Even before the state's new and leaner budget proposal was unveiled, Little City Foundation already had announced it was closing seven of its 22 single-family homes that house adults with developmental disabilities.

Now, threatened state budget cuts have officials at the Palatine-based agency, as well as many others, looking at an even bleaker financial picture.

"There's no way to take away $450,000 and look the same tomorrow as we do today," said Executive Director Rena Zaid.

Those sentiments are being echoed throughout the suburbs by directors of agencies serving people with disabilities.

They are anticipating major financial problems as a result of Gov. George Ryan's suggested changes in the way those agencies are funded.

Of particular concern to providers are planned cuts to group home programs like Community Integrated Living Arrangements and day programs.

Combined, the services would lose $38 million in the budget plan. The cuts, according to Ryan, are necessary to balance the budget.

"I don't know how we're going to deal with this," said Carl La Mell, president of Rolling Meadows-based Clearbrook Center, estimating a $300,000 loss for the agency.

Glendale Heights-based Marklund is losing $200,000 and is closing one of its community homes as a result of the budget cuts, placing the eight residents in vacant slots elsewhere.

In some cases, Ryan's plan suggests these agencies no longer will be paid upfront and instead work on a fee-for-service system.

What's more, Ryan's budget proposal also affects people who choose home care for their adult children with disabilities. He wants to switch to a system that relies on Medicaid. That could mean more out-of-pocket costs for some people.

For those who provide services to those with mental disabilities, the main sticking points:

• An across-the-board 2.5 percent decrease in funding.

• A proposal that requires Community Integrated Living Arrangement residents be tested to determine their IQ. Those above a certain level may have their staff support reduced.

• A switch to a fee-for-service approach, rather than a pre-payment plan.

Throughout the state, nearly 7,500 people with developmental disabilities live in Community Integrated Living Arrangements.

Depending on their ability level, their support care ranges from a few hours to 24-hour care. The state pays about $45,000 annually per year to house the residents in homes in traditional neighborhoods.

Tony Paulauski, executive director of The Arc of Illinois, which serves retarded residents throughout the state, said he is concerned about the state potentially reducing the amount of staff supervision at the homes.

"There's a reason professionals have designated that they be placed in 24-hour care," he said. "They may have a high (score) but have suicidal tendencies or cannot control themselves unless there's supervision there."

Jeri Johnson, of the Illinois Department of Human Services, said the cases will be handled individually. In some situations, people with higher scores will remain with longer care, she said.

While providers are complaining about the fee-for-service transition for Community Integrated Living Arrangements and switch from grants to Medicaid waivers for day programs, others say it will mean more aid for the agencies.

"In the long run, it's the right thing to do," said state Sen. Steven Rauschenberger, a Republican from Elgin. "We need the federal help."

Currently, the state funds about $33 million in grants for Developmental Training and $11 million for Supported Employment Programs. But according to the budget plan, those grants would be eliminated. If the agencies use Medicare waivers, the federal government will match the funding. But officials are concerned that not all their clients would qualify.

Meanwhile, Rauschenberger said he will use his influence as chair of the Senate Appropriations Committee to stress the importance of community-based services for people with developmental disabilities.

He also has some suggestions of his own such as having the Community Integrated Living Arrangements rate of reimbursement be reflective of the community where the home is located.

Jeff Stauter, legislative director for the Illinois Association of Rehabilitation Facilities, said time will reveal the real effect of the cuts.

"Providers are reticent to say, 'We're going out of business,' but that's what's happening in some places," he said. "Normally, there's a white knight that steps up. However, in these tight financial times, that's not happening."

Cuts: State senator says it's the right thing to do, in long run