ILLINOIS OFFICE OF COMPTROLLER May 12, 2021 SUSANA A. MENDOZA ‘COMPTROLLER Honorable Janet Yellen Secretary of the Treasury 1500 Pennsylvania Ave. NW Washington, DC 20220 Re: Interim Final Rule ~ Question 17 Response Dear Secretary Yellen Thank you for your recent release of the Interim Final Rule providing guidance on the authorized uses of the Fiscal Recovery Funds provided under the American Rescue Plan Act. As offered in the Interim Final Rule, comments are welcomed in response to specific questions presented in the Rule. As the Chief Fiscal Officer for the State of Illinois, this letter is my response to Question 17. itis my understanding the Interim Final Rule, as worded, would not allow the State of Illinois to use its federal funds for debt payments directly related to some $3.8 billion in short-term borrowing necessary for medical payments to the Illinois healthcare industry at crucial points during the 2020 pandemic. This short-term borrowing by the State of Illinois in 2020 includes: ‘* April 2020 - $200 million from other state funds allowing the state to purchase urgently needed PPE supplies and equipment; ‘* June 2020 - $1.2 billion in Municipal Liquidity Facility (MLF) funds from the Federal Reserve allowing payment to Illinois Medicaid providers since the state was experiencing a $3.1 billion revenue shortfall in the two months prior; ‘© November 2020 - $400 million from other state funds for Illinois Medicaid providers as a cash-flow bridge to the larger loan in December; and © December 2020 - $2 billion in MLF funds from the Federal Reserve for Medicaid and other medical providers, This borrowing was essential for the continued performance of government services during the ‘most fiscally challenging times for the state’s cash flow during the pandemic, all directly related to the COVID-19 crisis. It was critical to get state payments out during these periods, as our Illinois healthcare industry was fighting back the adverse impact of COVID-19. 100 West Randolph Street, Suite 15-500 201 State Capitol 325 West Adams Street Chicago, Ilinois 60607-3252 Springfield, linois 62706-0001 ‘Springfield, linois 62704-1871 (312)814.2481 (217)782-6000 (00) 877-8078 ~<--Cont. Honorable Janet Yellen Letter Illinois could not wait for additional federal relief funds to help mitigate the state’s response, and without this short-term borrowing, the state's recovery would have been imperiled. Illinois is the only state that utilized short-term borrowing in order to provide essential government services during the pandemic, allowed under prior federal Covid-19 relief programs. These debts would not have been incurred except as a response to the Covid-19 pandemic. We want to promptly repay federal taxpayers for the crucial help they provided us during the pandemic. This is entirely consistent with the spirit of the American Rescue Plan passed by Congress and signed by President Biden. My specific request is for the Department of the Treasury to clarify this Rule to accommodate this unique circumstance; allowing Fiscal Recovery Funds to be used to directly repay Covid-19-necessitated short-term borrowing. The Covid-19 pandemic continues while the Governor and the legislature work to balance Illinois’ budget for fiscal year 2022 and beyond. The Department of the Treasury's timely approval of this request is critical for Illinois’ path toward fiscal recovery. Thank you for considering this important clarification. ae tae, A sae Illinois State Comptroller cc. Honorable Richard J. Durbin Honorable Tammy Duckworth Honorable Raja Krishnamoorthi Honorable Governor!.B, Pritzker Honorable President Don Harmon Honorable Leader Dan McConchie Honorable Speaker Emanuel Chris Welch Honorable Leader Jim Durkin Ms. Melissa Moye, Director of the Office of State and Local Finance at the U.S. Dept. of the Treasury