Illinois' 1848 Constitution gave voters in each county the right to organize townships for the “management of the fiscal concerns of the county.” The framers' decision for our then-30-year-old, largely agrarian state was a no-brainer: As the most local of local governments, townships would be directly accountable to residents of unincorporated rural areas whose interests might not be considered in distant county seats, let alone the state or federal capital.
Despite radical shifts in demographics and advances in technology, today's township supervisors defend hyperlocal government, arguing that public services always should be administered by elected officials closest to the people. Fiscal federalism, they argue, serves the state's residents democratically, efficiently and effectively.
But Illinois' townships, now numbering a staggering 1,431, aren't delivering on their promise to the 8 million people they serve and tax. Townships should be abolished, with their functions assumed by cities and counties that can get the job done better, cheaper and more fairly.
State law gives townships only three obligations: to assess property for tax purposes, to maintain roads in unincorporated areas and to provide general assistance to the poor.
Tax assessments often are made by untrained township assessors who set their own policies, make their own rules and treat taxpayers unequally and inequitably.
While townships maintain residential roads only in unincorporated areas, they tax all township property even if it's within an overlapping municipality, in which case the property owner ends up paying to maintain unincorporated roads along with his or her own city's or village's. And in providing aid to the needy, township supervisors arbitrarily can set their own eligibility criteria and benefit levels, doling out taxpayer money for food, rent and other assistance as they alone deem fair.
Just as troubling, townships often maintain bloated bureaucracies, favor patronage payrollers and hoard cash that rightfully should be rebated to taxpayers.
In August Gov. Pat Quinn signed into law two bills acknowledging that grass-roots democracy doesn't always serve the public interest. One lets certain local government units merge with others or shift their duties to a city or county and then go out of business. The other lets voters in adjacent fire protection districts merge them.
Now it's time to empower voters to get rid of unnecessary and wasteful townships.
Township governments were created by voters in countywide ballot referenda and can be abolished the same way. But state law requires that all the townships in a county be dissolved simultaneously or not at all. Let's urge the General Assembly to allow any and all of Illinois' townships to dissolve by referendum.
The world's first social impact bond, or SIB, was introduced in 2010 to fund innovative social programs that realistically might reduce recidivism by ex-offenders in Peterborough, England, and, with it, the public costs of housing and feeding repeat offenders. Prudently building on the strengths of that initiative, Illinois Gov. Pat Quinn is rolling out SIBs to help solve some of the state's most vexing social problems.
A SIB isn't a traditional bond where investors are guaranteed a fixed return but a contract among a government agency that agrees to pay for improved social outcomes, a private financing intermediary and private investors. SIBs shift the risk of experimenting with promising but untested intervention strategies from government to private capital markets, with public funds expended only after targeted social benefits have been achieved.
Peterborough's problem was daunting: Sixty percent of prisoners serving short-term sentences historically had gone on to re-offend within a year after their release. But policymakers were confident that a solution was within their reach. They attracted private investment to pay experienced social service agencies to provide intensive, multidisciplinary support to short-term prisoners, preparing them to re-enter society and succeed outside the penal system.
The government decided which goals would be supported, but exactly how those goals would be achieved was left to the private sector. It was the investors, through a bond-issuing organization, who ultimately endorsed the allocation of investment proceeds — how much would be invested in job training, drug rehabilitation and other interventions.
If the Peterborough plan eventually shrinks recidivism rates by 7.5 percent or more, the government will repay the investors' capital and share the taxpayers' savings with them, delivering up to a 13 percent return. If the target isn't hit, the investment will have failed and the government will owe the investors nothing.
Illinois' SIB effort was spearheaded by the state's Task Force on Social Innovation, Entrepreneurship and Enterprise — the governor's think tank on social issues, which I am privileged to chair — with support from Harvard University's John F. Kennedy School of Government, the Rockefeller Foundation and the Aurora-based Dunham Fund. A request for information issued by the Office of Management and Budget on May 13 yielded responses from service providers eager not only to reduce recidivism here but also to create jobs, revitalize communities, improve public health outcomes, curb youth violence, cut high school dropout rates and alleviate poverty.
Now the governor has issued a request for proposals intended to spur better outcomes for Illinois' most at-risk youth — by increasing placement stability and reducing re-arrests for youth in the state's Department of Children and Family Services, and by improving educational achievement and living-wage employment opportunities justice-involved youth most likely to re-offend upon returning to their communities.
Kudos to Mr. Quinn for bringing SIBs to Illinois. May they soon start delivering on their promise.- See more at: http://www.chicagobusiness.com/article/20131007/OPINION/131009850/a-new-kind-of-futures-contract-for-illinois#sthash.ThgxeiFt.dpuf
Marc J. Lane is a Chicago-based business and tax attorney and financial adviser.
Reprinted from Marc Lane's September 30, 2014 editorial which appeared in Crain's Chicago Business. Crain Communication Inc.'s permission is gratefully acknowledged. Copyright © 2014 by Crain’s Communications Inc.
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