcapital programs

Measure program performance

Enhance revenue compliance andenforcement

Require new spending to be matched by newrevenues

Transfer excess balances in special funds

Streamline government by reducing the sizeand increasing its responsiveness.

Financial Reporting Policies

The state annual financial report will followaccounting and financial reporting practices inconformity with accepted principles and

standards of the Governmental AccountingStandards Board (GASB) and best practices of theGovernment Finance Officers Association(GFOA).

Revenue Policies

To develop revenue policies, the state willconsult with the Council of Economic Advisorsand independent national economic consultingfirms, and utilize various revenue forecastingmethodologies including econometric modeling,historical relationships and economic indicatorprojections.

The state will monitor revenues on a semi-monthly, and quarterly basis. Comparisons willbe made to both budget and prior year, in orderto facilitate a rapid response to changes ineconomic conditions and fiscal status.

Expenditure Policies

The state will monitor expenditures on amonthly basis through the Budget to ActualVariance reporting and variance analysis.

Operating Expenditure Policy

Agencies will prepare Budget to Actual VarianceReports: actual expenditures will be comparedto budget, monthly and quarterly allotments willbe made, and significant variances will beaddressed by all agencies under the governor.



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State of Illinois

Agencies will prepare Corrective Action Plans:budget to actual variances of two percent ormore from their allotments will require acorrective action plan that will be monitored bythe Governors Office of Management andBudget.

The Governors Office of Management andBudget will approve procurement transactions of$1 million or more.

The Governors Office of Management andBudget will approve all personnel transactions.

Reserve Policy

The state will reserve general funds for cash

management purposes to reduce the need forshort term borrowing and provide additionalresources to assist the state in meeting itsneeds.

Debt Capacity, Issuance and Debt ServicePolicies

The state will identify new or increased revenueswhen authorizing additional debt to supportcapital spending.

The state will conduct debt affordabilityanalyses to determine the long-term effects of

debt repayment on future operating budgets.Unless otherwise necessary to offset pensionliability, the state will limit debt serviceexpenditures to no more than seven percent ofGeneral Revenue and Road Fundsappropriations.

Capital Expenditure policy

The state will annually forecast and analyzerevenues available for capital expenditures.

The state will conduct a formal capital planningprocess to annually rank projects based onspecific criteria including life/safety factors,code compliance, infrastructure maintenance,cost benefit analysis and targeted newconstruction programs.

The state will annually evaluate the impact ofnew capital spending on the operating budget.

The state will perform facilities managementand condition assessments in order to provide

information and recommendations for currentand future capital expenditures.

Pensions

The state will continue to implementrecommended pension actions that improve thesystems financial condition and affordability.

The state will approve a proposed increase inpension benefits only if matched by continuingrevenue sources.

Performance Measures

The agencies under the governor will developperformance measures that indicate progresstoward the governors priorities and eachagencys core mission.

The performance measures will focus onoutcome measurement in order to assess theimpact on the public.

The performance measures presented in thebudget book will include estimated data for thecurrent year, projected data for the budget yearand historical data for the three prior fiscalyears.

Legislative Policies

Agencies under the governor will submitproposed legislation to the Governors Office ofManagement and Budget to determinethe fiscalimpact to thebudget. All proposed legislationthat has a fiscal impact is accounted for in thegovernors proposed budget.



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State of Illinois

During the course of the legislative session, theGovernors Office of Management and Budgetwill prepare balanced budget notes at therequest of members of the General Assembly.These notes assess the fiscal impact ofproposed legislation on the budget.

The Governors Office of Management andBudget will review rule change proposals ofagencies under the governor to determine theirfiscal impact on the operating budget.

The table below summarizes additional fiscalpolicies of the state. The states fiscal policiesare designed to minimize administrative costand maximize state efficiency.



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State of Illinois

SELECT FINANCIAL POLICIES

State Agency Financial Policy

Brief Policy Description

Treasurers Office

State Treasurers Investment Policyhttp://www.state.il.us/treas/InsideOffice/invpolicy.htm

The Treasurers investment policy calls forinvestment of all funds in a manner thatprovidesthe highest investment return using authorizedinstruments while meeting the states daily cashflow demands. The policy covers the followingareas: ethics and conflict of interest; authorizedbroker/dealers and financial institutions;authorized and suitable investments; investmentrestrictions; collateralization; diversification;custody and safekeeping; internal controls;limitation of liability; and reporting.

Comptrollers Office

Statewide Accounting Management Systemprocedures manual (SAMS Manual)ftp://163.191.177.34/ioc-pdf/SAMSManualMaster.pdf

The Comptrollers SAMS Manual documents thefiscal policies, accounting principles, controls,operating procedures and reportingrequirements for the Statewide AccountingManagement System. The Manual assists stateagencies by indicating the method to be used forprocessing accounting information betweenagencies and the Comptroller Office.

Governors Office ofManagement and

Budget

Interest Rate Risk Management Policyhttp://www.state.il.us/budget/Intr_Rate_Policy_October2003Final.pdf

This policy establishes the purposes andprocedures by which the state may enter into anexchange contract or issue direct variable ratedebt. The policy covers the following areas:definition of variable interest rate position;purposes of interest rate exchange contracts;risk assessment; form and legality of agreement;

qualified counterparties and collateral provisions;counterparty aggregate position limits; liquidityfacility; monitoring and reporting; and terms ofpolicy review.

Central ManagementServices

Standard Procurement Ruleshttp://www.state.il.us/cms/download/pdfs/sel_rule.pdf

All qualified vendors are invited to participate inbidding on the wide variety of commodities andequipment purchased by the state. TheDepartment of Central Management Services isauthorized by law to buy commodities andequipment for state agencies and electedofficials. The states procurement rules establishstandards for procurement authority, bidthresholds, bid publication, bid security, durationof contracts, contract pricing, preferences,ethics, protests, supply management andgovernmental joint purchasing.

ComptrollersOffice

Budget Stabilization Fund (30 ILCS 122/1)http://www.ilga.gov/legislation/ilcs/ilcs.asp

Funds are reserved for use in the cashmanagement of the General Revenue Fund, thusreducing the need for short term borrowing andserving to provide additional resources to assistthe state in meeting its needs. The priority forthe use of these funds include secondary andelementary education, child care and otherprograms that may provide a direct benefit tochildren.



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State of Illinois

THE BUDGET PROCESS

The Illinois Constitution requires the governor

to prepare and present a state budgetrecommendation for the state to the GeneralAssembly. The Constitution also requires thatthe proposed budget be balanced and includerecommended spending levels for stateagencies, estimated funds available from taxcollections and other sources, and state debtand liabilities. The Governors Office ofManagement and Budget (GOMB) estimatesrevenues in consultation with the Department ofRevenue. GOMB subsequently develops budgetrecommendations that reflect the governorsprogrammatic and spending priorities.

Planning: September through February

Planning for the next fiscal year begins each fall.During the planning phase, the followingactivities occur:

Agencies work with GOMB and thegovernors Office to refine strategicpriorities, develop initiatives to achieve thosepriorities, and evaluate actual performancecompared to benchmarks from comparablestates or other peer entities;

GOMB and agency staff identify and estimatepotential spending for the coming fiscalyear, including both the costs of current andpotential programs and the value ofexpansion, modification or elimination ofvarious programs;

Working with the Council of EconomicAdvisors, GOMB and the Department ofRevenue review economic forecasts andmake preliminary revenue estimates;

GOMB, the Department of CentralManagement Services and agencies reviewstatewide trends and administrativeprocesses to find and reduce inefficienciesand propose reallocation of resources toimprove efficiency and promote bettergovernment;

Based on targets, assumptions and materialsprovided to agencies by GOMB, agenciesprepare, and GOMB reviews, preliminarybudget materials;

GOMB, the Governors Office and agenciesmeet to review and discuss availablerevenue, anticipated spending and programpriorities to develop budgets that reflect thecore priorities of the agency;

Periodically, GOMB reviews revenue andspending estimates, resulting in review andreprioritization of agency and statepriorities;

When final budget options are developed,they are presented to the governor forreview and approval before they are draftedin legislative form. GOMB then produces thebudget book, a narrative explaining thebudget and providing complete budget tableforms;

The governor announces and describes thebudget in the annual Budget Address; and

GOMB drafts appropriation bills toimplement the governors budget

recommendations.

Legislative Deliberation: March through May

After the Governors Budget Address in March,legislative review of the governors budgetrecommendations begins with hearings beforeHouse and Senate appropriation committees.During this period, the following activities occur:

Appropriation committees may adoptamendments to change the funding level

recommended by the governor;

Once passed by the first committee, anappropriation bill moves to the full House orSenate for consideration, amendment and avote. Following passage in the firstlegislative chamber, the appropriation billmoves to the second chamber, where asimilar process takes place. Changes madein either chamber must ultimately be



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Table I-A Operating Appropriations by Agency All FundsSummarizes each agencys general funds, other state funds, federal funds and totalappropriations for fiscal years 2010, 2011, and 2012. The footnotes to Table I-Aexplain the various transfers of functions and funds related to agency reorganizationsand program changes.

Table I-B: Supplementals to Complete Fiscal Year 2011Lists of the Governors recommended supplemental appropriations needed to completefiscal year 2011.

Table II-A: Revenues by Source All Appropriated FundsSummarizes, by source, all appropriated state revenues for four fiscal years.

Table II-B: Revenues by Source General FundsSummarizes, by source, all revenues deposited into the states general funds for fourfiscal years.

Table II-C: Budgeted Funds Revenues GAAP BasisBudgeted funds revenues prepared in accordance with Public Act 90-479 for fiscal year2012.

Table II-D: Budgeted Funds Expenditures GAAP BasisBudgeted funds expenditures prepared in accordance with Public Act 90-479 for fiscalyear 2012.

Table III-A: Road Fund

Provides a summary of the receipts into the Road Fund and allocations from the fund tovarious state agencies for four fiscal years.

Table III-B: Motor Fuel Tax State FundsSummarizes the receipts into the Motor Fuel Tax Fund and distributions from the fundfor four fiscal years.

Table IV-A: Appropriated Operating Funds by Fund Group for Fiscal Year 2012Summarizes, by fund group, the appropriated funds and projected operating cash flowfor fiscal year 2012.

Table IV-B: Appropriated Operating Funds by Fund for Fiscal Year 2012Lists all appropriated funds and describes each funds projected operating cash flow for

fiscal year 2012.

State of Illinois Summary Tables



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Agency

($ thousands)

FY 2010

Enacted

Appropriation

FY 2010

Actual

Expenditure

FY 2011

Enacted

Appropriation

FY 2011

Estimated

Expenditure

FY 2012

Recommended

Appropriation

Table I- A - Operat ing Appropr iat ions by Agency

JUDICIAL AGENCIES

Supreme Cour t 321,558 305,636 326,229 326,229 364,618

General Funds 305,607 299,629 309,640 309,640 347,531

Other State Funds 15,952 6,007 16,590 16,590 17,087

Federal Funds 0 0 0 0 0

Supreme Cour t Histor ic Preservat ion Commission 10,000 805 10,000 876 10,000

General Funds 0 0 0 0 0

Other State Funds 10,000 805 10,000 876 10,000


Judges' Ret i rement System 0 0 90,251 0 0

General Funds 0 0 90,251 0 0

Other State Funds 0 0 0 0 0


Judicial Inquiry Board 714 612 714 710 709

General