Illinois House Passes School Funding Overhaul
by Steven Kandelman
On Monday, August 28, 2017, the Illinois House passed an education funding plan which will increase state money for all districts and attempt to reduce the differences in educational funding in richer and poorer districts. The Illinois House passed the legislation 73-34 and Governor Rauner signed the bill. This funding bill will allow Illinois schools to get funded and stay open. For the Chicago Public Schools (CPS), the State of Illinois will guarantee the same funding to each of the state’s 852 school districts as they received last year and to annually provide at least $350 million in new revenue to schools through a new school funding formula, giving priority to districts with poor property values. [1] Also, under the newly passed bill, the Chicago Board of Education (CBOE) will be able to raise property taxes by an additional $120 million to pay for teacher pension costs and its massive under-funded pension liabilities. Cook County Clerk David Orr’s office estimated this additional funding to Chicago Teacher’s Pension Fund would be closer to $148 million.
David Orr’s office stated publicly that the new pension levy under this education bill would mean an additional $98 in property taxes owed for a home worth $200,000.[2] This new revenue source would be in addition to the $543 million property tax increase that City Hall is still phasing in over a four-year period to increase the City’s contributions to the pension funds for police officers and fire fighters. The Illinois school funding plan also creates a program offering $75 million in income tax credits to individuals and businesses that donate up to $1 million to help pay the tuition of poor students attending private schools.
The new law uses a tax swap concept which creates a pool of state tax dollars that can be distributed to local school districts that promise to pass tax savings to their constituents. The tax swap is intended to allow for villages or towns with low property values who try to levy tax rates higher than three percent which is the rate the state assumes when calculating how much a district should be able to raise. These districts will be able to apply for state grant money, but must reduce their real estate tax levies for education by a similar amount. Poorer taxing districts will get a return of 90 cents for every dollar in taxes they cut.
For wealthier districts who fund their schools above an “adequacy target” or the amount that is needed to provide a quality education, these districts would be able to reduce their property taxes by a maximum amount of 10 percent. Jim Conrey, a spokesman for Adlai Stevenson District 125 in Lincolnshire which is one of the wealthier districts, said that “as a school district, I don’t see us initiating any process” to reduce the real estate taxes. Stevenson is funded at 179 percent of adequacy and spends about $19,000 per student with a tax levy of 2.8 percent. Poorer districts like Ford Heights School District 169 in southern Cook County has a tax levy of 12.4 percent for their schools and nearby Park Forest-Chicago Heights School District 163 has a tax levy of 10 percent for its schools. [3]
Overall, the school funding legislation is a compromise bill which accomplishes and will result in the
following:
1) allows the schools to open on time;
2) tries to address the disparity in school funding between poorer and wealthier school districts
with a tax swap;
3) allows for additional funding through an estimated $120 million property tax increase to pay
for under-funded CPS pension liabilities; and
4) provides for tax credits and additional funding for scholarships to help assist students in
paying for private school tuition costs.
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[1] “A tepid school win for Rauner,” by Rick Pearson, Chicago Tribune, September 1, 2017, Sect. 1, pgs. 1, 9.
[2] “Cost of latest planned tax CPS tax hike?”, Chicago.Suntimes.com/news/new-cps-could-bring-in-up-to-148million, August 31, 2017.
[3] “Poorer districts can get help; wealthy districts able to save – Property tax options in school law meant to even out funding,” by Kim Geiger, Chicago Tribune, September 3, 2017, Sect. 1, p. 4.
