Madison - St. Clair Record

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State social service agencies sue in St. Clair County to force timely payments for services

By Ann Maher | Feb 9, 2017

A group of state human and social service agencies and companies filed suit today in St. Clair County against Gov. Bruce Rauner and other state officials to force timely payments for services performed.

The 37 plaintiffs are asking the same circuit court that ordered the state to pay Illinois workers - despite the lack of an approved budget (AFSCME v. Rauner) - for the same basic consideration. The group Pay Now Illinois wants a preliminary and permanent injunction for timely payments of contracts for fiscal year 2017.

“Precedent has been set with the ruling in St. Clair County that required state workers be paid;

we feel our constitutional claims are as strong, or possibly stronger,” said a spokesperson for the group Andrea Durbin.

“We are hoping for the same success so that we can get paid what is owed us, and we can be certain of getting paid in the future. After all, why should state workers be paid, but not state contractors? The state must provide assurance that it is a responsible business partner.”

Plaintiffs, including Caritas Family Solutions, Children's Home and Aid, TASC, Inc., and Lutheran Children and Family Services are represented by attorneys at Despres, Schwartz and Geoghegan in Chicago.

Some of the plaintiffs claim they have received no payments for services in the first half of fiscal year 2017 to date and "most will receive no payment for the rest of the fiscal year unless defendants are restrained from this current course of conduct," the suit states.

They claim the defendants have damaged their capacity to operate; they are unable to rehire the professional staff that had to be laid off in fiscal year 2016; they have been unable to restore programs they had to cut in the last fiscal year and they have to brace for further cutbacks for existing contracts under the stop gap for the rest of the fiscal year.

Since July 1, 2015, the state has been operating without an approved budget. Lawmakers are currently in session, but negotiations on budget deals have stalled. Republicans have resisted an income tax increase without meaningful reforms to state pension and workers' compensation systems, among other things. A package of budget bills sputtering in the Senate dubbed the "grand bargain" included one that called for $7 billion in borrowing to pay down a massive amount of unpaid bills.

The suit says that the stop gap budget adopted by the state on June 30, 2016, has "unlawfully reduced or capped the liability of the State to plaintiffs on the contracts for services in fiscal year 2017."

"For most plaintiffs, the Stop Gap provides less than twelve months worth of funding to pay contracts in both fiscal year 2016 and 2017; that is, a period twice as long as twenty-four months," it states.

It further says that the stop gap budget limits the spending authority of the state under these contracts to Dec. 31, 2016, "although defendants are continuing these contract past that date without any prospect of payment."

By operating without an approved budget or balancing revenue with expenditures as required by law, the defendants have "willfully" removed the state's ability to fund contracts "which they continue to enter," the suit says.

Pay Now Illinois also says the stop gap budget has had the effect of denying a legal remedy for nonpayment in the only venue where the service providers can bring a contractual claim - the Illinois Court of Claims.

According to a press release issued by Pay Now Illinois, this is a second suit filed against officials seeking payment on overdue bills. The first suit filed in May 2016, seeking an injunction and full payments of unpaid services dating back to July 1, 2015, was dismissed by a Cook County judge. The judge agreed that the case presented important constitutional issues and urged Pay Now Illinois to appeal, the release states.

The release also notes that more than 40 percent of the plaintiffs are using or have fully expended their lines of credit, and more than 32 percent are struggling with liquidity issues.

Approximately 76 percent of the plaintiffs have already taken actions to reduce staffing expenditures, while nearly 60 percent of the plaintiffs have reduced services, it says.

"We are suing to get paid, but also to protect the integrity of contracts in the State of Illinois,” Durbin said. “Right now, nobody doing business with the State of Illinois can be certain of getting said. And that is no way to run a business. If the State can get away with not paying our contracts, does any contract holder have security that the State’s word is good? Will they believe that the State of Illinois has integrity?”

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Illinois Governor Bruce Rauner