I am here today to present my FY2013 Budget to the Cook County Board of Commissioners.
Two years ago, we began to chart a new course for the County. And it is a result of our work that we have solved for nearly $1 billion in deficits since taking office.
But our work is far from over; I come before you today with another challenge. This year, we started with a $268 million deficit, due to declining health revenues, effects of the sales tax rollback, debt service and rising labor costs. In short, we have structural problems that demand structural solutions.
I have a vision for this County – and it is shaped by four key principles: fiscal responsibility, innovative leadership, transparency and accountability and improved services.
It all starts with fiscal responsibility.
We walked in the door on December 6, 2010, a week into first quarter of the fiscal year; with a deficit of almost half of one billion dollars; and more importantly, no budget or plan for one.
That is why, once we got over the considerable hurdle of the first budget, we immediately went to work to establish a more effective, transparent and accountable budget process.
I issued an Executive Order which established a timeline to ensure that the County more effectively engages the public in the budget process and produces a balanced budget before the start of the fiscal year.
And we established a countywide system of performance management system called STAR (Set Targets. Achieve Results). For the first time, the County has a forum in which departments and separately elected officials can work together to set priorities, identify opportunities, address problems and measure performance. Already this year, there have been over 30 performance management review sessions. In those sessions, County leadership has identified and implemented over 175 action items to improve operations and increase collaboration between offices. To date, STAR initiatives have led to tens of millions of dollars in either increased revenue or decreased costs to taxpayers in FY2012.
Starting this year, the STAR program will work with agencies to use performance management as a management tool, including facilitating internal goal-setting, training and monitoring.
Balancing a budget is not the goal in itself, it’s the first step in establishing a set of priorities which will allow us transform government.
To that end, the budget I present to you today is more than a financial document; it is a policy plan. It’s a plan for our future.
We are paying for this plan first with cuts in spending.
In order to transform Government we have to ensure that we live within our means, and that should start at the top. As my husband continues to remind me, one of my first actions as President was to cut my own salary by 10%.
Since taking office, I’ve cut the County’s operating budget by over $100 million. To date, we’ve reduced both the number of positions by over 2,400 as well as the headcount by roughly 1,500. This year, we’ve made $51 million in cuts and eliminated 462 positions, including taking vacant positions off our books. The cuts we’ve made are a direct result of our continued commitment to collaboration with the other separately elected officials and with our labor unions.
We’ve also been able to realize expenditure reductions by demanding greater efficiency, such as reducing our electricity and gas usage, terminating unnecessary leases, consolidating real estate and implementing shared a vehicle pool.
Key investments; waste-cutting, productivity, and long-term savings.
Government leaders at every level are finding that they have to do more with less; and Cook County is no exception. However, as we evaluate the County’s commitment to fiscal responsibility, we must not lose sight of the need for long-term investments to cut waste, raise productivity and produce savings. Let me run though some of our top examples.
In order to curb government wastefulness, our plan includes a proposal to lease some of our underused office space. On the 34th and 35th floors of the George Dunne building sit palatial yet under-used offices with incredible city views. I’ve got an office over on the 35th floor – some of my staff say it’s bigger than their first apartments. And I’ve been over there maybe twice. I don’t need this space – and rather than it just sitting there, we are going invest in upgrading it so this coveted downtown office space can be rented out as a potential revenue opportunity for the County.
We’ve installing GPS systems for all highways vehicles. We’ve all seen the stories – employees in County vehicles taking naps or driving off for personal errands or long lunches. Now, we will be able to track each vehicle to increase productivity, better track snow removal and reduce excess fuel costs.
We’re investing in an electronic case management system at the Board of Review. No longer will you be able to go up to the 6th floor and see rows and rows of paper files stacked in hallways. By investing in an Enterprise Case Management System, we will create a more effective workflow process to eliminate inefficiencies and provide better tracking than the previous, paper-based system.
And because of our commitment to automation, earlier this year, thanks to the Treasurer Pappas’ leadership, we were able to implement a unified property tax website. No longer will residents have to go from floor to floor, from office to office in order to handle their property tax issues. Instead, it can be done online.
And we’re making a capital investment in our unincorporated areas. Back in April, the group of experts I assembled to investigate the provision of services to the County’s unincorporated areas, put forth a long term goal for the County: the complete elimination of unincorporated areas. That is obviously no small task. Our unincorporated areas range dramatically in terms of geography, size and socio-economic make up. Therefore, when we talk about potential annexation with adjacent areas, we face an additional challenge: infrastructure. In many cases, there simply aren’t the resources necessary to make the infrastructure upgrades to facilitate annexation. That is why today I’m announcing the creation of a $5 million Unincorporated Cook Infrastructure Improvement Fund (UCIIF), to allow municipalities to apply for matching funding to complete the necessary infrastructure improvements.
In short, what we’re talking about is a different kind of responsibility – one that invests in the long-term financial future of our County and its residents.
Our priority will always be to look first at how we can cut.
I know that for most of our residents and businesses, the state of the economy remains the issue that weighs most heavily on their minds. That is why I stand by my commitment to complete the rollback of the Stroger sales tax increase.
There will always be those who say that this is not the time to reduce possible sources of revenue. But I remain fully committed to this course of action. I am confident this was the right choice for Cook County – for our residents, families and businesses. This year alone, the sales tax rollback saves $86 million for Cook County taxpayers. The final portion of the rollback is only a few months away. And when it takes effect in January 1, 2013, we will have saved Cook County taxpayers over $440 million.
But cutting isn’t always enough. The revenue priorities I recommend today were carefully thought through to capture only those select items that directly affect our core services.
By increasing the cigarette tax by $1, we will bring in $25 million to help to continue to fund our public health system. As the leading provider of public health care in the region, I believe that, if you choose to smoke – you should have a hand in paying for the health consequences of your decisions.
Additionally, the County will implementing a gambling machine tax. These machines generate almost $800/day – we’re asking for $800 per year. They keep their other 364 days of revenue. We use that one day’s revenue to help mitigate the impact of the associated costs of crime, health, addiction.
And we are proposing a 5 cent tax on rounds of ammunition and $25 tax on firearms. The violence in Cook County is devastating and the wide availability of ammunition only exacerbates the problem. Twenty-nine percent of the illegal guns used in crimes and recovered by the Chicago Police Department were purchased legally in Cook County. This violence has a real impact on the Cook County Health and Hospital System. Acute trauma care for a shooting victim costs $52,000 on average and 70% of shooting victims have no insurance. And 670 shooting victims were treated last year in our health system at an enormous cost.
Let me say again, every revenue measure I call for is targeted, it’s responsible and it’s focused on supporting the services we provide.
Consider this: In every budget – every budget – we have reduced the overall tax burden for Cook County residents. This year alone, we have reduced taxes for everyone by twice as much as we have selectively raised them. In doing so we have incrementally raised the price on items like cigarettes, guns and gambling machines in order to continue to lower the price on milk, toothpaste, and other everyday necessities.
During this process, we also looked to the State and the City to identify areas in which the County’s policies or practices had fallen behind. And unlike either the State or the City, the County had no measure in place to incent individuals and businesses to choose other local businesses for their purchases. As a result, major goods are still being purchased outside of Cook County. That is why, this year, we have introduced the non-titled use tax, to encourage businesses to buy their goods in Cook County . Furthermore, we’ve included a credit covering property valued up to $2,500. Our policy here is straightforward, if you’re a business and you choose not to support local businesses in your area; that is support our local economy – then you will have to pay a little more.
This is another way that the County is committed to supporting our local business communities.
But we know that economic development cannot stop there. One of my first objectives as President was to strengthen and expand the capacity and capability of the County to engage in meaningful economic development. We created a Bureau of Economic Development and we have spearheaded efforts to help small businesses get access to capital and improve capacity for growth as well as reducing barriers to entry to County business.
We are committed to making it easier to do business in and with Cook County.
The County spends $1.2 billion annually on goods and services. We have the ability to shape markets and build capacity for businesses. As part of this budget, we are proposing that they County’s local preference on bids increase from 2% to 5% in order to promote and support our local businesses and to incent other businesses to relocate to Cook County.
We are overhauling our procurement system in order to avoid unnecessary delays, provide clarity and eliminate redundancies and inconsistences.
We have launched a $200 Million partnership, the Small Business Financing Initiative, bringing together a group of leading financial institutions to build relationships with small, minority and women-owned businesses doing business with Cook County.
And, as a result of our performance management initiative, we are now paying vendors more quickly then ever before. When I walked in the door – it took on average 64 days for a vendor to receive a payment. We’ve already cut that down to 37 days. And in this budget, we’re investing in the technology so that we can bring the number down to 7 for the process within our Comptroller’s office. And, in response to the concerns we were hearing from subcontractors waiting for their payment, we have made it a requirement that prime contractors pay subcontractors within 14 days of receiving payment.
In this economy, we cannot afford for businesses to wait over a month to get paid, or worse, for businesses to take a pass on bidding on County work.
It is only because of our fiscal discipline – because of our continual push to make things more effective and more efficient that even in tough economic times we can continue to invest in the services that are at the core of our mission – public safety and public health.
I want to start with public safety. When it comes to our efforts around the Juvenile Temporary Detention Center (JTDC), I’ll be blunt – I want as few kids in our juvenile jail as possible.
With that goal in mind, and thanks to the hard work of the juvenile justice stakeholders in Cook County, we have successfully reduced the number of kids detained at the Juvenile Temporary Detention Center (JTDC). It costs over $600 a day to keep a kid there. Many of these kids could be better served in other settings. We have worked collaboratively to expand community-based alternatives to detention so that youth who don’t pose a risk to public safety can have their needs met in other settings. This year we have been able reduce the population by approximately 50 kids. Our goal is to continue the reduction by another 50 in order to permanently close one of the centers at the JTDC.
Our other major public safety investment revolves around our bond court system. I’ve personally been to bond court and, honestly, it’s a truly disheartening experience.
On one occasion when I was there, I saw two 17 year olds charged with minor drug possession come before the court and receive low bonds – they would have had to post $200 apiece. They had no family or friends in the court room. And you immediately saw that neither of them had it. And just like that, their lives are changed forever.
The overwhelming majority of the people held in Cook County Jail are awaiting trial. Of those, the vast majority have the opportunity to post bail. It is far too expensive for the County to house defendants just because they are too poor to make their bond. We pay $143 a day to keep someone in jail so within a matter of days, we are paying more than their actual bond to detain them.
As a result, I asked the Justice Advisory Council to conduct a 6-month comprehensive study on the operation of our bond courts and pre-trial services, pulling together recommendations from a cross section of public safety stakeholders.
You can read their report to see their findings and recommendations. And you can see in this budget our commitment to making those a reality. But if you want to understand bond court – I urge you to actually go to bond court. Over the new few months, you can see the changes for yourself.
We are working to screen people eligible for alternatives to incarceration out of the system at every step in the process. In order to get eligible individuals out of the system earlier, we are working with the State’s Attorney’s office in order to ensure the necessary resources to begin screening for eligibility for alternative sentencing and deferred prosecution on-site at bond court. We are also moving forward with a motion to reconsider court call so that cases in which low bond has not yet been met can receive a second review and the opportunity for a more appropriate bond amount.
We are providing the resources to make more information more readily available. We’ve invested in additional personnel. Staff will work with Safer Foundation to review old cases where terms of bond may be revised. Two new public defenders and an investigator will be hired to meet the demands of incoming cases. The additional investment in looking at all of the defendants more carefully means that the judge will rely less on pre-trial detention, so that we can work to ensure that these individuals are not unnecessarily detained or disrupt any treatment they are receiving.
And finally, instead of being crammed in a bullpen with as many as 100 other people, all of whom can hear your every word, we’ve invested in a larger, more humane space for pre-trial detainees that allows for private conversations with their attorneys.
Now, I can’t talk about Cook County Health and Hospital System without first talking about its Chief Executive Officer, Dr. Ram Raju. Last year at this time, I said he experienced a baptism by fire, coming on board in the middle of the budget process. Since then, he has proven himself to be an invaluable asset to our health system. We are all dependent on his insight, experience and leadership.
With the Affordable Care Act on the horizon, the landscape of health care is changing – quickly and drastically.
In just the last year, the Health and Hospital System provided over $500 million of uncompensated care to a patient population with a high percentage of complex, serious illnesses. I made a commitment to the taxpayers of Cook County to evaluate and streamline the costs of health care. Working directly with Dr. Raju, we have maintained the County subsidy at $254 million. At the same time, outside of our investment in the 1115 waiver, we’ve reduced expenditures by $27 million and dramatically improved our billing practices. Consider this: physician billing, which was minimal a year ago, has generated $4 million so far this year and is projected to increase next year to $13 million.
But I also made a promise to the staff and, most importantly the patients, of the Cook County Health and Hospital System to firmly protect the quality and sustainability of our health care services. Without a doubt, our greatest achievement has been the application for our 1115 Waiver. After trips to Springfield and Washington D.C., countless meetings and conversations with members of the Illinois delegation and the Obama administration, the 1115 Waiver is within our reach. Granted by the federal government, the program allows us to “early enroll” 100,000 patients who will be eligible for Medicaid under the Affordable Care Act (ACA) in 2014. This brings in $99 million in net revenue to treat the patients we have already been treating but for whom we previously received no reimbursement.
But in addition to the financial argument, there is another more powerful one. It means we provide better health care.
This is an historic opportunity. Now we must shape a system of health care, not sick care; centered on the patient, not the doctor. We are building a system focused on preventive care to provide our patients, many for the first time, with a primary care doctor responsible for their wellness. Dr. Raju calls it a “medical home” and I couldn’t think of a more fitting term.
I remember an example Dr. Raju shared with me about people continuing to rely on the emergency room for basic, primary care, like a headache. When a patient comes to the emergency room with a headache, they are taken through a series of complicated, expensive tests, starting with a CAT scan. The approach of an emergency room is to start at the worst case scenario and work down. But with a primary care doctor, the approach is the exact opposite. Symptoms are watched and treated over days. This is the better scenario for both the health care system, which avoids unnecessary and expensive tests and our patients, who receive better, more personalized treatment.
But it’s not enough. We must create a true County-wide system of care, encompassing hospitals and clinics and directly engaging with communities and neighborhoods. It’s a tremendous amount of work but Dr. Raju and I are committed to it. And in five years, we will have shaped a system in which every County resident will have access to quality primary care and specialty care.
The success of the Cook County Health and Hospital System is in all our interests. There are those who will question our commitment because they don’t personally use our health care system. Maybe you don’t use our system, but what about the person sitting next to you on the train, or serving your food at a restaurant or even just walking by you on the sidewalk. Illness doesn’t discriminate – it is not limited by race, class or geography. The only way to keep yourself healthy is to ensure that everyone has the ability to keep themselves healthy.
But this is more than just a health care issue, it’s an economic development one. A healthy workforce is a productive workforce. The only way to ensure that we have an economically vibrant community is to ensure we also have a healthy one.
And the impact goes beyond our health care system alone. Our health care system is considered a safety net provider – meaning we provide for the uninsured and the underinsured. The reality is this: we are the safety net for our entire health care system. If our health care system fails, the entire health care delivery system as we know it goes down with us. This is because our patients don’t simply go away – they go to other hospitals. Hospitals that have historically been unwilling to cover the extensive costs associated with our patient population.
That’s what we can – and must – do with this opportunity. We can secure the long-term financial sustainability and the provisions of a health care system that never closes its doors; that provides true universal coverage.
Long-Term Financial Planning:
The heart of this budget plan deals with the long term. For far too long, short-term solutions were selected over long-term investments. And the failure to look beyond the next payment, the next quarter, or the next budget only eroded our resources.
It is because of our financial discipline that we have an unsurpassed opportunity to address the recurring challenges facing our pension system. Right now, it all comes down now to Springfield. But we know what it will take to get there and when Springfield is ready – we will be ready. But we must have the tools to do so. That’s why we’ve met with every single union. We’ve laid out a full set of options. We know the cost of every variable and how each might contribute to a solution.
It’s why we were consciously conservative with our revenue initiatives, conservative in our expenditure cuts; why we didn’t rely on any additional debt restructuring.
Two years ago, the County’s fund balance had been allowed to dwindle to $61 million. In the last two years of the previous administration, the County borrowed over $750 million, largely to fund potential capital projects. Quite simply, this is not advisable for a government with a $3 billion operating budget.
It is only with comprehensive assessment that you can begin to effectively control and reduce spending. We imposed a moratorium on all non-essential capital projects and service contracts. We conducted a comprehensive, case-by-case review and prioritization of these projects. The result of this process was a Capital Improvement Plan. It created a new system focused on program management and allowing the County, and the public, to clearly identify projects by location, operating agency and category.
Two years ago, I stood before you and promised to chart a new direction for Cook County. The most fundamental change is the focus on the future. As I said at the beginning, structural problems demand structural solutions. This budget is 99% structural solutions.
Today the County’s fund balance stands at almost $200 million.
We are committed not only to sustaining it but growing it and our budget shows that. This is a widely recognized best practice because our financial reserves are critical to provide a buffer against future uncertainty, ensure we can pay our vendors rapidly, and protect our credit rating.
As part of this budget we have composed Cook County Financial Policies, which include policies for budgeting, revenues, capital and debt management, investment management, financial reporting and performance management. These policies express the County’s commitment to maintaining internal controls, safeguarding assets and meeting our financial responsibilities for Cook County taxpayers.
Our continuous emphasis on expenditure reduction, coupled with efficiencies brought through structural changes will help the County to sustain the general fund balance for the near future. We must be responsible stewards of the taxpayers’ funds during this time of economic uncertainty.
Over the last two years, we have launched a campaign to reinvent County government. And, as a result the County is stronger than it has been. And we’ve seen what we can do when we work together. We strengthened our economic development efforts, including rolling back the Stroger sales tax increase. We instituted performance-based management to demand more accountability from our operations and our employees. We focused on critical public safety reform; and we worked to strengthen the health care system while reducing the subsidy from the County.
We’ve conquered what, at the time, might have seemed to others, to be insurmountable challenges. But we persevered because we share a vision of the great potential of this County.
The plan I’ve laid out here for you today is about what government can do because I believe government can and must do more. This plan will balance our budget and it will invest in our residents. We are tackling both the immediate concerns and enabling the long-term investments without ever losing sight of the fact that it all starts with fiscal responsibility.
But I cannot do any of this without you. So today, I issue a call to action – action by this Board and by our separately elected officials. We must work together. The residents of this County elected us all. And we must be committed to a new kind of County government – one that not only addresses our immediate concerns but supports the investments that shape our future.