Yes, that is my experience too, Linda. I worked for a children's publisher for years and now work as a freelance writer and editor of children's books.
I wonder if perhaps where the confusion lies is in the difference between someone who is purely a writer, and someone who writes and illustrates? Obviously if you are a talented illustrator first and foremost, and you have an idea for a story, the publisher will be interested to see the story alongside perhaps a spread or two of illustrations. It may be that if your text isn't up to scratch they get a more experienced writer to revise it. I have known this happen.
On the other hand, if you are a writer who doesn't illustrate, they will be far more interested to see your text as a stand-alone Word doc than to see it with illustrations done by so-and-so down the road who you think is marvellous.
There are a lot of things to think about when planning illustrations for a picture book and unless you are a talented illustrator, the chances are that there are things the publisher will need to guide you on.
HTH