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Nonprofit groups hang by thread waiting for state funds

Nonprofit groups hang by thread waiting for state funds

By John Keilman / Chicago Tribune

February 19, 2010

David Terrazino had tried everything he could think of to keep Youth Crossroads afloat, but with payday less than 24 hours away, all he could do was hope for a miracle — that the state of Illinois would actually pay its bills.

The Berwyn organization, which counsels troubled young people, gets about half of its $700,000 budget from the state. But the state hadn’t paid a dime in months, forcing the group to delay paying its own bills and exhaust its line of credit at a local bank.

None of that had closed the gap, and Terrazino, Youth Crossroads’ executive director, had reached the end of the line. Without a quick infusion of state cash, he and his 15 employees were not going to get paid.

“Over the last year, it’s just been a gut-wrenching nightmare,” he said. “It’s killing us.”

The state has $3.8 billion of unpaid bills, and much of that money is owed to the nonprofit groups that care for some of Illinois’ most vulnerable residents: children, the poor, the mentally ill and the elderly.

By law, the government is supposed to make good in 60 days or pay a small interest penalty. But that measure — which cost the state $31.2 million last year — hasn’t caused payments to come any faster, some nonprofits say.

“They could jack that (interest) rate up — the state still doesn’t have the money,” said Gina Guillemette of Chicago’s Heartland Alliance, an anti-poverty group that was owed more than $4 million.

That has caused organizations to search high and low for other sources of money. They’ve borrowed against their property, if they own any, and tapped the credit lines they have with their banks. Some have also have been slow to pay their own bills to landlords, utility companies and other vendors.

Nonprofits often plead with the state agencies with whom they have contracts, but eventually all roads lead to the office of Illinois Comptroller Dan Hynes — keeper of the government checkbook.

Spokeswoman Carol Knowles said some of the state’s bills, such as debt payments and checks for state workers, get paid first. Without enough funds to pay the rest, the office has resorted to a triage system, trying to decide which nonprofit needs money immediately and which can wait.

“We try to deal with emergency situations, but there are so many of them,” she said. “We have to weigh the relative nature of all the emergencies in order to keep things going. It’s a very difficult thing to do.”

Many groups say they’ve asked elected officials to exert pressure. Knowles said politics do not affect the comptroller’s decisions, and while some nonprofit officials believe otherwise, they say such influence is waning in the face of the state’s giant debt.

“I just talked to a number of legislators, and what I’m hearing is that we shouldn’t expect anything to happen any time soon — in fact, it’s going to get worse,” said Steven McCullough of Bethel New Life, a West Side social service agency that is owed $2.1 million.

Youth Crossroads has been scrambling for state money for the last year. Terrazino said he gradually learned there was no use appealing to the Department of Human Services, the agency with which his group has a contract. He needed to go straight to the comptroller’s office, which actually issues the checks.

After weeks of phone calls, he faxed a “hardship letter” to the comptroller last month, one day before he was supposed to pay his employees. He asked for $48,400 — money the state owed for Youth Crossroads’ services from July through October.

“Without your immediate assistance to expedite payment of some of these funds, Youth Crossroads Inc. will be forced to close our doors and discontinue services to high-risk youth and their families as contracted,” Terrazino wrote.

He wasn’t expecting much. But the next morning, his bookkeeper called him to a computer that displayed the group’s bank account balance.

The cash, for reasons Terrazino still doesn’t understand, had arrived. Payday was saved.

With the state money finally in the bank, Youth Crossroads should be in good shape until April. But Terrazino fully expects to go through this ordeal again, and the next time he might not be so lucky.

“It’ll be a roll of the dice,” he said. “If and when [a hardship letter] doesn’t work, I’ll have to discover another method to plead our case.”

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