Illinois’ system of funding education is broken. But it is not broken because many school districts, 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. Illinois now ranks 50th among the States in the amount it contributes to education.
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, lacks the political will to put the money that is needed into educating our children. Instead the legislature is thinking about making up a part of the shortfall in its funding obligations and dividing up a small pie in a different way.
One vehicle is Senate Bill 1, which is patterned after last year’s Senate Bill 16 and which the Senate overwhelmingly passed in late May 2014. If enacted into law, SB1 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. This is an overly simplistic solution to a complex problem – particularly when it is not accompanied by an infusion of needed funding.
Many legislators will tout SB1 as a “reform” bill that provides equity. Unless State legislators significantly increase education funding, though, their claims about reform and equity are pure sophistry.
In addition, we think many key provisions of SB1 are arbitrary and inequitable and that the bill is guided more by political maneuvering to secure votes than to establish equity and sound educational policy.
SB1’s General Model
SB 1 creates formulas to calculate a school district’s theoretical Available Local Resources (ALR) and to calculate its theoretical expenses. 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.
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 SB1
We think SB1 is arbitrary, inequitable and constitutes bad policy for six key reasons.
First, Federal Funding. The formula used to determine ALR does not take into account federal aid that is paid to school districts in Illinois. According to the Illinois State Board of Education’s (ISBE’s) online report card, federal aid in 2014 equaled about 50% of the amount paid by the State of Illinois in general State aid. Federal funding is thus a significant source of funding, and it 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. For example, when federal funding is taken into account, East St. Louis School District 18 had operational spending per student in the amount of $14,462 in 2014 (18% of which is from federal funding), compared to School District 65, which had $14,041 (6% of which is from federal funding).
If the State is going to take away funds from some school districts and give them to others based on an assessment of need, that assessment should take into account federal funds.
Second, Impact of Tax Caps. In determining a school district’s theoretical property tax revenues, SB1 provides a “PTELL adjustment,” recognizing that school districts subject to State-imposed property tax caps cannot levy on the full amount of their EAV. The PTELL adjustment, however, contains an arbitrary floor (i.e., 85% 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 formula overstates School District 65’s ALR by about $12.1 million, using data in ISBE’s latest estimates that are based on District 65’s 2011 EAV.
The legislature imposed the tax caps. Ignoring their full impact in awarding State aid is arbitrary and unfair.
Third, Regional Cost Differences. In calculating each school district’s theoretical expenses, SB1 fails to take regional cost differences into account in a fair and realistic way. School districts in the Chicago area have to pay teachers more than school districts downstate, in part because it costs substantially more to live in the Chicago area. Housing costs alone are 50% more in the Chicago area than they are downstate. While SB1 acknowledges that regional cost differences should be taken into account in calculating theoretical expenses, it allots school districts in the Chicago area only 6.29% more than other school districts downstate based on this factor.
According to ISBE’s online report cards, downstate Bunker Hill Community Unit School District 8 paid an average teacher salary of $46,210 in 2014. The average salary paid by Springfield School District 180 was $56,468. The State average was $62,435. In stark contrast, School District 65 paid $74,673, or 62% more than Bunker Hill, 32% more than Springfield, and 20% more than the State average. With all due respect, the provisions in SB1 that allot District 65 only 6.2% are devoid of reality.
Fourth, the EAV. To ensure there is 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 that is intended on a gross basis to make EAVs uniform among all counties in Illinois, IDR’s equalization factor does not equalize the EAV for school districts in Cook County.
Moreover, while SB1 is billed as being based on property wealth, EAV does not assess farmland – a big source of property wealth in downstate Illinois – based on fair market value, but at levels far below fair market value. According to one recent report, the median certified EAV for one acre of farmland is $203 per acre. In contrast, the fair market value of an average acre of farmland is $8,700.
Fifth, Depth of Poverty. SB1 increases a school district’s theoretical expenses using a low-income concentration formula. That formula alone is responsible for about 25% 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. If the legislature was serious about addressing the needs of children from low-income households, it would target the funding based on depth of poverty. And it would also take differences in regional cost of living into account in measuring depth of poverty. The failure to take depth of poverty into account indicates that SB1 is more about politics than helping kids.
Sixth, the Impact on Kids. SB1 eliminates the current supplemental grant for low-income students and it eliminates certain funding for students with disabilities. These grants are needed to support the most vulnerable students in our State. The school districts that will be hardest hit by the elimination of these grants are school districts like Districts 65 and 202 that have relatively higher ALRs, but that also have high concentrations of low-income students and many students with a disability. These districts need State aid to continue to provide needed supports to their low-income students and students with a disability. Stripping them of State aid is unfair to their students and is bad policy.
SB1’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.
In 2011, approximately one-third of Evanston’s households were low- to moderate-income households. Of that group, 51% were ”cost burdened,” meaning they pay more than 30% of their income toward housing costs, and 35% were “severely cost” burdened, meaning they pay more than 50% of their income toward housing.
Yet, under SB1, District 65 would lose 85% of its State aid, or $6.6 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 three years, we think they may force our Districts on a combined basis to cut staffing levels by more than 125 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 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.
SB1’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.
Another significant problem with SB1 is that 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. SB1 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.”
We oppose SB1 and urge our legislators to do so as well.
If you are concerned about the impact SB1 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.
Under SB1, District 65 would lose $6.6 million per year. School District 202 would lose $2.2 million per year.