Illinois “Borrowing” Money From Charitable Foundations

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Taxpayers were furious to discover the state of Illinois has been “borrowing” money from local charities in order to pay for state funds, a practice that began in early 2011. ”This is not money that in my judgment belongs to the state at all,” said former Illinois Comptroller Dawn Clark Netsch (D). In fact, these “borrowed” funds were given by Illinois taxpayers to various charities including Alzheimer’s Disease Research, the Military Family Relief Fund and the Penny Severns Breast, Cervical and Ovarian Cancer Research Fund. Netsch reiterated,”It’s not the state’s money. It never was the state’s money,” while state officials are claiming the move was necessary. During the fiscal year 2011, approximately $1.2 million dollars were taken from 11 charities. ”It is absolutely not transparent, and it is absolutely not the right thing to do with taxpayers,” said Ralph Martire, the Executive Director of the Center for Tax and Budget Accountability.

Surprisingly, it just may very well be within the currently most-indebted state‘s jurisdiction to take funds from charity foundations in order to pay for costs uncovered due to heaping debt. The legislature passed a measure in 2009 that would provide a glimpse of hope somewhere in Illinois’ debt-ridden future. ”Legislation was passed — adopted by the Democrats — that allowed the governor to sweep one year and then borrow from those funds in another year,” Senate Republican Leader Christine Radogno explained. Fund sweeping began in 2003 with former Governor, which allowed the state to relocate unused money into a general fund. It wasn’t until 2010, however, that the state set about borrowing from charitable donations.

Penny Severns Breast, Cervical and Ovarian Cancer Research Fund, as well as several other charitable donation organizations are listed for optional giving opportunities on Illinois annual state tax forms. Penny Severn’s was a state Senator from Decatur running for lieutenant governor in 1994 when she was diagnosed with breast cancer. After her death in 1998, a breast cancer research fund was named in her honor. The state “borrowed” $354,200 dollars from her fund. State officials see the practice as a last-minute resort. A spokesperson for Governor Pat Quinn argued only the charitable borrowing allowed the state to match a $100 million Medicaid grant that, unpaid, would have cost Illinois a major source of federal funding.

Illinois paid back all of the money borrowed from this year including interest. However,  $436,000 dollars of last year’s “borrowed” charity funds have still not been repaid. Quinn’s spokeswoman said the governor stopped the practice of fund sweeping. His office declined an interview request.