Labeling this a “dangerous time in education funding,” John McCarron, professor, freelance writer and columnist for the Chicago Tribune, moderated a panel discussion with State Representatives Laura Fine and Robyn Gabel and State Senator Daniel Biss about state actions that could affect education funding in Illinois.
The event, held July 17 at Evanston Township High School, was hosted by the Community Legislative Committee of School Districts 65 and 202. The legislators responded to questions from members of both School Boards about how pension reform, Senate Bill 16 and the state budget could affect Evanston schools’ bottom line.
State Senate Bill 16 – State Aid to Schools
The Illinois Senate passed SB 16 on May 27, and the bill then moved to the House of Representatives where it was referred to the Rules Committee.
“So why did you vote for SB 16?” Mr. McCarron asked Sen. Biss in his opening question.
“I know it’s difficult for my constituents, but it was the right thing to do,” said Sen. Biss, who is a member of the Illinois Senate’s Education Committee.
If enacted into law, SB 16, as amended, will make sweeping changes in how the state funds education. The bill does not increase the level of education funding but changes the way in which limited state funding is apportioned among school districts. Generally, school districts with higher assessed property values, such as Districts 65 and 202, will receive much less state funding.
The Illinois State Board of Education has calculated that School District 65
will lose 85% of its State funding, or $6.5 million, and School District 202 will lose 81% of its State funding, or $2.2 million, if SB 16 as passed by the Senate is enacted into law.
State aid is intended to help balance inequities in money that is available to schools across the state, said Sen. Biss.
The formula used to divide the money has “not evolved” and “disproportionately affects the poorest kids in the state,” he said. “I had no choice but to vote for it.”
Jonathan Baum, District 202 School Board member, questioned why, in the formula set up in the legislation, more recognition would not be given to the fact that Evanston has a larger poverty rate than neighboring New Trier and Lake Forest districts.
“The current system is screwed up, that is 100 percent true,” said Sen. Biss.
He added that it may appear that Evanston has “more to lose because we get more [than those districts] now. …At the end of the day it is about what a district is able to raise at home. What it costs to educate each student and what resources are available at home are a good starting point” for discussion, said Senator Biss.
Senator Biss, Rep. Gabel and Rep. Fine all agreed that SB 16 is unlikely to advance in the Illinois House any time soon. Rep. Fine, who is on a House education appropriations committee looking at the Senate bill, said that the legislation has “started the conversation” about school funding but that there is still a “long way to go.”
Pension Reform and the State Budget
The second major issue discussed were issues dealing with teacher pensions. For several years now, the Illinois legislature has been considering various bills to shift the “normal cost” of funding teachers’ pensions from the State to local school districts. The normal cost is the cost of funding the pensions for the current year, without adding an amount to make up for the unfunded liability which is generally due to the State’s failure to make required contributions in prior years.
According to the Teacher Retirement System (TRS), the normal cost to fund teachers’ pensions for fiscal year 2013 was over $1 billion. The unfunded liability is about $53.5 billion.
Many school districts opposed shifting the cost because teacher retirement benefits have been created by State law and they are growing at an unsustainable rate. Late last year, the legislature passed a law that was intended to reduce pension payments, stabilize the system and fully fund teacher pensions by 2044. Lawsuits were quickly filed challenging the new law on the ground it reduced teachers’ pension benefits in violation of the Illinois Constitution.
While those cases have not yet wound their way up to the Illinois Supreme Court, on July 3, the Supreme Court issued an opinion in an unrelated case, Kanerva v. Weems, that suggests the new law faces an uphill battle. The Court held that the State’s provision of insurance premium subsidies for retirees is a benefit of membership in a pension system and that it could not be diminished.
On July 3, the Illinois Supreme Court ruled that the state “cannot even tinker” with the health insurance premiums of retirees, Mr. McCarron said to the panel.
It is an “emotional topic, a surprising ruling,” said Senator Biss.
Rep. Gabel talked about how House Speaker Michael Madigan has stressed the need to “shift the responsibility of pensions” but that no one “really knows where [this issue] is at” as far as negotiating how much of the pension expense schools could be asked to take on.
“How much of this can we absorb?” asked Bill Stafford, CFO of District 202. “I understand equity, but at what point does this stop?”
I “don’t know that pension debt is coming,” said Sen. Biss. And if more pension responsibility is passed along to schools, he asked, “does it come with other relief?”
“The amount of the budget paid into pensions goes up every year,” said Rep. Gabel. “Human services and education are affected the most. We need to look at all options,” including extending the time of fully funding the pension fund from 30 to 50 years as proposed in SB 1, she added.
“As a newbie,” said Rep. Fine, “I thought I’d comb though the budget and find the waste. I have not found it yet. People want to know what we are doing with the tax increase: paying bills.” She said the state has reduced its bill debt from $9.1 billion to $3.9 billion.
“The state is looking for money in lots of places,” said Rep. Gabel, and in the end, “the state budget will be the driver [for education funding], not fairness.”