EFFINGHAM — Illinois State Treasurer Michael Frerichs swung through Effingham on a downstate visit Wednesday, teaching local officials about programs offered through his office.
Frerichs spoke with Effingham leaders about economic development, among other things. Other stops this week included Mattoon, Carbondale and Marion.
He said each stop on the tour had a different purpose, including discussing economic development, programs for the disabled, retirement savings programs, and meeting with bankers.
When he was first elected in 2014, Frerichs said the State of Illinois had some challenges. He said over time the lack of a state budget and lack of effective management resulted in a “big backlog of bills” and also deteriorated confidence in the state in general.
“As someone who grew up in this state and lives here and has lots of family here, and loves it, I feel it is my job to help encourage economic development in the state. In part, we also do that by returning trust by showing we are good stewards, such as in our college savings programs.”
He said the state still has plenty of financial recovering to do, but at the end of a long tunnel, he sees a flicker of hope. The financial problems took time to create and will take time to fix, he said.
“Since I came into office, we have increased our interest income six times – from $49 million to over $300 million this last year,” said Frerichs. “That doesn’t solve our budget problem, but it helps.”
With every dollar the state can bring in with interest, is a dollar that won’t have to come from raising taxes, he said.
“We met with officials in Effingham because we have programs that can help units of government earn a higher interest rate,” said Frerichs. “We also try to partner on economic development issues and Effingham has a strong track record in economic development. They are good partners.”
He took a couple minutes to reflect on the proposal being promoted to make Chicago a state of its own.
“Some people are advocating this because they think it is good politics,” said Frerichs. “There have been studies conducted that show downstate gets back more tax dollars than it sends to Springfield.”
Frerichs said the state spends money on state government downstate on such entities as prisons and higher education institutions, both mostly downstate. And when it comes to money spent on infrastructure per capita, there are more miles of roads being fixed downstate than upstate.
“Downstate gets more money from Springfield than it sends,” said Frerichs. “I’m a downstate Democrat and (former Illinois Governor) Jim Edgar, a downstate Republican, said just two weeks ago this isn’t good for downstate.”
Frerichs said financially it doesn’t make sense for the state, adding there might be some social issues that downstate people disagree with and that’s created this desire to break away. But, that’s a different issue than financially speaking, he said.
Frerichs also touted a few of the state’s programs that will improve people’s lives if utilized.
Illinois ABLE for the disabled; Secure Choice for older residents; and Bright Start and Bright Directions, two state college funds, are available to help people prepare for their future.
A new program, Illinois ABLE, is for people with disabilities, in an effort to help them save for their futures, while still preserving their Supplemental Security Income and Medicaid benefits. This involves a 16-state consortium.
“We have a creative approach by working together with other states,” said Frerichs. “We got this crazy idea: Why don’t we work together? It is like a college savings program. You put money in an account and can invest it, and the growth is tax free if you use it for disability expense.”
Frerichs said ABLE is a federal program that allows the person to have up to $100,000, if it is in an ABLE account, without losing SSI and Medicaid benefits. So, it allows disabled people to hold jobs. The first accounts were opened in 2017 in Illinois.
Secure Choice is a program offered to Illinois businesses with at least 25 employees that has been in business for two or more years, and that doesn’t have a qualified savings plan otherwise.
“Secure Choice will help 1.2 million save for their retirement,” said Frerichs.
A person who has a workplace saving option – pension or 401K – is 15 times more likely to save for their retirement, he said.
“If people don’t save for their retirement, they are more likely to in retirement rely just on state or federal benefits and that costs all of us. We have an incentive to make sure people are saving their own money and preparing for their retirement.”
Two college savings funds are available to help families prepare for one of the largest investments.
According to the Center for Social Development, children who have a college savings account are about three times more likely to attend college. Bright Start, is a direct plan that individuals can sign up for and manage, while Bright Directions, is one that can be accessed through a financial adviser. Contributions can be withdrawn tax free for qualified higher education expenses.
As the state treasurer, Frerichs said it is part of his job to teach others how to handle personal finances.
“We’re tasked with financial literacy and we try to work with schools to teach kids about how to handle money,” said Frerichs. “(Students) not knowing is bad for them and bad for our state.”
Originally from Gifford, but now residing in Champaign, Frerichs was first elected to the state treasurer’s office in 2014 and again in 2018. He is also a former Champaign County Board member, where he was vice chairman; former state senator and the former Champaign County auditor, which is an elected position.