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Administrative Order 2 (2003)


February 24, 2003

In the absence of a demonstrable economic recovery on the national and State level, State spending continues to outpace revenues across virtually all funds and agencies of State government. It is imperative that the State act immediately to control and reduce expenditures while continuing to maintain those essential State services upon which the people of Illinois rely. Effective immediately, all departments, agencies, boards and commissions under the jurisdiction of the Governor are required to implement procedures to eliminate unnecessary State spending as specified in this Order. All other agencies, boards, commissions, authorities, universities, and other state institutions are urged to adopt similar procedures. The procedures outlined in this Order shall apply to agency funds appropriated or otherwise available for expenditures for operations, administrative expenses, awards and grants, permanent improvements, highway funds, and waterway funds, regardless of funding source, to the extent not prohibited by State or federal law or regulations. In the event State legislation becomes effective specifying additional procedures to eliminate unnecessary spending, this Administrative Order shall continue to be effective to the maximum extent possible without conflict with such legislation.


The Governor directs agencies to make, on average, 10% reductions in administrative expenses for Fiscal Year 2004. Proportional reductions shall be made for Fiscal Year 2003 administrative expenditures no later than April 1, 2003. While certain agencies may ultimately be asked to make more or less than a 10% reduction, all agencies shall propose steps necessary to achieve a 10% reduction. Administrative expenses for each agency will be defined by the Bureau of the Budget.


The Governor shall establish reserves from the amounts available for expenditure by a State agency. These reserves may be established from amounts appropriated by the General Assembly, from other funds held by the State Treasurer not subject to appropriation, and from any other funds under the direction, custody, or control of the State agency.

In directing the establishment of the reserves, the Governor may from time to time designate the amount to be reserved from each line item or fund:

  1. For State agency expenses appropriated for operations, 8% of the item of appropriations and reappropriations for Fiscal Year 2003;
  2. For funds appropriated or otherwise available for awards and grants, 5% of the item of appropriations, reappropriations, and other available funds for Fiscal Year 2003, except that no reserves may be established (i) from kindergarten through 12th grade appropriations to local school districts, (ii) from health care agency programs, including the State Medicaid program, or (iii) from funds used for pubic protection;
  3. For all permanent improvements, highway funds, and waterway funds, 10% of the item of appropriations and reappropriations for Fiscal Year 2003.

Any periodic transfers or expenditures that are based upon amounts appropriated shall be proportionately reduced to accommodate the reserves established under this Order.

Before directing the establishment of reserves pursuant to this Order, the Governor will have notified the State agency of the amount or percentage of reserves to be established. The State agency shall propose to the Governor the allocation of reserves in the amounts specified by the Governor against specific appropriations, other funds held by the State Treasurer not subject to appropriation, or other funds under the direction, custody, or control of the State agency. After review of the State agency’s proposal by the Governor and the Bureau of the Budget, the State agency will be directed to establish the reserves, to reduce spending, or to release the funds.

Any amount directed by the Governor to be reserved may not be obligated, encumbered or expended unless the Governor, by written direction to the State agency, directs the release of that amount from the reserve.


In addition to directing the establishment of reserves, the Governor may direct a State agency to refrain from spending additional amounts from the agency’s budget until the Governor has conducted a review of the proposed expenditure and the expenditure has been approved. The Governor may identify expenditures subject to this review either by line item appropriation, fund, or program designation.

For expenditures subject to the above additional review, the State agency shall submit a written explanation of the proposed expenditure, including the compelling public interest in making the proposed expenditure, prior to submitting a proposed expenditure to the State Comptroller for processing. State agencies shall be responsible for ensuring that the Governor receives proposed expenditures subject to review with sufficient lead-time for the review by the Governor prior to the due date of any payment.

Any questions regarding the implementation of this Order should be directed to the Bureau of the Budget.