State "Borrowing" Money Meant for Charities

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    NEWSLETTERS

    With state government in dire economic straits, the Illinois legislature in 2009 paved the way for the state to use charitable funds to pay its bills.

    The state of Illinois last year, in a move that angered many, began to "borrow" money from charities.

    State officials said the borrowing -- to the tune of about $1.2 million -- was essential, but former Illinois Comptroller Dawn Clark Netsch puts it in clear terms.

    "This is not money that in my judgment belongs to the state at all," she says.

    The money was given by Illinois taxpayers to a variety of charities, including Alzheimer’s Disease Research, the Military Family Relief Fund and the Penny Severns Breast, Cervical and Ovarian Cancer Research Fund.

    Penny Severn's, a state senator from Decatur, knew the odds were against her when it came to breast cancer.

    She was diagnosed in 1994, during a campaign in which Netsch was running for governor and Severns for lieutenant governor. Severns' younger sister had already died of breast cancer.

    "Her family is obviously one in which breast cancer runs," said Netsch.

    Severns died in 1998. A year later, a special breast cancer research fund was named in her honor. 

    When Illinois taxpayers fill out their annual state tax forms, they're now given the chance to donate to the fund named after Severns, as well as several individual charities.

    "It's not the state's money. It never was the state's money," said Netsch.

    But in 2009, with state government in dire economic straits, the Illinois legislature paved the way for the state to use those charitable funds.

    "Legislation was passed -- adopted by the Democrats -- that allowed the governor to sweep one year and then borrow from those funds in another year," explained Senate Republican Leader Christine Radogno.

    In fiscal year 2011, nearly $1.2 million dollars was borrowed 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.

    The practice of sweeping funds began in 2003 with Rod Blagojevich. It allowed the state to gather unused money and place it in the general fund.

    The ante was upped in 2010 when the state began borrowing from the charitable donations.

    In the case of the Penny Severns Fund, $354,200 was "borrowed."

    A spokesperson for Gov. Pat Quinn said that without the charitable borrowing this year, the state would not have been able to match a $100 million Medicaid grant and would have lost a major funding source.

    Still, others think the practice is inexcusable.

    "I think it is just a violation of the trust of the people of Illinois," said Radogno. "To take that money people have voluntarily contributed and use it for something else."

    In 2009, $500,000 from the Penny Severns fund was given to researchers, including Dr. Alan Diamond at the University of Illinois Chicago. In all, there were 11 grants to continue cancer research at a time when federal funds are drying up.

    As of today, the Illinois Department of Public Health website states: "Due to budget cuts and fund sweeps, no grants will be offered under the program for the current fiscal year.”

    It all points, said Martire and others, to the state of the economy in Illinois.

    "So literally if you have a starved fiscal system, it actually encourages the state to engage in irresponsible fiscal practices," said Martire.

    The money the state borrowed from the 11 charities was all repaid -- with interest -- this year. Last year the state "borrowed" $436,000 from the various charities. It was never repaid.

    A spokeswoman for the governor said Quinn opposes and has stopped the practice of fund sweeps. The governor’s office declined an interview request.

    As for Penny Severns?

    Radogno, whose path crossed on the Senate floor with Severns, said she would have frowned on how the state "borrowed" the money.

    "Her normally mild-mannered, optimistic personality might have erupted with a little bit of passion if she had heard that," Radogno said.

    "Oh I think she would have been very unhappy about it," said Netsch. "I think she would have been very outraged by what happened."