CHICAGO, March 8 (Reuters) - Illinois warned that it will run out of money next week to pay for a program that allows 80,000 elderly and disabled people to live at home, the latest illustration of the state's fiscal crisis.
The Illinois agency that oversees home healthcare providers said in a letter on Thursday that the money was "projected to be exhausted by March 15," 3-1/2 months before the fiscal year ends on June 30.
The shortfall will force some smaller nonprofit home healthcare agencies to close, trigger layoffs at others and leave thousands of elderly people scrambling for alternatives to in-home care, said Bob Thieman, executive director of the Illinois Association of Community Care Program Healthcare Providers.
"The state's going to pay for this one way or another. If these seniors cannot be picked up by other in-home providers, they're going to wind up in nursing homes, which will cost a lot more," he said.
Illinois is mired in a financial crisis caused by skyrocketing costs of public-sector pensions, which Governor Pat Quinn this week said are draining money from other social services.
The state legislature has failed to approve reforms to the pensions that will reduce the cost, which has prompted the state to delay paying its bills to balance the budget.
State officials say the situation is improving, but Thieman said it is getting worse for home healthcare providers.
They already wait as long as six months to get paid by the state. Illinois has advised them to continue submitting invoices but says they will not be compensated immediately.
The department blamed the action on overdue bills from last year, which it said ate up a quarter of the $687 million budgeted for the current year to help elderly people remain independent by paying for in-home care.
It would be the second time in two years that the money ran out before the end of the fiscal year, Thieman said. This year's warning came much earlier than last year and was caused by a much larger backlog of bills.
"This one is critical," Thieman said, predicting hardship for providers.
The program serves about 80,000 people each month, according to the Department on Aging. The 40 providers - ranging from nonprofits such as Catholic Charities to for-profit companies such as Addus HealthCare - employ about 25,000 home care assistants, according to Thieman.
No other U.S. state has institutionalized late payment of bills like Illinois, according to the National Council of State Legislatures.
The state's backlog of unpaid bills stood at $8.7 billion at the end of fiscal 2012, or about a quarter of the state's annual revenues. Financial watchdogs say it could soar to nearly $22 billion in five years unless the state takes action to curb its public pension costs.
The state currently has $96.8 billion in unfunded pension liabilities and has the lowest credit rating among the states rated by Moody's and S&P.
In January Illinois Comptroller Judy Baar Topinka asked lawmakers to either approve spending more money or require state agencies with surplus funds to return them for others to use.
The legislature approved some additional funding but it did not include money for the elderly and people with disabilities, said Topinka's spokesman, Brad Hahn.