Illinois’ system of funding education is broken. But it is not broken because property owners in school districts with high property values, such as School Districts 65 and 202, have been paying high property taxes to fund their schools. It is broken because the State legislature has shirked its responsibility under the Illinois Constitution to adequately fund education – a point clearly made in our School Boards’ Joint Resolution opposing SB16.
We strongly believe every child should be provided an education that prepares him or her for college or a career. It is our obligation to do that. And we are willing to pay our share of any increase in taxes necessary to do that.
Our legislature, though, appears to lack the political will to put more money into educating our children. Instead the legislature is now planning to divide up a small pie in a different way. The vehicle is Senate Bill 16, which the Senate passed in late May; it is currently pending in the House. If enacted into law, SB16 will allocate more than 90% of State aid to school districts through a single model that purports to measure each school district’s resources and its needs.
We think that allocating more than 90% of the State’s funding pursuant to a single model lacks the nuance and flexibility to fairly and adequately measure the resources and needs of each school district. It is an overly simplistic solution to a complex problem – particularly when it is not accompanied by an infusion of needed funding. The devastating impact on Districts 65 and 202 described below is Exhibit A.
But if the legislature intends to go forward with a single model such as that created in SB16, then the model needs to be fair and equitable, and people affected the most need to be able to buy into the model as being fair and equitable.
We do not think that SB16 satisfies these criteria. While SB16 has been billed as a “reform bill” and one that brings “equity” into the State’s funding of education, it is arbitrary, unfair and inequitable in its own right.
SB 16 creates formulas to calculate a school district’s theoretical Available Local Resources (ALR) and to calculate a theoretical expense budget for the district. If the theoretical ALR exceeds the theoretical expenses, the school district receives no primary State aid under the formula. If the expenses exceed the ALR, then the school district receives the difference as primary state aid. Cuts in State aid are limited to $1,000 per student.
In calculating each school district’s theoretical ALR, the formula multiplies the equalized assessed value (EAV) of property in a school district by an assumed tax rate to get theoretical property tax revenues, and it adds in corporate replacement taxes. To calculate a school district’s expenses, the formula starts with a foundational dollar amount, and it increases that amount by factors for low-income concentration of students in the district, students with a disability, English-language learners and other categories.
Some Key Flaws and Inequities in SB16
We have argued in three previous editorials that the formulas used in SB16 are flawed and inequitable in four key respects. We add three more reasons:
First, the formula used to determine ALR does not take into account the $3.6 billion in federal aid that is paid to school districts in Illinois. This funding goes primarily to school districts that have lower property tax revenues per student. The failure to take federal funding into account grossly understates the available resources of these school districts, and it has the effect of substantially inflating their allocations of State aid, and substantially reducing the allocations to other school districts.
Second, in determining a school district’s theoretical property tax revenues, SB16 provides a “PTELL adjustment,” recognizing that school districts subject to State-imposed property tax caps cannot levy on theA full amount of their EAV. The PTELL adjustment, however, contains an arbitrary floor (i.e., 80% of EAV); and it thus does not recognize the full impact of property tax caps. By not recognizing the full impact of property tax caps, the formulas may overstate the available resources of School Districts 65 and 202 and reduce their ability to obtain State aid.
Third, SB16 increases a school district’s theoretical expenses using a low-income concentration formula. That formula alone is responsible for about $1.7 billion, or 26%, of all primary State aid. Yet, the definition of “low-income” includes all students from households earning less than 185% of the poverty line without making any distinction based on degree of poverty. It thus rests on an unfounded assumption that a student from a household earning $44,124 a year (185% of the poverty line for a family of four) has the same needs as a student in a household earning $11,000 a year. This is bad policy because the formula fails to target $1.7 billion to students who have the greatest need. The problem is magnified because the formula fails to take into account regional differences in the cost of living in measuring degree of poverty. This is significant. It costs “low-income” families 20% more to live in Evanston than in downstate Illinois.
Fourth, SB16 eliminates the current supplemental grant for low-income students, which totaled $1.9 billion this year. Approximately 91% of this funding is earmarked for school districts that have low ALRs. Eliminating this grant has the effect of eliminating funding for a small group of school districts like Districts 65 and 202 that have relatively higher ALRs, but that also have high concentrations of low-income students. In reality, Districts 65 and 202 need the State aid they have been receiving under this grant to continue to provide needed supports to their low-income students, who comprise 40% of their student bodies.
Fifth, in calculating each school district’s theoretical expenses, SB16 fails to take into account that it costs more to educate students in some regions of the State than others. For example, school districts in the Chicago area are required to pay teachers more because housing costs are 50% higher – or more – in the Chicago area than downstate.
Sixth, for there to be equity in calculating ALR, the ratio of EAV to the fair market value of property within each school district should be fairly equalized. If a school district’s ratio of EAV to fair value is higher than that of other school districts, it will have the effect of increasing its ALR, and this in turn will lower its primary State aid. While the Illinois Department of Revenue (IDR) determines an equalization factor which is intended on a gross basis to make EAVs uniform among all counties in Illinois, IDR’s equalization factor is not intended to and does not make the EAVs uniform among school districts.
Seventh, SB16 eliminates funding to subsidize a portion of the salary of special education teachers for school districts like Districts 65 and 202 that have relatively high EAVs, despite the fact that providing services to students with disabilities is mandated by State and federal law.
We think each one of the foregoing issues needs to be addressed.
SB16’s Impact on D65 and 202 Will be Devastating
The residents of Districts 65 and 202 have a long history of paying high property taxes and providing students of all races and ethnicities, including high percentages of students from low-income households, with a high quality education. And the property tax burden is shared by everyone, including many low and middle-income households who sacrifice to live here so their kids can go to high-quality schools.
Yet, under SB16, District 65 would lose 85% of its State funding, or $6.5 million per year. School District 202 would lose 81% of its funding, or $2.2 million per year. While these cuts would be phased in over four years, we think they may force our Districts on a combined basis to cut staffing levels by more than 100 persons, the vast majority of whom would likely be teachers.
The potential cuts are devastating because more than 5% of District 65’s students are homeless; 33% come from households earning below 130% of the poverty line; and an additional 7% are from households earning between 130% and 185% of the poverty line. In addition, 16% are English language learners (ELL) and 14% have a disability. The demographics at District 202 are similar. These and other children in our Districts will suffer if the State slashes its funding to our schools.
SB16’s single model approach does not fairly or equitably measure the need of these students or the severe impact funding cuts will have on them.
The State’s Stanglehold On Funding Education
Proponents of SB16 argue that “adequacy” of funding is different from “equity.” We think that providing adequate funding for education, though, is a linchpin to providing equity. As stated in the District 65 and 202 School Boards’ resolution opposing SB16, “Without addressing adequacy in a way that acknowledges the cost of educating high-need students, SB16’s purported focus on equity falls flat.”
Another significant problem with SB16 is it slashes State aid to many school districts, while failing to allow those school districts to make up for the shortfall by increasing property taxes. SB16 does not lift property tax caps, which limit school districts’ ability to increase taxes to the lesser of the increase in the Consumer Price Index or 5%. We think that cutting off State aid without providing any relief from property tax caps puts a stranglehold on education funding. The clear message is: “We’re not going to adequately fund education, and we’re going to make it very difficult for you to do so.”
A Final Comment on Shifting Pension Costs
The impact of SB16 will be far worse if the State legislature shifts the cost of funding teacher pensions to schools districts – an issue on the table in Springfield. Under Illinois’ Constitution, the State has “primary responsibility” to finance public education in the State. One way the State legislature chose to do this was to create a teacher pension system and to take on the responsibility of funding those pensions. The legislature has not fared well here either. The teachers’ pension fund has an unfunded liability of $62 billion (and that assumes an optimistic 8% annual return on investments).
Having created the pension system and the retirement benefits, the State should fund the pensions. It should not heap additional burdens onto school districts by shifting the cost of funding the pensions to school districts.
We recognize that SB16 contains a provision that would in essence subsidize any pension costs that are shifted to school districts with lower ARLs. That provision, however, will not help Districts 65 or 202.
We join Districts 65 and 202 in opposing SB16. We ask our legislators, State Senators Daniel Biss and Heather Steans and State Representatives Robyn Gabel, Laura Fine and Kelly Cassidy to address each of the issues mentioned in this editorial and to proactively advocate for our children. We will be following how this unfolds, and we urge our readers to do so as well.
If you are concerned about the impact SB16 will have on District 65 and 202, contact your legislators. Daniel Biss: firstname.lastname@example.org, Robyn Gabel: email@example.com, Heather Steans: firstname.lastname@example.org, Laura Fine: email@example.com, Kelly Cassidy: Repcassidy@gmail.com.