Late payments complicate business for prisons

Fifth in a series

CARBONDALE — The Illinois Department of Corrections insists its failure to pay its bills on time isn't creating any safety concerns inside state prisons. But documents show one department executive warned of “a big problem looming” if a food supplier halted deliveries.

“I am fearful at some locations we won't be able to meet the food needs of the population. To an inmate, food is the most important part of the day so this obviously would create huge security concerns,” Bryan Gleckler, the department's chief financial officer, wrote in a June letter that was obtained through the Freedom of Information Act.

The state soon coughed up part of the $2.5 million it owed the supplier, MJ Kellner, and Gleckler now plays down the safety concerns. He said the department tries to keep enough food on hand to keep providing meals even if deliveries are cut off.

“As long as I've been here, we haven't run out of food,” Gleckler said in an interview. “For the most part right now, we're having no issues that I'm aware of with food suppliers.”

Nevertheless, the prisons system has not escaped problems stemming from the state's chronically late payment of its bills, and in some cases has had to rely on long-standing relationships with vendors to weather the delays.

John Maki, executive director of the John Howard Association, said the prison watchdog group has seen problems with vendors providing clothing, toothpaste and pesticides. Food is particularly important, he said, but it's just one of several items where interruptions could dial up tensions behind bars.

“That's just another thing to stress out an already overcrowded and stressed population,” Maki said.

As of Sept. 8, the state comptroller had $39.3 million worth of bills to the Corrections Department that were at least a month old. Some dated back to November of last year.

That is just one slice of what the state was overdue in paying. As of early last month, the state owed on 166,000 unpaid bills worth $5 billion, with nearly half of that amount more than a month overdue, according to an Associated Press analysis of state documents. The late payments have become a regular part of the state's budget management, creating a cycle of hardship for residents and businesses helping the state carry out some of its most important tasks.

Businesses that supply Illinois prisons report major frustrations with the slow payment.

Jim Panozzo of Kankakee said his company, John Panozzo Produce Co., used to supply food to five Illinois prisons but quit for a while when the state fell behind by nearly $200,000.

“I couldn't afford it anymore,” Panozzo said. “It got to the point where I had to stop bidding on them and stopped delivering.”

Several of Panozzo's competitors also stopped bidding because of a lack of payment, he said. And although the state has started paying some of its back bills, and Panozzo has resumed delivery on some prison contracts, he is still owed nearly $15,000.

Carol Behymer, vice president of Wilson Paper Co. in Galesburg, said a Corrections Department purchasing agent usually calls before ordering more janitorial supplies to see if the company will provide them.

“It's embarrassing when he has to call and ask, `Is it OK for us to buy, or are we past due?”' Behymer said.

Wilson Paper provides supplies for correctional centers in Galesburg, Canton and East Moline. Sometimes the backlog can top $10,000, she said. The company charges the state a bit more for supplies to make up for the long payment delays, she said.

“You're being a bank for 60 to 90 days is what it amounts to,” Behymer said. But there are limits to price increases “because you know you're bidding against other people.”

Corrections spokeswoman Sharyn Elman acknowledged that in June MJ Kellner discussed stopping shipments of food to prisons, triggering the warning letter.

The Springfield-based food supplier says the state has been a long-term customer and the company wants to keep it that way if possible. “It's been a good partnership,” said Dave Rikas, the chief operating officer.

Rikas said the company has to get creative when the state falls behind. It diversifies by doing business with corrections departments in other states and with other kinds of Illinois institutions, including hospitals, nursing homes and day cares.

But MJ Kellner can't wait forever for the state to pay its bills, he said. Eventually, the company might have to consider dropping the Corrections Department.

“That's discouraging, and we have to be honest with ourselves that that is a conversation that we have to have,” Rikas said. “But I hope it's not a bridge that we ever have to cross.”

The Corrections Department knows what it's like to wait for much-needed money.

More than $1.1 million in payments to the department were at least a month overdue as of Sept. 8. Almost all of that was owed by the Illinois Community College Board.

The missing money was for adult education programs, said Ellen Andres, chief financial officer for the Community College Board. Andres said the federal government requires the board spend a certain amount of adult education money in prisons. It amounted to $1.5 million over the last two years, most of which is still outstanding, she said.

So far, the Corrections Department has not been forced to trim back education programming, Gleckler said. A combination of different funds pay for the education programs, so the classes can continue until the Community College Board pays what it owes, he said.

“Until that point we'll just use our other funding sources to maintain our programs,” Gleckler said.