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After many years of study, discussion, and finally compromise, the State has reformed the way it will fund education at the k-12 grade levels in Illinois. The legislature approved Senate Bill 1947 on Aug. 29, and Governor Bruce Rauner signed it into law on Aug. 31.
In a major shift from bills that were passed by the Senate, but not the House, in two prior years, SB 1947 provides that no school district will receive less than the amount of State funding “distributed” to it in the 2016-17 school year. This is called its Base Minimum Funding.
Thus, School Districts 65 and 202 will each receive, as a minimum, the amount of funding that they received in the 2016-17 school year. Under the Illinois State Board of Education’s (ISBE’s) preliminary calculations, District 65’s Base Minimum Funding is about $8 mllion, and District 202’s is about $2.9 million.
Under bills considered in prior years, District 65 would have lost about $6.5 million in State funding and District 202 would have lost about $2.2 million.
Going forward, under SB 1947, any New State Funding approved by the Legislature – defined as funding over and above the amount distributed by the State to school districts in 2016-17 – will go to the neediest districts, those that are furthest away from meeting their adequacy targets.
For example, assuming there is $350 million in additional funding for 2017-18, 85% would go to districts with greater than 50% low-income students; almost 50% would go to districts that have capacity to generate only $3,500 in property taxes per student.
Based on the funding model, it does not look like District 65 will have much of a chance of receiving any significant amount of additional State funding in the future; and District 202’s chances are virtually nil.
The New Formula
Amounts Needed to Adequately Educate Students: Under the new funding model, ISBE must compute an “Adjusted Adequacy Target” for each school district in the State. The Adjusted Adequacy Target is theoretically the amount needed to properly educate every student in the district, taking into account the number of students, household income, language, disabilities and other factors.
In computing an Adjusted Adequacy Target, the model takes into account 27 “essential elements.” For example, ISBE will determine how many core teachers are needed in each school district. For grades K-3, it assumes one core teacher is needed for every 15 low-income students in those grades, and one is needed for every 20 non-low income students. For grades 4-12, the model assumes one core teacher is needed for every 20 low-income students, and one for every 25 non-low-income students.
Under the model, ISBE will then determine the funding needed to pay for core teachers by multiplying the number of teachers needed by an average cost per teacher. The cost used by ISBE in its calculations is $60,930 for elementary and middle schools, and $69,484 for high schools. A regionalization factor of 1.05681 is then applied for school districts in the Chicagoland area, which purports to reflect regional cost differences. That brings teacher salary levels up to $64,391 for elementary and middle schools in the Chicago area, and up to $73,431 for high schools in the area.
According to ISBE’s website, the average teacher salary in 2016 for District 65 was $78,679, and for District 202 it was $97,854. The funding model thus assumes that the salary expenses of Districts 65 and 202 are significantly less than they actually are. This reduces their assumed costs and significantly reduces the chances of their receiving an increase in State funding in the future.
A similar process will be followed for 26 other essential elements, which include specialist teachers (e.g., art and music teachers), intervention teachers, guidance counselors, librarians, nurses, principals, assistant principals, and other positions. Amounts will also be allocated for professional development, computer technology, assessment, maintenance, student activities, additional investments in low-income and English language learners and special education.
The total cost of all these elements is a school district’s Adequacy Target.
Resouces to Fund Education: ISBE will also compute a “Final Resources Target,” which is the sum of a school district’s: 1) “Adjusted Local Capacity Target,” which is the amount of money that the district is assumed to have available through property taxes to fund education; 2) the district’s share of the Corporate Property Replacement Tax; and 3) the district’s Base Minimum Funding from the State. It does not include federal funding.
Significantly, in computing an Adjusted Local Capacity Target, the formula takes into account that property tax caps limit a school district’s capacity to generate property tax revenues. In addition, school districts that have approved an increase in property taxes through a referendum do not lose State funding as a result of the referendum.
A School District’s Final Percent of Adequacy is determined by dividing its Final Resources Target by its Adequacy Target. The lower the percentage, the higher the need of the school district. Conversely, the higher the percentage, the less the need. A percentage over 100% would show no need for New State Funding under the formula.
School districts with higher property tax bases, such as School Districts 65 and 202, have higher local capacity, which increases their Final Percent of Adequacy. Under ISBE’s recent calculations relating to SB 1, whose formula is used as a base for SB 1947, District 65’s Final Percent of Adequacy was 100%, and District 202’s was 135%.
To allocate New State Funds, school districts are assigned to one of four tiers. School districts’ with the lower Final Percent of Adequacy (i.e., those with the greater need) are placed in the lower tiers. Under the formula, 50% of New State Funding will be allocated to school districts in Tier 1; 49% of the funding will go to school districts in Tier 2; 0.9% of the funding will go to school districts in Tier 3; and 0.1% of the funding will go to school districts in Tier 4.
There are complex formulas used to determine the relative ranking of school districts in terms of need, and their distributive share of New State Funding.
ISBE says it has not yet calculated each school district’s share of any New State Funding unde SB 1947.
But under ISBE’s calculations relating to SB 1, District 65 was placed in Tier 3, meaning it will have a share of 0.9% of any New State Funding.
School District 202 was placed in Tier 4, meaning it will have a share of 0.1% of any New State Funding.
The payments will be relatively small.
Approval of SB 1947, the Compromise Bill
On Aug. 28, the Illinois House voted to approve Senate Bill 1947, a compromise bill, worked out between the legislative leaders of the House and the Senate. On Aug. 29, the Senate approved SB 1947. Governor Bruce Rauner signed the bill into law on Aug. 31.
SB 1947 expressly states bill the funding formula it contains is based on the funding formula in Senate Bill 1, which had been vetoed by Gov. Rauner. As part of a compromise, a new provision was added that provides up to a maximum of $75 million in tax credits will be given to persons who donate money for scholarships to enable students from households earning less than 300% of the poverty level to attend private schools. The program will expire after five years.
State Representative Robyn Gable and Laura Fine and State Senator Daniel Biss each voted “no” on SB 1947.
Sen Biss said in a prepared statement, “Today, Bruce Rauner used a school funding crisis he created to get even more tax breaks for millionaires and fund private schools with taxpayer dollars. Middle class parents like me are fed up with footing the bill for rich people’s tax cuts.
“I’m running for governor to end schemes like these, and to make the rich finally pay their fair share in taxes. We’ll use that revenue to fully fund schools in every neighborhood, so every child gets the education they need to succeed.”