Noting the contracts they signed made their payments contingent on the availability of legally appropriated state funds, an Illinois appellate court has found a coalition of social service providers have no legal or constitutional leg to stand on to demand the state pay them without first securing the proper appropriations from the state’s legislature and governor.
On June 15, a three-justice panel of the Illinois First District Appellate Court rejected a lawsuit brought by Pay Now Illinois, a coalition of dozens of social service agencies from throughout the state.
The group had sued more than a year ago in Cook County Circuit Court, asserting the state – and Republican Gov. Bruce Rauner, particularly – had violated the law in refusing to enact state appropriations sufficient to cover the invoices the social services providers had submitted to the state under the terms of their contract.
Specifically, Pay Now had drawn attention to Rauner’s two vetoes of state appropriations the social service providers said included the funds needed to pay them and help them to avoid staff layoffs, service reductions or even outright closure.
Amid a continued impasse between the Democratically-controlled General Assembly and Rauner, the state has since failed to pass budgets in each of the last two years, providing only partial payments or no payments to the social service agencies within the Pay Now group.
In part, Pay Now had asserted the state’s actions, if committed by a private business, would have been considered fraud and would have been subject to penalty.
In this case, Pay Now had asked the courts to step in and order the Illinois Comptroller’s Office to pay them what they believed they were owed under the contracts they had secured through state agencies.
A Cook County judge, however, dismissed their complaint, saying Pay Now would be hard-pressed to prove why their contract payment demands should be allowed to circumvent the state’s sovereign powers, designed to keep elected state lawmakers in control of the state’s funds.
Pay Now appealed. But the appellate justices similarly sided with the state.
The opinion was authored by Justice Eileen O'Neill Burke, with justices Margaret McBride and Nathaniel R. Howse Jr. concurring.
“… Plaintiffs here cannot point to a specific constitutional or statutory provision that either specifically prohibits defendants’ actions or that specifically requires an appropriation for plaintiffs’ benefit and would compel payment despite the governor’s veto,” the justices wrote. “There is no statutory mandate. “
Further, the justices noted the law does not allow the comptroller’s office to issue any payments without a specific appropriation first being issued by the General Assembly, and signed into law by the governor.
And the justices repeatedly pointed to language included in the state contracts the social service agencies signed, which made payment for their services subject to availability of state funds issued under appropriating legislation.
So, justices said, the social service providers claims in this case fall into much the same category as payment demands earlier made by state workers, who contended their collective bargaining agreements also required the state to pay them, even without specific appropriations.
“The supreme court’s decision in State v. AFSCME controls the present case and dictates a similar result,” the justices wrote. “Plaintiffs here seek payment for services provided pursuant to their contracts with the State, despite lack of enacted appropriations, where the contracts were expressly contingent on appropriations.
Plaintiffs do not contend that they were unaware of such provisions. Consistent with the supreme court’s holding in State v. AFSCME, these contractual obligations are subject to the constitutional appropriations power and cannot be satisfied without proper appropriations.”
The justices also rejected Pay Now’s assertions the state’s failure to pass a budget amounts to an illegal action by the state to renege on a contract, again citing the clause subjecting all contract payments to state funding availability.
Pay Now was represented in the action by attorneys with the firm of Despres, Schwartz & Geoghegan, of Chicago.