IN THE NEWS

EXECUTIVE SUMMARY

In Fiscal Year 2013, the State of Illinois paid $2,563,825,011 in combined State and Federal funds to provide childcare for low-income working parents and to give in-home care to seniors and people with disabilities.

The human impacts of these caregiving investments are difficult to overstate. Safe, affordable childcare makes it possible for low-income parents – especially mothers – to get jobs and stay in the workforce. In-home care for the elderly and disabled makes it possible for them to live independently in their homes and remain connected to their communities. These are the kinds of fundamental human services that state governments are established to provide, and that we as a statewide community have set out as our shared priorities for State spending in Illinois.

But beyond the benefits and respite that caregiver programs provide to clients and their families, these programs are drivers of economic development ¬– creating jobs for caregivers, recapturing Federal funds, supporting jobs throughout the community, and generating vital economic activity throughout Illinois.
As we confront the possibility of drastic cuts in the Illinois State budget for human services, it is important to understand the very real – and very positive – economic impacts of these programs, which extend far beyond their direct beneficiaries. The State of Illinois’ investments in caregiving drive real, measurable, positive impacts on our overall economy:

• The State’s investment in these caregiver programs directly created a total of 144,062 caregiver jobs in Illinois and indirectly created an additional 66,591 jobs in communities across the state.
• The State’s caregiver programs brought a total of $1,141,781,585 in Federal dollars back home to Illinois taxpayers in FY2013.
• In-home care programs for seniors and people with disabilities save up to $1 billion each year.
• By investing $1,422,006,814 in General Revenue Funds in caregiver programs in FY2013, the State of Illinois generated a grand total of $5,311,728,317 in economic activity in communities throughout Illinois.
• Every dollar of GRF spending invested in caregiver programs generated an average of $3.74 in economic activity.

At a time when deep cuts in the State budget are being touted as painful but necessary to spur economic development, it is critically important to consider the very real and positive economic impacts of these programs. Any reductions in these programs will have a direct, negative impact on communities and on Illinois taxpayers ¬– triggering job losses, diminishing Federal reimbursements and erasing important economic activity in communities statewide.

 

INTRODUCTION

Too often, the challenge of developing a prudent and responsible State budget is framed as a struggle to balance the humanitarian desire to provide adequate services to those in need against the pragmatic goal of promoting economic development that will benefit all. But as economic development expert Kenneth E. Poole noted in 1999, “economic development is about more than just jobs and income; it seeks to improve productivity of local resources, encourage business profitability and promote community sustainability and quality of life.”

As we assess Illinois’ investments in caregiver programs for children, seniors, and people with disabilities, it is clear that these programs reflect a national consensus on the importance of these programs in helping individuals and families to become more productive and self-sufficient. In addition, by providing and/or subsidizing high-quality care for young children, people with disabilities and the elderly, the State of Illinois’ investments in these programs have created a multi-pronged tool for economic development in communities where it is most needed.

CHILD CARE ASSISTANCE PROGRAM

Illinois’ Child Care Assistance Program (CCAP) provides low-income, working families with access to quality, affordable child care that makes it possible for parents to hold jobs or go to school. Families are required to pay part of the cost on a sliding scale that reflects their income, family size and the number of children in care.

In Fiscal Year 2013, the State of Illinois invested a total of $905,836,611 in the Child Care Assistance Program. CCAP served a total of 259,493 children from 149,699 families between July 1, 2012 and June 30, 2013. The monthly average for FY2013 was 163,250 children and 87,700 families. (It should be noted that the average number of children served has dropped by more than 30,000 since FY2002.)

The great majority of CCAP caregivers are license-exempt; of 77,000 workers providing direct child care in FY2013, 52,374 were friends, family or neighbors providing care in their own homes or the child’s home. Of the families who accessed childcare through CCAP, 99.4% paid co-payments, which averaged 4.6% of family income.

Leveraging Federal Funds
Illinois is a “donor” state, which means that Illinois taxpayers receive only about 92 cents in Federal spending for every dollar we send to Washington. State programs that drive Federal matching funds play a huge role in bringing taxpayer dollars back home to Illinois.

The State of Illinois’ investment in CCAP included $663,400,000 in Federal funds. That means that, for every dollar spent on CCAP, 73 cents were provided by Federal funds that are being returned to Illinois taxpayers.

Economic Impacts
Low-wage workers who provide child care have tremendous impacts on the local and state economy. By its nature, child care is a localized service, and child care funds tend to flow to community-based providers who, in turn, spend those dollars locally. Those dollars move quickly through the local economy. As a result, child care spending has an outsized impact on local economic activity and job creation.

As previously noted, CCAP directly created 77,000 jobs in Illinois in FY13. Research studies of child care-related job creation suggest that, for every 100 new jobs created in Illinois child care, another 56 are created in other sectors. (Importantly, this number does not include parents who are able to gain and keep jobs because they can access reliable, affordable child care.) Combining 77,000 direct jobs created with 43,120 jobs indirectly created, CCAP created 120,120 jobs in Illinois in FY2013.

Researchers at Cornell University, working with industry-standard data sets from IMPLAN, have developed state-specific multipliers that reflect the economic activity generated by child care spending. That research indicates that every dollar spent on child care in Illinois generates a total of $2.13 in economic activity in the state. So Illinois’ total CCAP spending of $905,836,611 generated an additional $1,023,595,370 throughout the state economy. That comes to a grand total of $1,929,431,981.

Given that the State share of CCAP spending from the General Revenue Fund totaled $242,400,000, that means that every dollar of GRF that was spent on CCAP generated a total of $7.96 in economic activity in Illinois.

SENIOR CARE

In 2013, the U.S. Census reported 1.74 million people over the age of 65 living in Illinois, representing 13.5 percent of the total population. The Illinois Department on Aging was created to help Illinois’ older adults live independently in their own homes and communities.

The Department’s central initiative is the Community Care Program, which provides services to seniors whose health problems put them at risk for nursing facility placement. The program has no income eligibility requirement, but participants must contribute toward the cost of their care based on their income levels.

In FY2013, the State’s Community Care Program provided in-home care to seniors who need help with the “essential activities of daily living,” such as getting up, getting dressed, preparing meals, doing basic housekeeping, and going to appointments. The program assisted an average of 76,000 seniors each month, and a total of 82,791 seniors over the course of the year.

The State of Illinois spent $977,324,400 on the Community Care program in FY2013. The program directly created 35,400 home caregiver jobs.

Leveraging Federal Funds
The State of Illinois’ investment in the Community Care Program included $241,581,585
In Federal funds, primarily through the Federal Medicaid program. That means that, for every dollar spent on CCP, almost 25 cents were provided by Federal funds that are being returned to Illinois taxpayers.

Cost Savings
Because Community Care is focused on helping seniors to stay in their homes and avoid costlier nursing facility care, this program results in substantial cost savings for Illinois taxpayers. Generally speaking, caregivers can provide in-home services for three people for the cost of caring for one person in a nursing facility. Based on the program’s monthly average cost of care per client ($854), the Community Care Program is estimated to provide average cost savings of $20,496 per consumer per year compared with nursing home care.

It is difficult to precisely calculate the Community Care Program’s aggregate cost savings to Illinois taxpayers, given the varying costs of nursing facility care and the individual needs of the elderly people served by the program. However, given that the median cost of nursing home care in Illinois was $170 a day in 2013, it is clear that the cost savings must be measured in the hundreds of millions.

One retrospective study of Community Care from its inception in 1981 through 2008 found that, while the number of people aged 75 and over increased by 54% during that 28-year period, the actual number of Illinois residents in nursing homes actually declined by 8% That study estimated that, in 2008 alone, the Community Care Program reduced State spending on nursing facilities by $539 million. After subtracting costs for that year’s Community Care Program, the study conservatively estimated that year’s net savings at $260 million.

One more recent estimate made along these lines suggests that Illinois saves more than $600 million a year in Medicaid costs via the home-care model instead of more costly public institutionalization.” After subtracting the Federal Medicaid match, that translates into more than $300 million in GRF savings.

Economic Impacts
IMPLAN data indicates that every dollar spent on home care in Illinois generates$2.04 in economic activity in the state. Using that multiplier, the State’s FY2013 total$977,324,400 investment in Community Care generated an additional $1,016,417,376 in economic activity, for a total of $1,993,741,776.

In addition, data indicate that 35 jobs are indirectly created for every 100 home care jobs directly created by State investment. So the direct creation of 35,400 caregiver jobs through the Community Care Program indirectly generated another 12,390 jobs in Illinois, for a total of 47,790 jobs created.

The State share of spending on the Community Care from the General Revenue Fund totaled $735,742,814. That means that every dollar of GRF that was spent on CCP generated a total of $2.71 in economic activity in Illinois.

HOME CARE FOR PEOPLE WITH DISABILITIES

The State of Illinois provides home care for people under age 60 with physical and developmental disabilities through the Rehabilitation Home Service Program (HSP) and Home-Based Support Services (HBSS). These home care programs are central to the Department of Human Services’ mission of meeting the basic living needs of people with disabilities while providing services to help those individuals achieve maximum independence and self-sufficiency.

In Fiscal Year 2013, the State of Illinois invested $613,400,000 in the Home Services Program, providing home care services to 36,617 people with physical disabilities. Additionally, the State spent $67,264,000 to provide home care to 5,360 Illinois residents with developmental disabilities.

Leveraging Federal Funds
The State’s FY13 investment in the HSP program included $236,800,000 million in Federal funds through the Medicaid program and other Federal funds and $376,600,000 million in GRF. That means that, for every dollar spent on providing home care to people with disabilities in Illinois, almost 39 cents were provided by Federal funds that are being returned to Illinois taxpayers.

Cost Savings
The people served by these programs are affected by a wide range of disabilities that differ greatly in both cause and severity. The diversity of the population served makes it difficult to calculate the specific amount that these programs save Illinois taxpayers by making it possible for people with disabilities to remain in their homes.

However, the average cost per client for HSP services was about $18,800 in 2013, while the State’s average annual cost for nursing facility care was $38,700. That translates into estimated savings per person of about $19,900. Multiplied by the number of people served by the HSP, the total savings could reach up to $728,678,300.

Economic Impacts
The HSP program directly created 26,787 caregiver jobs and indirectly created another 9,375 jobs in Illinois in Fiscal Year 2013, for a total of 36,162. Using the same multiplier, the 4,875 directly created by HBSS yield an additional 1,706 jobs indirectly created, for a total of 6,581.

Using the Illinois home care multiplier of 2.04, the State’s $680,664,000 investment in home care for people with disabilities generates another $707,890,560 in additional economic activity, for a total of $1,388,554,560. GRF spending on these programs totaled $443,864,000. So every dollar in GRF invested in care for people with disabilities in Illinois generates a total of nearly $3.13.

CONCLUSION

In FY2013, the State of Illinois invested a total of $2,563,825,011 in child care services and home care for seniors and people with disabilities. These services represent an important investment in the dignity and self-sufficiency of individuals and families throughout Illinois.

But Illinois taxpayers should know that their investment in these State programs also has a quantifiable and outsized impact on economic activity across our state – creating thousands of jobs, attracting more than $1 billion in Federal dollars returned to our state, saving hundreds of millions of dollars by avoiding costly nursing facility care and generating billions of dollars in economic activity that is felt in communities throughout Illinois.

 

 

1. Poole, K. E. (1999). Evaluating business development incentives. Washington, DC: National Association of State Development Agencies.
2. Illinois Department of Human Services Child Care Funding History.
3. Illinois Annual Child Care Report FY2013, https://www.dhs.state.il.us/page.aspx?item=70482.
4. “The Erosion of Early ChildhoodInvestments in Illinois,” Larry Joseph and David Lloyd, Special Report, Fiscal Policy Center at Voices for Illinois Children, February 2014, http://www.voices4kids.org/wp-content/uploads/2014/02/Erosion-of-Early-Childhood-in-Illinois-Report-FINAL.pdf, p. 4.
5. Illinois Annual Child Care Report.
6. https://www.dhs.state.il.us/page.aspx?item=72057#a_toc2
7. http://www.actforchildren.org/site/DocServer/CC_Funding_Policy_Brief_1.2.13.pdf?docID=3681.
8. This estimate is based on staffing patterns at Illinois child care centers.
9. http://s3.amazonaws.com/mildredwarner.org/attachments/000/000/045/original/96-62465335.pdf
10. http://quickfacts.census.gov/qfd/states/17000.html
11. https://www.illinois.gov/aging/CommunityServices/Pages/ccp.aspx
12. http://www2.illinois.gov/gov/budget/Documents/Budget%20Book/FY%202015%20Budget%20Book/FY%202015%20Illinois%20Operating%20Budget%20Book.pdf
13. http://www.aarp.org/home-family/caregiving/info-2014/family-caregivers-providing-complex-chronic-care-cognitive-behavioral-AARP-ppi-health.html
14. http://www.payingforseniorcare.com/longtermcare/paying-for-nursing-homes.html
15. https://www2.illinois.gov/gov/budget/Documents/Budgeting%20for%20Results/Public%20Hearing%20Testimony/Illinois%20Association%20of%20Community%20Care%20Program%20Homecare%20Providers.pdf
16. The study’s estimates of savings are conservative, because it includes the costs of CCP’s expanded client base but does not count savings for diverting those additional seniors from longterm care facilities.
17. http://chicago.suntimes.com/uncategorized/7/71/185446/taking-care-of-our-caretakers; It should be noted that this estimate roughly aligns with the estimate of 2008 savings in the HCBS study.
18. IMPLAN Group, LLC, IMPLAN System (software and 2013 data). Huntersville, NC.