The School Funding Bill Passed and the Result is…

Editors note:  Lets hide our wallets!! Fed will cut us off as we are a Sanctuary State. Horrible business decisions by Chicago Public schools gave them their unfunded pension liability which All Illinois taxpayers are now responsible for. Employees of school districts and administration expect and get raises each year at the expense of the overburdened taxpayer. Education Sector people get high pay the best medical and great retirement plus numerous days off and 9 month work year. The system is only working because they can increase property tax every year. Illinois is a socialist style government taking from those who work hard, make good decisions, and don’t over spend; giving to those who do the opposite. Where is the incentive to improve?

Thank You Jeanne Ives

The School Funding Bill Passed and the Result is…

on Wednesday, August 30, 2017

The School Funding Bill Passed and the Result is…

CPS Got Bailed Out and We Made Promises We Can’t Keep

I Voted NO – Here’s Why

State Rep. Jeanne Ives

In typical Illinois fashion, Mike Madigan and Mayor Rahm Emanuel got everything they wanted in the new school funding bill – and more.  Madigan got more dollars for the unions, he got the pretense of ending the long debate over education equity funding (this bill won’t end the debate), and most importantly he got to use suburban tax money to bail out CPS. To highlight the bail out, I present these two statements coming out of Chicago leadership:

From DNAInfo August 24, 2017 – “Mayor Rahm Emanuel said Thursday evening that a bipartisan agreement reached by state lawmakers to fund Illinois’ schools would give the Chicago Public Schools everything — “and more””

From CapFax August 28, 2017 – “School board President Frank Clark said on Monday that Chicago Public Schools may see as much as $450 million from a pending state accord on education funding, about $150 million more than the district had anticipated.”

On top of that Madigan got all the political theater he is known for.  There were three separate votes, the first was a test vote and virtue signal to the unions by Democrat members.  Then, came the fake veto override vote on SB1 to show the unions they would have to settle for the other bill.  And then after more drama, the compromise bill came back on reconsideration and passed.  House members knew before the votes were taken what would pass and what wouldn’t – leadership worked their roll calls and structured their votes – because that’s the way it always happens when taxpayers are about to get their pocket picked and the policy can’t stand on its own.

The Bill Bails Out Chicago Public Schools – Tax Increase will be Required

v  The formula requires $350 million more EACH year to work as planned.  The advocates plan on spending up to $6 billion more in the next 10 years on this one grant line.  That is double the amount we spent last year.

v  The budget bill passed for this year is already projected to be short $1-2 billion.  They also short changed the retirement systems by $700 million in the budget bill. Our budget is precarious and there is still $15 billion in unpaid bills.  Funding this bill would require a Tax Increase.

v  CPS keeps $250 million block grant – a grant no other district receives.

v  State taxpayers will pay Chicago Teacher Pension normal cost – first year amount is$221million

This amount will increase each year for the foreseeable future and is determined by their local pension fund – not the state.  Chicago teachers only pay 2% of salary toward their multi-million dollar pensions.

v  State taxpayers will pay for CPS legacy pension costs forever. This is the most problematic provision outside of the junk science behind the evidenced based formula itself.  Chicago Teachers Pension Fund has defunded the account with the help of state legislators for the last 17 years.

Ø  In 2000 the fund was near 100% funded, now it is 52% funded

Ø  For the last 17 years it has never paid the full actuarial amount needed, and in 13 of the last 17 years it paid in almost nothing towards pensions

Ø  Last year it lost $28 million in investments alone, it had investment expenses of $35.8 million and made only  $7.8 million

v  The bill allows Chicago to appear less wealthy because they can deduct legacy pension costs from their local wealth calculation which means they are eligible for greater state support.  By simply adjusting their actuarial assumptions, they can continue to game the formula to remain in the neediest tier of schools

v  The legacy pension cost this year for Chicago is $505 million – that translates into a$40 million additional state payment via the formula

v  If there is not enough money to fund the formula, a different distribution formula is in place and only the “neediest” districts are eligible for any new money – so many districts will see no increase in funding from the state

v  For most districts there is not property tax relief.  32 districts may receive preferential access to $50 million pool of money to buy down their property tax burden.  This is discriminatory to all other districts.

v  This bills assumes high operating tax rates will remain in most school districts and those districts with already higher rates are penalized in the formula for those rates while other districts that have not taxed at the same high rates to pay for their local schools are rewarded in the formula.

v  Superintendents liked the formula because they have been promised the same level of state support they received in FY17 in perpetuity – that’s regardless if property wealth increases or student enrollment declines.  Chicago lost 20,000 students in last two years and has $10 billion in new projects coming, but it won’t matter – they get the same amount of base funding minimum on top of the extra described above.  Cairo is set to lose half their students and they will get the same level of state support.

v  For Tier 3 and 4 districts, they are only eligible for 1% of any new money going forward because it is assumed they have sufficient property wealth to fund their own schools.  All the schools I represent are in Tier 3 or 4. Their base funding minimum amount will erode over time as it is not inflation adjusted.

v  The funding formula – for new money though– has built in cost escalators for annual salary enhancements and adult education.

MOST IMPORTANTLY – CHICAGO HIDES ITS PROPERTY WEALTH

This bill is heavily dependent on determining how well a local district can fund itself.  The lower your property wealth, the less able you are to fund your schools and the more state support you receive.  But Chicago hides their wealth.  They hide it in TIF’S to the tune of about $6 billion. Yet, last year CPS was able to access $90 million of that TIF money and this year it appears they want nearly $270 million from it.  They have the money to fund their schools, but they want the rest of us to pay first. Other districts also have side agreements to get TIF funds and this is not accounted for in the formula.  Districts without TIFs or side deals or the clout to get the money end up losing when other districts hide wealth this way.  And yet, I have not had one Superintendent speak out about this!

Chicago undervalues large commercial property in the Loop by a large amount.  A survey of the top 20 properties that sold recently shows they are under assessed by an average of 58%.  For example, when the Willis Tower sold for $1.3 billion in 2015, it was on the books at the assessor’s office for $535 million.

Here are a few more examples.

More Problems with Assessments

v  Coles County property owners are suing in federal court over numerous problems in the assessment process including that there has not been any reassessment of property in 16 years

v  The DuQuoin Superintendent admitted in a committee hearing in response to my question that his county had not had a reassessment in 35 years.  I looked into it and it was true that Perry County had not done one since 1982. State law requires reassessment every 4 years. Good assessors adjust yearly to keep large swings in value in check.

I have no confidence that assessments are being done in accordance with state law and with the level of accuracy required.  I know my district and others are not being treated fairly in school funding when many districts are not accurately assessing their property, especially property-rich Chicago.

I have called for an investigation by the Illinois Department of Revenue on the statewide property assessments.  No one else in the education bureaucracy seems concerned about this major factor in the formula and its problems – again, they only care about their own money coming in and not the big picture of fairness.  By the way, how does the DuQuoin Superintendent look at his taxpayers knowing they are getting unfairly treated by not having the reassessments done?

Evidenced Based Funding Model has Failed in Other States

v  From an Illinois Policy article, “Ohio, North Dakota, Arkansas and Wyoming have all had “evidence-based” funding in place – some for up to a decade – and have collectively spent billions of additional dollars on select education programs. In all those states, not only has student achievement on NAEP tests failed to grow at the rate the “evidence-based” funding model promises, but achievement has been virtually flat.”The three lobbyists who wrote and promoted the bill for years claim the reason it failed in those states is because they didn’t spend enoughmoney.

v  This new spending formula IS NOT focused on student outcomes.  Money does not flow to schools based on measurable results of student growth and performance.

v   The “evidenced based formula” pretends to “fund” the ideal school and recalculates that cost every year with automatic escalators and “evidenced based” ideas about what will improve student outcomes.  It is only input based. It is seven spreadsheets going out to 89 columns of data to send money to schools.  And if our current bloated education bureaucracy does not know already how to deliver good education then this formula will not help.  The term begs the question, why haven’t they used “evidence” before?

Marginal Reform

v  The bill allows school districts to contract out for drivers’ education.  The bureaucracy calls this mandate relief.  But real mandate relief would be eliminating all drivers’ ed in schools. Driving is a privilege not a right and not something taxpayers should pay for.

v  The bill allows relief from the PE mandate in schools.  PE teachers and others think this mandate is sacrosanct.  It shouldn’t be – every district should decide for themselves how often to have PE and who must take it.  My three sport athlete does not need to take PE, for example.  I ran a bill to get rid of the state mandate earlier this year and simply let local districts decide – you would not believe the uproar by unions and their legislative supporters. Fortunately, there is some relief from this mandate in the bill on PE, but it is weak.

v  The bill allows districts at 110% of adequacy to run a referendum to force a lowering of property taxes.  The specific provisions make it much more difficult than it should be to pass such a referendum.

The One Good Provision

The bill includes a tax credit scholarship program.  This is a very important first step to introducing competition to the marketplace of education and getting kids out of poor performing schools.  Taxpayers and corporations would be able to donate up to $1 million and get 75% of that donation back as a tax credit.  They can designate down to the school where they want the scholarship money to go.  The total program is capped at $75 million.  Families making up to around $73,000 would be eligible for the scholarships and that increases to $92,000 over time.  There are various other provisions to the program, but in general only students in areas where schools are poor performing would be eligible.  About 10,000 kids could take advantage of the program. As far as I can discern, no family or child living in my district would be eligible for this scholarship except perhaps a few children in the West Chicago area.

I am a school choice advocate and I am the only one in the Illinois House that ran a school choice bill this session.  It got shot down in committee with no serious debate and colleagues accusing me of not caring about poor kids – even though that’s who would have benefitted in my bill.

The overwhelming negatives of the underlying education funding bill, as described above, outweigh this school choice part of the bill.

Additional Information

Background:  Changes to the education funding formula have been a topic of discussion for years and came to the forefront four years ago after a Senate Republican report showed that Chicago was getting lots more money through the current formula with block grants that no other district was eligible for.  CPS, countered that they had to pay for their own pensions when all state taxpayers paid for all the other teacher pensions in the state, a fair point, but there is more to that story too.

Spending Among School Districts Vary Widely – And So Do Results –The Two aren’t Linked

Meanwhile many downstate school districts complained that they truly needed more state support because many of the districts were spending 6k-9k per student when the state average is over 12k per student and while rich and overtaxed districts were spending as high as 30k per student.  Some downstate districts simply do not have the property wealth to generate the local taxes to fund their schools, in many cases some schools should receive additional support.

However, many of the districts spending lots of money for education are generating the taxes locally and receive well under 10% of their funding from the state.  While many of the districts that are low in spending receive 30-50% of their spending from the state.

In general, Illinois ranks 50th in terms of STATE support to fund education and on average the state only provides 34% of the cost to educate.  Yet in terms of average spending per student, we rank 13th nationally and number 1 compared to our surrounding states.  The average spent per student is $12,821.

In Springfield – it is all about the money.

It always is in Springfield and that is one of the biggest problems in education and in this new formula.

Spending on average $12k per student in Illinois has generated below average results for decades.  In Illinois, only 34% of school children perform at grade level statewide and only 46% of high school graduates are considered college ready (indicated by at least a 21 ACT score).  Out of the 852 school districts in the state, nearly 80% of those districts have scores at or below that state average.

This chart shows you the 17 schools that are suing the state and governor over inequitable spending. The PARCC score indicates performance at grade level, the college ready score is self-explanatory, and the poverty count is the percentage of those in poverty in a district.

District Name PARCC College Ready Poverty Count Spend/Student
BETHALTO C U SCHOOL DIST 8 28.00 37.00 49.00 8,542.00
BOND CO C U SCHOOL DIST 2 36.00 33.00 46.00 8,839.00
BUNKER HILL C U SCHOOL DIST 8 31.00 30.00 43.00 7,826.00
CAHOKIA COMM UNIT SCH DIST 187 5.00 6.00 74.00 14,959.00
CARLINVILLE C U SCHOOL DIST 1 43.00 51.00 43.00 7,549.00
GILLESPIE COMM UNIT SCH DIST 7 30.00 37.00 71.00 10,916.00
GRANT COMM CONS SCH DIST 110 23.00 N/A 53.00 11,760.00
MOUNT OLIVE C U SCHOOL DIST 5 27.00 47.00 45.00 9,631.00
MULBERRY GROVE C U SCH DIST 1 28.00 31.00 52.00 9,705.00
NOKOMIS COMM UNIT SCH DIST 22 43.00 48.00 45.00 7,965.00
PANA COMM UNIT SCHOOL DIST 8 27.00 34.00 65.00 9,278.00
SOUTHWESTERN C U SCH DIST 9 39.00 46.00 37.00 8,583.00
STAUNTON COMM UNIT SCH DIST 6 37.00 43.00 38.00 8,322.00
TAYLORVILLE C U SCH DIST 3 28.00 41.00 54.00 7,474.00
VANDALIA C U SCH DIST 203 18.00 33.00 55.00 9,677.00
WOOD RIVER-HARTFORD ELEM S D 15 13.00 N/A 63.00 9,055.00
IL VALLEY CENTRAL UNIT DIST 321 42.00 44.00 35.00 8,262.00

As you can see, in many cases spending and outcomes have little direct correlation.  For example, Taylorville and Vandalia have nearly equal poverty counts but Vandalia spends $2k more per student, or 30% more, and has much worse readiness levels. Cahokia spends 17% more than the state average in a district where the cost of living is substantially lower and only 5% of the students are at grade level.

I have many more examples and district data that are likewise informative.

Final Thoughts

Traditional ways of educating children must be challenged.  In our modern society, there are many different and hybrid ways to educate children.  Parents should be able to choose the best method for their unique children.  That means the marketplace should be opened up by having the dollars for education follow the child – just as we do at the college level.  I do not believe this means traditional public or private schools go away.  Traditional schools provide many advantages to most children and families.  However, there are certainly ways that educators would re-design schools if our antiquated way of funding k-12 education changed first.

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