Madison - St. Clair Record

Saturday, February 22, 2020

State grants to CUB under Quinn are examples of 'mis-prioritization' of spending, lawmaker says

By Ann Maher | Sep 29, 2015

Mccarter new

A tax exempt organization that lobbies and litigates against utility companies was awarded $1.5 million in state grants that was used to pay the salaries of existing staff members as well as rent and utilities.

Citizens Utility Board received the economic development grants from the Illinois Department of Commerce and Economic Opportunity (DCEO) through a budget controlled by former Gov. Pat Quinn.

Documents associated with the applications for the grants indicate that "0" jobs would be created through the awards.

The DCEO awarded CUB $718,000 in 2009 and $782,000 in 2011.

The grants were initially in the amounts of $500,000 and $282,000, but each were modified upwards to equal a combined $1.5 million.

The first of the two grants, which ultimately covered a period from Dec. 1, 2009 through Nov. 30, 2011 after modification, allocated $610,300 in salary for six employees: executive director David Kolata, associate director, communications director, litigation director, attorney and senior policy analyst.

CUB paid Kolata $111,407 in 2013, according to IRS Form 990, which CUB was required to file.

That first grant also provided $107,700 in rent and utilities for the organization which rents space at 309 West Washington Street, Suite 800 in Chicago. (It costs $24 per square foot to rent space in the building, according to Willard Jones real estate).

The second grant, which covered a period of time from May 1, 2011 through April 30, 2013, provided $710,000 in salaries to four full time employees and one part time employee: operations director, attorney, database and web administrator, communications and outreach associate and network administrator. The paperwork did not indicate which employee was part time.

Communications regarding the grants refer to them as "lump" sum grants.

In fact, executive director Kolata wrote in an email to the grant administrator on Dec. 11, 2009, "It's my understanding that this is a 100 percent up front grant - at least so we were told."

However, the first grant totaling $718,000 appears to have been distributed in four payments: $250,000 on Jan. 5, 2010; $125,000 on March 2, 2010; $125,000 on June 2, 2010 and $218,000 on July 27, 2010.

Payment was quicker for the second grant which went from $282,000 up to a total of $782,000 - having been paid in total within 60 days. Records indicate $70,500 was issued on May 18, 2011; $211,500 on June 24, 2011 and $500,000 on July 11, 2011.

Interest totaling more than $4,000 from both grants was returned by CUB to the DCEO.

In the grant application paperwork, CUB indicated that 5.5 million people were expected to directly benefit from "this project," with approximately 20 percent of that number considered disadvantaged or low income.."and all receiving that benefit at no charge."

It also indicated that the funds would allow the organization to "continue and expand its outreach efforts toward fulfillment of its mission. This includes working for better policy on energy and telecom issues, to help Illinois consumers save more money on utility bills in the future and thereby improve their economic outlook."

Kolata did not respond to a request for comment.

State Sen Kyle McCarter (R-Lebanon) said the grants are examples of "mis-prioritization of spending."

He said it wasn't necessarily a bad thing that CUB received state funds,

"The question is, when you don't have funds..there are probably areas in organizations and services that are more important."

About CUB

CUB is exempt from federal income tax as a 501c4 organization and also is exempt from paying Illinois sales and income tax.

It was created in 1983 through the efforts of consumer advocate Quinn. The legislative act creating the organization directed it to advocate for residential utility customers by intervening in ratemaking proceedings at the Illinois Commerce Commission, in the courts and before other public bodies. The state statute also permits CUB to promote tougher consumer protection laws in the state legislature, and to provide consumers with assistance with their utility companies.

The Illinois General Assembly set up CUB as a membership-based organization, with an initial $100,000 state loan and the ability to include membership flyers in utility bills. But, CUB’s website says, after utilities blocked the inserts in federal court in 1986, the state legislature modified the law so CUB could include its membership flyers in mass mailings from state agencies.

CUB points out in its website that it is primarily funded by Illinois consumers.

CUB’s website lists accomplishments for 2012 and 2013, stating that in each year the board beat back $300 million in rate hikes.

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Organizations in this Story

Illinois Department of Commerce and Economic OpportunityIllinois General AssemblyCitizens Utility BoardIllinois State Senator Kyle McCarter (R-54th)