Operational spending provides the foundation for state government to provide services to the residents of Illinois. Whether it is to pay a state employee’s salary, buy paper and postage, or keep a computer running with a database of automobile titles and drivers’ licenses, dollars spent for operational costs are a basic component of state government.

As further detailed below, the largest part of operations spending is for personal services, and the Early Retirement Initiative (ERI) offered in 2002 resulted in an immediate reduction in state employees and concomitant reductions in spending for personal services, commodities, equipment, telecommunications and so forth. Total personal services spending was $99.6 million lower in fiscal year 2007 than it was in fiscal year 2002. Despite this reduction, a component of personal services, regular positions spending, increased by $33.9 million. Notable in this increase for regular positions spending was a shift away from the General Funds to other appropriated funds, especially the Road Fund.

Expenditures for group insurance increased as costs of medical coverage continue to move up, as did spending for retirement to meet the requirements of Illinois’ 1995 pension funding plan. Also, spending for contractual services, lump sums and automotive equipment increased to levels higher than in fiscal year 2002. Even areas where operations spending was lower in fiscal year 2007 than in fiscal year 2002, such as telecommunications, commodities and equipment, have had increases since fiscal year 2004, the first full year after the ERI.

Similar to the case with spending for regular positions, there was a shift away from the General Funds in supporting total operations spending. In fiscal year 2002, the General Funds accounted for 57.2% of total state operations spending, but by fiscal year 2007 that percentage had dropped to 51.1%.

The following is an analysis of major categories of operational spending. Only expenditures from appropriated accounts were analyzed, and higher education expenditures were excluded.

 view detail: Fiscal focus