Home > Blog > Education

Tax Reform Provisions for Private K-12 Education: Unintended Consequences?

by John Gordon

While the final language is not yet out, members of the conference committee on federal tax legislation have reportedly reached an agreement on the outlines of a compromise bill. Going into the conference committee, one area of agreement in the House and Senate proposals was a measure that takes direct aim at public education: subsidizing private school tuition for wealthy families.

Both the House and Senate bills included provisions that would expand the 529 college saving account plan, which allows parents to save money and withdraw that money for higher education expenses (tax-free) to also cover up to $10,000 of tuition at private and parochial schools. (Language in the Senate bill also covers home schooling expenses.) The provision is a federal subsidy for private and parochial school tuition.

As it currently stands, 529 plans are used by largely upper-income households (median income of $142,400) and by making the proposed changes, it will only increase the growing inequality in educational attainment between high-income families and low and middle-income families. The planned expansion of this tax break is welcomed by school choice advocates, who argue that public schools are unable to properly educate students and should be more market-oriented. However, this planned expansion would be largely unavailable to low and middle-income families.

In reality, this plan does not really expand school choice options to anyone. It actually undercuts the savings benefits of the plan if they are used for private and parochial K-12 tuition. Pulling out the money sooner both lessens the tax benefit of the plan and leaves less money available in the plan for college. If you are a wealthy family, this is not much of a problem. But if you are a middle class or low-income family, it would be very unwise to use this money before college. The only real beneficiaries of this expansion would be people who are high-income and wish to have the government subsidize their kids private school tuition.

Withdrawing funds from the savings plans sooner rather than later could also have implications on the investment strategies employed by states and fund managers. Such changes could impact the eventual rates of return for all participants in 529 programs.

Along with capping the deduction for local property taxes and/or state and local income and sales taxes at $10,000, the 529 measures could set back public funding for education. Combined with the trillion dollar plus increase to the federal deficit the tax bill could bring, it’s another demonstration of why our members of Congress need to vote down this bill.

Looking at the Fragile State of Public Higher Education in Illinois

Attaining a college degree has never been more important for economic success than it is in the 21st century. The public university system is also the epicenter of the nation’s research apparatus, paving the way for the advancements that have affected every aspect of modern life. Yet, in spite of the essential nature of a thriving higher education system, Illinois is falling behind and jeopardizing the state’s ability to be a thriving economic epicenter for the United States and the entire world.

It is difficult to fully grasp the damage done to the higher education system in Illinois due to the recent, two-year long budget impasse. For the two years, Fiscal Year 2016 (FY 16) and Fiscal Year 2017 (FY 17), the state did not have a full budget.  During this time, all but one of the nine public universities experienced a decline of over 20% in their state funding from FY 15 levels. Three universities (University of Illinois, Northern Illinois University, and Southern Illinois University) and the community college system saw a decrease of over 35%. This required universities and community colleges to take steps in order to save money, such as layoffs, mandating furlough days for remaining staff, and shuttering whole programs.

  FY16-17 Ave. % change from FY 15         FY 18 % change from FY 15
Chicago State University $29,805,700 -18.0% $32,697,400 -10.0%
Eastern Illinois University $30,507,100 -29.0% $38,678,100 -10.0%
Governors State University $18,409,050 -23.5% $21,656,000 -10.0%
Illinois State University $55,258,850 -23.5% $65,004,000 -10.0%
Northeastern Illinois University $28,230,300 -23.5% $33,209,000 -10.0%
Northern Illinois University $58,747,950 -35.5% $81,983,500 -10.0%
Southern Illinois University $128,554,550 -35.6% $180,912,800 -9.3%
University of Illinois $415,221,800 -35.8% $583,005,900 -9.9%
Western Illinois University $37,377,400 -27.3% $46,300,700 -10.0%
Community Colleges $176,316,400 -36.0% $248,030,500 -10.0%

 

It comes as no surprise that during this time, most universities experienced a noticeable decline in enrollment. Between 2015-2017, only Illinois State University and two of the U of I campuses (Urbana-Champaign and Chicago) saw enrollment increases. The most drastic enrollment declines occurred at Chicago State University, Eastern Illinois University, Southern Illinois University, and Western Illinois University.1

enrollment

Chart source: Illinois Board of Higher Education (IBHE)

While the last two years have been a trying time for the state’s higher education system, the problems that face our public universities and community colleges stretch back much farther. Beginning in 2002, Illinois has steadily decreased its investment in the public university system. As shown in the graph below, in the year 2000, state funds used to make up approximately 72% of the revenue received by universities, as opposed to 28% from university income funds (mostly tuition and fees). By 2015, state income funds made up just 39% of revenue, while university income funds made up 61% of universities revenue.2

State General FundsChart source:  IBHE

Community colleges have also seen a decrease in state funding since the year 2002. This drop is not as severe as the drop seen in university funding.  Community colleges also receive local property tax revenue. In 2000, state funds made up 28% of community colleges annual revenue, with local property taxes accounting for 55% and student tuition and fees making up 27%. In 2015, state funds accounted for 15% of their revenue, with property taxes accounting for 59% and student tuition and fees accounting for 44%.3

Trends in Educational Revenue

Chart source:  IBHE

With the plummet in state funding in 2016-2017, along with the 10% cut in funding in the FY 18 budget, this troubling trend continues despite the growing demand for college graduates in the economy.

Illinois also faces a problem when it comes to who is going to and completing college. Low-income and minority students, while seeing an increase in the last decade in terms of enrollment, are still lagging behind their non-low-income and white counterparts. Cost is a major factor behind these disparities.  Families with median incomes typically need to set aside 25% of their income to pay for a four-year college education; that number is 63% for low-income families.4

2-4 Institutions

Percentage of Family Income Needed to Pay for Full-Time Enrollment at Public Institutions, 2014

Chart source:  IBHE

This is made even more problematic when considered alongside the fact that the Monetary Award Program (MAP) is not keeping up with these rising costs. In the beginning of the 21st century, the maximum MAP award could pay for almost all the tuition and fees of a low-income student. This is not even close to being the case now.5
Figure 2Chart source:  IBHE

Competition rates are another area of concern, especially with minority students. Black and Latino college students in Illinois are much less likely to complete their degrees than their white counterparts.6

Figure 5

Illinois Graduation Rate Within 150% of Normal Time; By Level of Institution and Race/Ethnicity. 2015

Chart source:  IBHE

Overall, the current state of higher education in Illinois needs serious improvement. It can be reasonably inferred that the root cause of the problems in the state stem from the dramatic decrease in public investment. If adequately funding our universities and community colleges does not become a serious priority, then it is unlikely that we will see an improvement in any of these enrollment and completion numbers.  This in turn will hobble our ability to produce an educated workforce that will sustain Illinois as the economic powerhouse of the Midwest. We owe it to present and future college students in Illinois, particularly those from disadvantaged backgrounds, to do better.

 

1.  IBHE Data Points
2. IBHE Fiscal Year 2017 Higher Education Budget Recommendations: Operations, Grants, and Capital Improvements
3. IBHE Fiscal Year 2017 Higher Education Budget Recommendations: Operations, Grants, and Capital Improvements
4. Midwestern Higher Education Compact 2016
5. Illinois Student Assistance Commission
6. National Center for Education Statistics

Illinois School Funding Still in Limbo

Written by John Gordon

Governor Bruce Rauner has made good on his promise to issue an amendatory veto on the school funding reform bill that passed both chambers of the General Assembly. Senate Bill 1, sponsored by state Sen. Andy Manar (D-Bunker Hill) overhauled the way in which the state funds public schools by instituting an evidence-based model that would distribute new funds to schools that are furthest away from their unique adequacy targets while maintaining current levels of state funding to ensure no school district experiences a loss of state funds from the 2016-2017 school year.

The urgency behind the debate on SB 1 stems from the recently passed budget. In the budget bill, it states that approximately $6.7 billion in state funds to schools must be distributed through an evidence-based model. This means that if SB 1 or a similar bill with an evidence-based model is not signed into law before the new school year begins, then the state will not be able to legally distribute those funds. If those funds are not released, then school districts will be faced with the possibility of closing their doors if they cannot find the funds to continue.

The biggest changes to the bill from the Governor’s amendatory veto are the hold-harmless provision that ensures no school district loses money, the provisions concerning the pension obligations for Chicago Public Schools (CPS) and the block-grant CPS receives from the state and the minimum funding level recommendation.

Hold-Harmless

Senate Bill 1 included a “hold-harmless’ provision that ensures no school district receives less funding from the state than it did during the 2016-2017 school year. This hold-harmless provision is calculated at the per-district level in SB 1. Governor Rauner changes this in his amendatory veto by calculating a school district’s hold-harmless at the per-pupil level beginning in the 2020-2021 school year based on average student enrollment. Advocates for SB 1 point out that, under this change, if a school district experiences a loss in student population then it will lose state funding.

Chicago

In SB 1, both the normal pension costs for CPS and the block-grant are folded into CPS’ hold-harmless funding. The Governor stated this is tantamount to a bailout for CPS at the expense of suburban and downstate school districts. In his amendatory veto, the Governor takes the approximately $200 million CPS receives from the block-grant and distributes it throughout the rest of the state. He also moves the CPS pension pick-up to the pension code. SB 1 proponents argue that taking the block-grant away from CPS in the fashion that Governor Rauner does in his amendatory veto would cause CPS, by far the largest school district in the state, to lose out on new funds for classroom instruction by shifting them towards administrative costs and that moving the CPS pension pick-up is beyond the scope of his amendatory veto powers.

Funding Levels

Illinois school districts currently receive approximately 25% of their funding from the state, with majority of the remaining funding coming from local sources of revenue, namely property taxes. One of the main goals of SB 1 is to increase the percentage of state funding to Illinois schools over the next decade. The stated funding objective laid out in SB 1 is to increase state funding by $350 million per year. If that amount is not appropriated, then whatever increased amount is appropriated will be dispersed more progressively to school districts that are furthest away from their adequacy targets. In his amendatory veto, Governor Rauner eliminates that language and does not replace it with any figure. Not maintaining the $350 million level will delay the goal of decreasing the reliance on local dollars within a decade and will make it difficult for more school districts to reach adequacy levels set in SB 1 than if the funding minimum level is maintained at its current level.

The General Assembly now has 15 days from the issuance of the amendatory veto (August 1st) to either accept or reject the Governors amendatory veto. Both would require a 3/5 majority vote. If neither action occurs, then SB 1 dies. If that happens, then Illinois will be facing a full-blown crisis as state funding for schools will be withheld and many school districts will be forced to take drastic measures if they hope to remain open for the full school year.

The new state budget and education funding: still waiting

Written by John Gordon

K-12 Education Funding Left Hanging in the Balance for Upcoming School Year

Illinois has a state budget for Fiscal Year 2018 (FY18) that began on July 1st but not the means for appropriating the dollars for K-12 education. While the legislature overrode Governor Rauner’s vetoes of the state budget and revenue bills, the budget bill (Senate Bill 6) contained language stipulating that the majority of the dollars set aside for elementary and secondary education were to be allocated according to an “evidence-based formula.” The result of this decision is that public schools in Illinois remain in jeopardy of not opening on time or only being able to stay open for a short period of time.

The amount appropriated for evidence-based funding is approximately $6.7 billion in general funds and reflects a consolidation of five prior education line items (General State Aid, bilingual education, transportation for special education students, special education personnel, and services for extraordinary special education pupils). This is an increase of $776 million from the FY 17 funds. The formula incorporates $5.9 billion in general funds into the new formula as part of a “hold-harmless” provision, which ensures no school district receives less funding from the state than they received in the 2016-2017 school year.

The evidence-based formula, by which this pool of dollars is to be allocated, is outlined in SB 1.  That bill combines 27 weighted elements into the current school aid formula including the number of low income students, special education students, students for whom English is not their first language, and up-to-date text books. The amount of money the district received in the last academic year (a district’s “Base Funding Minimum”) is then combined with the district’s local available resources. Match that against the adequacy level and the difference determines the additional state funding for the district under SB 1 -with more money going to those districts further away from their adequacy level.

The formula then separates school districts into four tiers based on their adequacy targets, with districts in Tier 1 being the furthest away from their adequacy target and districts in Tier 4 being at or above their targeted level. There is a little over $353 million in funding allocated to help districts make gains towards their targets, with 99% of the funds going to districts in tiers 1 and 2.

The main point of contention between the proponents of SB 1 and the Governor is that the FY 18 normal pensions costs for Chicago Public Schools (CPS) is incorporated into CPS’ Base Funding Minimum (approximately $221 million). The Governor believes this is equivalent to a “bailout” for CPS, while CPS and the advocates of SB 1 argue that Chicago is placed at a disadvantage because the state picks up the pension costs for every other school district.

As a consequence of the Governor’s threat, one of the Senate sponsors of the bill placed a procedural motion on it that holds the bill in the Senate and prevents the chamber from sending it to the Governor. Absent SB 1, or any similar bill, there’s no way for the State Board of Education to send the $6.7 billion to local school districts. Without the dollars, some Illinois schools may not open in August.  Others might be able to open the doors but depending on the district’s finances could not keep them open through the school year.

Therefore, either the legislature could send the Governor SB 1 and, if he vetoes it, attempt to override the veto, send a new piece of legislation, or the legislature could send SB 1 to the Governor as a part of a compromise that includes a package of other bills that he would sign into law.

Higher Education

While elementary and secondary school administrators are left wondering what will happen with their state dollars, SB 6 provides funding for FY18 (as well as funds appropriated for costs incurred in FY17) but that funding generally represents a 10% cut from FY15.

The state’s public university system suffered enormously due to the budget impasse. Five universities saw their credit rating lowered to junk status, enrollment dropped at a majority of the state universities, and Monetary Award Program (MAP) grant recipients were left with uncertainty on if their awards would be honored. (MAP provides college grants to low-income students.) Area economies that rely on a healthy university saw a downturn. With a full budget in place, these institutions and their students can begin to take stock and plan for a future with some stability.

During the last two fiscal years, Illinois funded its universities in stopgap appropriation bills. Averaging the funding for the last two years, you can see the comparison to FY15 (the last prior year Illinois had a full-year budget). The numbers show the real damage sustained by the state’s higher education system from the two-year impasse.

 

FY16-FY17 Average % change from FY 15 FY 18 % change from FY 15
Chicago State University $29,805,700 -18.0% $32,697,400 -10.0%
Eastern Illinois University $30,507,100 -29.0% $38,678,100 -10.0%
Governors State University $18,409,050 -23.5% $21,656,000 -10.0%
Illinois State University $55,258,850 -23.5% $65,004,000 -10.0%
Northeastern Illinois University $28,230,300 -23.5% $33,209,000 -10.0%
Northern Illinois University $58,747,950 -35.5% $81,983,500 -10.0%
Southern Illinois University $128,554,550 -35.6% $180,912,800 -9.3%
University of Illinois $415,221,800 -35.8% $583,005,900 -9.9%
Western Illinois University $37,377,400 -27.3% $46,300,700 -10.0%
Community Colleges $176,316,400 -36.0% $248,030,500 -10.0%

 

Not only did students face uncertainty with courses, staff, and programs cut, but there was no appropriation for Monetary Award Grants until this budget passed. Not only does SB 6 provide funding for the recently ended fiscal year ($365 million) but the program receives $401 million in funding, a 10% increase from FY 15.

While funding is in place for FY18, state university administrators still have difficult choices to make with a 10% cut from FY15. It is unclear whether faculty and staff let go by the universities during the last two years will return. In some cases, students facing the uncertainty of not having a MAP grant curtailed their academic careers. Certain university faculty, watching the financial uncertainty of the state and its universities, left the state. A state budget is in place but it may take time for our universities to recover.

SB 1- Leveling the Playing Field

Written by John Gordon

The current attempt to reform how Illinois funds school districts in the state is at a critical point. Both the Senate and the House have passed a bill that would allow new state dollars to flow to school districts in the most financial need, giving more kids opportunities for the quality education that they deserve and that is their constitutional right. Governor Rauner, while expressing support for much of what the bill proposes, declared his intent to veto the legislation. As of now, the bill remains in the Senate chamber as lawmakers and advocates attempt to persuade the Governor to sign the bill into law.

The Problem

As it currently stands, school districts in Illinois rely heavily on local taxes, largely property taxes, for funding. Roughly 67% of all school funding in Illinois comes from local taxes, while the state only provides approximately 25%.1 This has led to a very inequitable system. For every $1.00 spent on a non-low-income student, Illinois spends $0.81 for every low-income student.2 This system is also a main contributor to Illinois having among the highest property taxes in the nation.3

Senate Bill 1 aims to change this by setting a goal for increased levels of state funding for education and a system to distribute new dollars for education to those school districts in the most need of more funding. The overall goal of Senate Bill 1 is to increase funding for education by $350 million per year over the next ten years to bring the state closer to parity in terms of funding education. This funding would need to be appropriated every year by the General Assembly. The $350 million is a goal, not a set law.

How Does the New Formula Work?

One of the main provisions of Senate Bill 1 is the “Hold-Harmless” provision. This means that no school district in the state can receive less state funding than it received in the 2016-2017 school year. This is done by creating a “Base Funding Minimum Level” for each school district.

The bill also instructs the State Board of Education to establish unique “Adequacy Targets” for each school district in Illinois, based on figures that influence school spending and school needs. The adequacy targets take into account the Base Funding Minimum Level described above, the availability of local resources, and what the bill refers to as “Essential Elements” needed to ensure K-12 students in Illinois are able to graduate high school and attend college. These 27 elements have been identified by academic research. Some of the 27 elements include:

  • Up to date textbooks and learning materials
  • Up to date technology for classroom instruction
  • Increased funding for low-income and special education students
  • Increased support for students who are learning English
  • Limited classroom sizes

Where Will the Money Go?

The bill groups school districts based on how their local available income meets the established adequacy goal. The first group of districts (Tier 1) are those who are at less than 65% of their adequacy targets. The second level of school districts (Tier 2) are those who are between 65% and 90% of their adequacy targets. The third level (Tier 3) are districts between 91%-100% of their targets. The fourth level (Tier 4) are districts that are above 100% of their targets.

Per the State Board of Education, 77% of school districts in Illinois are in Tiers 1 and 2. In the bill, 99% of the new funding (the $350 million stated above) would be distributed among these school districts to increase their adequacy levels.

Property Tax Relief

Senate Bill 1 also establishes a property tax relief fund. This fund, which is also subject to appropriation, would allow school districts in high-tax, low-wealth areas of the state to receive relief in their property tax bills. If a district receives this relief grant from the state, it must reduce its levy in the following year by the dollar amount they received from the state. As stated earlier, this is subject to a separate appropriation from the General Assembly. The more the G.A. appropriates for this fund, the number of school districts that can receive this benefit will increase.

Chicago

Due to its sheer size, Chicago Public Schools (CPS) both receives and carries burdens that other school districts in Illinois do not. For example, CPS receives a block grant from the state of approximately $250 million that other districts do not receive.  However, CPS is responsible for the pensions of their unit’s teachers, while the state covers the pensions for teachers in every other school district.

The bill attempts to address both Chicago’s educational and pension needs in the bill. The block grant and CPS’ normal pension costs are added to the district’s Base Funding Minimum Level. This does indeed help Chicago with their pensions, but it comes at a cost. If these two factors were not included in CPS’ Base Funding Minimum Level, CPS would receive a larger per-pupil funding increase than they are with these two factors included.

It is important to remember that the Chicago Public School System educates roughly 20% of the state’s overall student population. Of all students in CPS, approximately 84% are low-income.4 Any attempt to reform the school funding formula in Illinois to raise the level of equity between wealthy and non-wealthy school districts will have some benefit for Chicago.

The Necessity of Proper Funding

All of the reforms in Senate Bill 1 are predicated on proper funding levels from the state. Again, the stated goal in Senate Bill 1 is to increase the level of state funding to school by $350 million per year for the next ten years. The bill does prepare for the possibility that the state will fall short of this in any given year by distributing whatever funding is appropriated more progressively to those districts furthest away from their adequacy targets. This would reduce the level of new funding to schools in Tiers 3 and 4 to practically zero. But the lower the amount of new funding from the state, the less effective the formula will be at reducing inequality. The reduced funding will also continue to place the burden of school financing on local tax dollars, which is the biggest drivers of the inequity among school districts in Illinois.

This makes the need for a full budget agreement this summer and a return to the normal year-to-year budget process all the more critical. If the state continues down its current path, a new funding formula will be lost among the instability and financial ruin.


1. Illinois State Board of Education 2015-2016 Report Card

2. The Education Trust

3.New York Times, March 10, 2017 “Highest and Lowest Property Tax Rates in the U.S.”

4.Illinois State Board of Education 2015-2016 Report Card, Chicago School District 299

Higher Education Funding Cuts, Reduced Enrollment

The on-going impasse in Springfield continues to put a severe strain on the public university system in Illinois. As the legislature and governor fail to approve a complete budget for the fiscal year, it puts universities in the unenviable situation of having to raise tuition and fees while also looking at ways to cut costs. Some recent examples:

  • Southern Illinois University has reduced staff by almost 10% between the academic years starting in 2014 and 2016. It has reduced its authorizing budget by $21 million since the beginning of the budget impasse. Just last week, Southern Illinois University trustees approved a loan of up to $35 million from Southern Illinois University-Edwardsville to support its Carbondale campus.
  • Since 2016, Eastern Illinois University has reduced its workforce by more than 500 people (from 1,743 employees to 1,224 employees).
  • Chicago State University eliminated more than 400 staff positions in 2016.
  • Governors State University this year approved eliminating 22 degree programs and raises tuition by 15%.
  • Northern Illinois University has announced a reduction of 150 staff positons for Fiscal Year 2018.
  • As a cost-cutting measure, Northeastern Illinois University shut down the campus for three days last month. It has also required employees to take furlough days during the last two academic years.


State University Budget Cuts

university funding May
MAP funding

 

Student Enrollment
As the funding issues continue, it appears to be having an impact on the enrollment of full-time students.

university enrollment

 

In fact, Chicago State University enrolled just 86 freshman this fall.

This decline coincides with a trend that has been occurring throughout the decade. Illinois is among the nation’s leaders in outmigration of graduating high school students, with an estimated net loss of over 16,000 students. This is not a recent development; Illinois high school students have been leaving the state for college in increasing numbers.

Illinois out-of-state students

Source:  Illinois Board of Higher Education

Illinois high school and college students deserve a world class higher education system that allows them to compete in the world economy. As it currently stands, Illinois is underfunding its universities with subsequent staff and program cuts.

This graduate season it is worth contemplating the higher education system we want for our state.  More survey data might be needed for a more accurate picture to explain enrollment declines.  However, it seems the state’s high school and college students see what the future might hold for Illinois’ higher education system and are leaving.

Written by John Gordon

Illinois Must End the Budget Crisis and Target Investments for Low-income Parents of Color and their Children

With only three scheduled veto session days remaining and money from the state’s “stopgap” budget set to run out at the end of December, Illinois lawmakers need to act urgently to restore critical programs that strengthen young parents and their children. This week, Voices for Illinois Children released a new report highlighting the damage the ongoing budget crisis is having on the economic security of Illinois’ children and families and makes recommendations to raise the necessary revenue to balance the budget and fully restore programs that help communities thrive.

The first five years of life are the most important period of growth for a child, but persistent poverty can harm young children and set back their likelihood of success in school and in their adult life. With one in 10 Illinois children under six living in deep poverty (50 percent of the poverty level, or roughly $12,125 for a family of four) and four in ten living below twice the poverty rate ($48,500 for a family of four), the urgency of investing in programs that counter the negative effects of poverty are paramount.

The current “stopgap” budget fails to provide adequate funding for many important programs that support young parents to pursue their education and provide their children with high-quality childcare and programs that support their well-being. As a result, several programs, including the Monetary Award Program which provides grants for low-income college students, Adult Basic Education and Literacy programs, and home visiting programs that support child well-being will not have any funding available at the start of 2017.

voices_parent_educ-budget
To fully support young parents in Illinois and create opportunities for their children and families, Illinois must:

• Restore eligibility for the Child Care Assistance Program to 185 percent of the poverty level and to parents pursuing a college degree full time.
• Restore state investments in higher education and MAP grants.
• Target funding to areas that improve educational outcomes for low-income parents of color.
• Restore Safe from the Start funding and increase investments in children’s mental health.

College Price Tag Growing in Illinois

With the lack of a state budget this year and no funding for tuition assistance grants through the state’s Monetary Award Program (MAP), Illinois lawmakers are putting more students and the state economy at risk of falling behind. Without the promise of financial aid and more affordable tuition, many low-income Illinoisans will not be able to pursue college, a pre-requisite for obtaining a family-supporting career and moving into the middle class.

Even before the current budget impasse, Illinois was not making the needed investments to keep college within reach for aspiring college students. Last week, the Center on Budget and Policy Priorities released data showing that as of 2014, Illinois’ investments in postsecondary education were still lagging 4 percent behind pre-recession levels. This decline in state investments shifts costs onto students and families in the form of higher tuition. Overall, in-state tuition at Illinois’ four-year public universities is up more than $2,300 since 2008.

These higher costs mean many low- and moderate-income students must rely on working full or part-time to pay for tuition and fees. While some work can be beneficial during school, too much work can delay completion and leave students at greater risk of dropping out. And those students choosing to take out loans to pay for college often leave school with large amounts of debt when they enter the job market. In Illinois, one in ten student loan borrowers default on their loan within three years of leaving school.

In the not too distant past, Illinois stood out among many states for its commitment to supporting low-income students to attend college because of MAP grants. But ongoing tuition hikes, coupled with the lack of funding for MAP grants, sends the wrong message to Illinois’ current and aspiring college students about the state’s commitment to postsecondary education.

With more jobs of the future requiring postsecondary education, it is more important than ever for Illinois to invest in the future workers of the state through postsecondary education and skills training.

Download (PDF, 310KB)

Without Revenue, State’s Unpaid Bills Skyrocketing

After the failure of lawmakers and Governor Rauner to replace revenue lost when income tax rates declined by 25 percent a year ago, Illinois is awash in a sea of red ink. On the current path, according to recently released projections from the Governor’s Office of Management and Budget (GOMB), the state could end the 2019 budget year with nearly $25 billion in unpaid bills.

For the current budget year, which began July 1 and for which there is still no fully enacted budget, GOMB estimates expenditures of $36.6 billion. That leaves a projected general funds deficit of $4.6 billion for this budget year based on estimated revenue. GOMB then projects budget deficits surpassing $5 billion for each of the following three budget years.

On this track, Illinois would need to cut services and other costs by approximately $8.3 billion for each of the next three budget years to eliminate the state’s backlog of unpaid bills by the end of the 2019 budget year. To put that in perspective, that amount exceeds the entire annual K-12 general funds education budget projected for each of the next three budget years. The devastating scale of the potential cuts demonstrates the urgent need for new revenue to avoid dismantling core state services and investments in education, health care, and public safety.

Look at just a few examples of the damage already done from the state’s failure to enact a full budget that raises the urgently needed resources:

  • The State has told some 120,000 college students that there is no tuition assistance via the Monetary Award Program until there’s a budget. As a result, some 1,000 low-income students did not return to school for the second semester. Chicago State University officials have indicated the university may need to shut its doors this spring.
  • An Oak Forest firm that provided home health care assistants for about 300 elderly residents has informed the Illinois Department of Aging it can no longer provide services for the state since the provider has not been paid since July 1, 2015.
  • United Way of Illinois reports 84 percent of 544 human service agencies it surveyed have cut programs due to the state budget stalemate.

These areas are the tip of the iceberg in terms of the ongoing harm the budget impasse is causing. And, without revenue, damaging cuts to services will certainly grow far beyond what we are already experiencing.  It is clear that the State needs significant revenue not just to meet its current projected and anticipated expenditures based on state law but also to return to service levels seen in the last budget year (which had already seen service level cuts from prior years).

On Wednesday, Jan. 27, the governor will provide his State of the State Address. It’s a time to acknowledge our state’s dire situation and lay out a framework to fix it. Let’s hope that the vision presented is one of investing in Illinois, providing educational and work opportunities for all, and lending a helping hand to those in need.

Seven months after the start of the budget year, it is imperative that Governor Rauner and leaders in the General Assembly work together to enact a budget that invests in children, families, and our communities.

 

Tuition Assistance Halted Without State Budget

Without a state budget, students in financial need will not receive the Monetary Award Program (MAP) grants that help them attend college. Nearly 130,000 students received MAP grants last school year, according to a data recently released by Voices. The news segment below describes what is at stake for students who may be forced to take on more debt or even withdraw from school.

[ABC-7 news segment will play after embedded advertisement.]