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Public school funding in Illinois was the topic of discussion at State Senator Daniel Biss’s latest forum in his “Critical Issues Series” held Sept. 16 at the Joseph E. Hill Administration Building. Joining him on the panel was the chief sponsor of Senate Bill 16, Senator Andy Manar (D-Bunker Hill), and School District Superintendent Dr. Paul Goren. While the Senators stressed that SB 16 is still a work in progress, many in the packed room expressed concerns with how the current version of the bill proposes to divide State funds among Illinois’ school districts.

The Senate passed SB16 in May, with Sen. Biss and Sen. Manar each voting for it. It is currently pending before the House.

State Funds Already Cut

Sen. Biss opened the forum by explaining that Illinois recently cut funding to schools across the board. The formula used to distribute State aid was prorated at 89% this year, meaning that total funding from the State was cut by 11%. It is “not natural or fair” to penalize the poorest districts first. We “need to do something better” and be “sensitive to the needs of all districts.” SB 16 sets out to “counterbalance” this funding shortage, he said. .

The Creation of the “School Funding Reform Act of 2014”

Freshman Senator Manar, who represents District 48 in Central Illinois, began his remarks by discussing the process by which the draft of the School Funding Reform Act of 2014, or SB16, came about. Public hearings began in the Fall of 2013. “We started with the facts, organized our thoughts around facts, taking politics out of the equation,” said Sen. Manar, adding there were 46 hours of public testimony and that he talked to about 410 of the approximate 860 superintendents in the State.

Data from other states were considered as well, said Sen. Manar, and unbiased experts were brought in to weigh in on the situation in Illinois. A “list of reasonable things we can change” in the current funding formula was created, which led to the discussion of equity.

Adequacy vs. Equity

“Every expert, every piece of evidence says that equity makes a difference in the output of the education system,” said Sen. Manar. “We concentrated in the Senate completely on equity. Equity is very different than adequacy. They are often put into the same thought process, often considered the same thing.”

“The best way to explain this is to say adequacy has to do with the State budget, how much we devote to education in a given year,” said Sen. Manar. “Equity, while it relies on adequacy, is very different.” Regardless of how much money there is in the education budget, equity deals with how the State distributes the money, “and that is a very deep conversation that, frankly, Springfield hasn’t had in a very, very long time. SB16, at its core, attempts to address equity.”

Experts Provide “Snapshot” of Current Situation

Sen. Manar presented three overall findings provided through testimony from Augenblick, Palaich & Associates to the Education Funding Advisory Committee (EFAC) to illustrate what a “nonbiased, third-party group of experts” said they saw relating to school funding in Illinois. The first finding is, “Due to the impact of district wealth, districts that make lower tax effort tend to raise higher amounts of local revenue.” This shows an “inverse relationship between tax rates and per pupil spending,” explained Sen. Manar.

Next, the experts concluded, “The Illinois school finance system is inequitable for both students and taxpayers.”

The final point is, “The parameters that drive the allocation of state formula support . . have little meaning beyond assuring that total state aid does not exceed the revenue that the state is willing to provide for school districts.”

“In clear terms, said Sen. Manar, “we appropriate whatever we have in a given year and we don’t attach any priority to it whatsoever. That is a very clear indictment of how we as a State have done this for almost 20 years.”

Sen. Manar showed slides illustrating how Illinois’ education financing is inequitable. He compared a school district in East St. Louis which has 99% low-income students with a district in Arlington Heights with 26% low-income students. Because State aid was prorated to 89% this year, the East St. Louis district lost $935 per student, while the Arlington Heights district lost $58. In addition, “Districts with the lowest property wealth lost 5.5% vs. 0.5% for those with the highest property wealth. Districts with the most low-income students lost 4.8% vs. 0.8% of those with the least low income students,” graphs illustrated.

Sen. Manar also showed slides indicating that Illinois spends less on low-income students than almost all other States, “and in fact, it is the second worst in the U.S.”

He went on to say that even if Illinois added money to the education budget, the funds would not necessarily get to schools that need it the most due to the current distribution formula. “We are about $2.5 billion short of where we ought to be with education funding in Illinois which only exacerbates the problem when it comes to equity,” he said.

“I think it is easier to have a discussion about how much money the legislature puts into schools when we have a formula we know isn’t broken as opposed to advocating for money to be put into a formula when we know it’s not going to get to the districts that need it the most. That’s what we are faced with today.”

How SB16 is Said to Address Funding Inequity

SB16 transforms the way in which the State funds education. It does not add any new funding. Instead, it changes the way in which current funding is distributed to school districts.

The bill provides a model to calculate a school district’s theoretical “Available Local Resources” (ALR) and to calculate a theoretical expense budget for the district, using various assumptions. It compares the two to determine if a school district is entitled to primary state aid.

ALR is computed by multiplying a district’s equalized assessed value by an assumed tax rate of 2.36%, and adding in the corporate replacement tax and certain other amounts. In limited situations, an adjustment is made for districts subject to property tax caps.

In computing an expense budget, the formula starts with a foundational amount and adds onto that amount using different weights for low-income students, low-income concentration, special education students, English language learning students and students with other needs.

Dr. Goren Weighs In

“My recommendation is to focus on children and their needs and be careful about focusing on districts as we move forward,” said Dr. Goren. “I am worried about the kids I serve and the ramifications.”

Dr. Goren explained that in District 65, there are about 7,500 students, 40% of whom are at or below the poverty line. About 5% are homeless, 12% have special needs, 10% are English-language learners. “We serve a percentage and number of students that far exceeds like districts in North Cook County,” he said.

Dr. Goren pointed out that District 65 is already facing financial pressures due in part to potential shifts of pension costs from the State to school districts, the uncertainty of State funding due to a potential reduction in the State income tax and tax caps. “The burden of pension shifting, with lingering questions on income tax, and the way we set our budget using the consumer price index which is going down, we are projecting a $3.4 million deficit in 2016, in 2017, a $4.7million deficit, and in 2018, a $7 million deficit,” said.

SB16 will add to those pressures. District 65 projects it will lose between $6.5 million and $7 million if SB16 is enacted into law, he said.

“We face a substantial cut and would have to determine what services to take away. “

Dr. Goren stressed the importance of “following the needs of the children and how we pay attention to those at or below the poverty line.” Families move to Evanston and Skokie to “embrace the schools, especially families who have very deep needs. They move across Howard Street for a great purpose, to come to this great District. It’s not a perfect world but I have to really push hard to make sure that as we go down this course, there isn’t a detrimental effect on the families and children we serve.”

Other Considerations

Audience members raised many other concerns. They said the bill should take into account that the cost of living is different in different areas of the state; that properties with the same market value do not have the same equalized assessed value across the State; that different communities exert different efforts to raise property taxes. Several speakers pointed out that the impact of poverty varies depending on the depth of a student’s poverty and the cost of living where a student resides. Some suggested that the low-income concentration adjustment be measured at the school level, rather than just the district level.

A retired teacher from Glenview raised the issue of funding innovation. “Are we going to end up with a state full of mediocre schools?” she asked.

Sen. Biss, who is a District 65 parent, concluded the forum by stressing that the bill is “a work in progress” and thanked everyone for contributing to a thoughtful conversation.

Some Background on Current State Funding

Illinois currently has two grants to provide general state aid for education: 1) an equalization formula grant and 2) a supplemental low-income grant.

The equalization formula grant divides school districts into three categories based on local property wealth. The first category is the “”foundational level.”” These districts receive a grant calculated by subtracting a foundational level of funding – $6,119 for 2013-14 – from the district’s Available Local Resources (ALR) per pupil. The second category is the “”alternate level.”” School districts qualifying for the alternate level have an ALR per student between 93% and 175% of the foundational level of funding. School districts in the third category, “”Flat Grant,”” have an ALR per student of 175% or more of the foundational level and they receive a flat grant of $218 per student.

The supplemental low-income grant provides additional funding, which is based on the proportion or concentration of low-income students in a district. The higher the concentration, the higher the grant per student. In 2013-14, the grant ranged from a low of $355 per low-income student when the district’s low-income concentration is less than 15% to a high of $2,994.25 if the district’s low-income concentration were 100%. Unlike the equalization formula grant, the low-income grant does not take into account local property wealth.

In 2013-14, a total of about $4.9 billion was distributed in general state aid, about $3 billion as equalization grants and $1.9 billion as low-income grants. The Illinois State Board of Education reports that about 92% of the total funding went to districts that were in the foundational level, or those that had the lowest property wealth in the State.

— Larry Gavin