Illinois Gov. Bruce Rauner's arguments for reform don't all add up - News - Rockford Register Star - Rockford, IL

 

• By Sarah Burnett, Carla K. Johnson and Nick Swedberg
  The Associated Press
  Posted Feb. 1, 2015 at 8:54 PM

  CHICAGO — As he prepares to deliver his first State of the State address, Gov. Bruce Rauner has been traveling Illinois previewing what are expected to be his first legislative proposals, saying the state's dire financial situation is cause for cutting Medicaid and public-employee salaries and making Illinois more hospitable to businesses.

  The speeches, given mostly to college audiences, have had the feel of university lectures complete with PowerPoint slides and a slew of statistics.

  The Associated Press reviewed some of the facts the Winnetka Republican is using to make his case for change in Springfield. Some were spot on, others lacked context or weren't accompanied by other important information.

  No one disputes what Rauner says is his central claim: That Illinois is in deep financial trouble facing a more than $9 billion deficit in the upcoming fiscal year by some estimations and dramatic action is needed to fix it.

  Here's a look at some of what Rauner has been saying as he prepares for Wednesday's address:

  Medicaid Rauner said Medicaid spending is "booming" and "unsustainable." He showed a slide comparing a recent three-year rise in Medicaid spending to relatively flat Illinois population growth.

  "Just raising taxes to try to fix that? No chance," he said.

  The slide leaves out important facts.

  First, Washington paid for most of that increase. To improve access for the poor, the nation's new health law expanded Medicaid eligibility and increased rates for primary-care doctors treating low-income patients. The federal government paid the entire cost of covering more than 536,000 Illinois adults who previously had no insurance and wound up as charity care cases when they got sick.

  Second, Illinois spends less per Medicaid enrollee than the national average and less per enrollee than any of its neighboring states. In 2011, the most recent year available, Illinois ranked 47th in Medicaid spending per enrollee, according to the Kaiser Family Foundation. California, Alabama, Georgia and Nevada spent less.

  Rauner spokesman Lance Trover said Rauner's point was to highlight that job growth hasn't kept up with spending pressures.

  "It's not a sustainable trend line regardless of the amount of federal dollars," Trover said.

  State salariesRauner said state employee salaries are about 22 percent more than worker salaries in the private sector, and that the average salary for Illinois government employees is third-highest in the country. He noted the other states with the highest average salaries were New Jersey, California and Rhode Island what he called the "most bankrupt states in America."

  "It's no coincidence," Rauner said.

  Rauner cited a 2012 study from the Pew Research Center, a think tank that used data from the U.S. Bureau of Labor Statistics. But the bureau advises against comparing its numbers for public and private sector pay because it didn't consider education and other demographic factors.

  Page 2 of 2 - A 2013 University of Illinois study did look at salarrates employers pay have fallen significantly. Rauner says he wants to go further. ies of private and public employees with comparable backgrounds. It found that "working in state and local government in Illinois is strongly associated with incomes 13.5 percent less on average than in the private sector."

  Trover notes that the university study examined state and local workers not state workers on their own, which could skew numbers.

  Rauner's claim about the average government employee salary being the third-highest checks out, with the average Illinois state worker making $63,669 in 2012, according to Pew.

  Workers' compensationThe cost of workers' compensation insurance is one of the main complaints Rauner said he's heard from Illinois business owners, noting the state ranks 7th for the highest cost per $100 of salary. Rauner said that's preventing businesses from creating jobs and in some cases leading them to leave Illinois.

  The governor is correct about Illinois' rates, according to the Oregon Department of Consumer and Business Services, which compiles rates for all 50 states every two years.

  John Goetz, the owner of R.D. Lawrence Construction Co. in Springfield, told AP the costs are "a killer for new jobs."

  Lawmakers approved changes to the law in 2011 that were designed to decrease costs, and the state Department of Insurance says the

• PensionsRauner says state employees' pension benefits are too generous, among his many criticisms of Illinois' massively underfunded system.

  He cites a "sample state worker" with a career average salary of about $39,000. That worker will chip in $40,539 to their own pension over a 26-year career, but will receive $821,588 in total benefits over 20 years of retirement, Rauner said. He called that imbalance "a time bomb for taxpayers and the economy."

  But Rauner leaves out a critical point, despite being a former private equity investor who boasts of success in investing pension funds for Illinois teachers and firefighters: The state also contributes to the pension systems (though he accurately notes that for many years legislators didn't make the payment). Those combined funds are invested, and the returns are used to help pay for benefits.

  The State Employee Retirement Systems' 2014 annual report states that in the past five years, the fund's investments have returned an average of 12.3 percent a year.

  Trover says "investment returns don't negate the financial burden placed on the state."

• By Sarah Burnett, Carla K. Johnson and Nick Swedberg
  The Associated Press

  Rockford Register Star

  By Sarah Burnett, Carla K. Johnson and Nick Swedberg
  The Associated Press

  Posted Feb. 1, 2015 at 8:54 PM

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Illinois Gov. Bruce Rauner's arguments for reform don't all add up - News - Rockford Register Star - Rockford, IL