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Dead Last: State School Funding Worst of 50 States

April 27, 2013 | By Stephen Rickerl

Since 2009, general state aid has declined by hundreds of millions of dollars, a figure that solidly puts Illinois’ ability to fund its public education system last among all 50 states.

According to the Illinois State Board of Education, since 2009, appropriation levels for pre-kindergarten through 12th grade have been cut by $861 million. The foundation level, which is a required minimum to be spent per student, has not been fully funded since 2011. General state aid was prorated at 95 percent in 2012, and in 2013 aid was further reduced to 89 percent. Many in education are expecting a further reduction in 2014.

In its budget submitted to Gov. Pat Quinn, the board recommended fully funding general state aid in 2014 at the $6,119 foundation level. That would mean 2014 appropriation levels would have to increase $745 million to neutralize the cuts the board says are impacting student learning and the financial health of school districts statewide. Board data says reduced state funding has resulted in deficit spending for about 67 percent of Illinois in 2013.

Larry Joseph, director of the Fiscal Policy Center at Voices for Illinois Children, said data compiled for the Illinois Kids Count 2013 report shows on average state funding for education accounts for 28 percent of the overall cost of education — placing Illinois last among all states in funding its public education system. The state’s share of funding has not topped 33 percent since 1987, according to the report.

Joseph pointed out that the funding situation is actually much worse because the 28 percent figure is based off of data collected before general state aid began taking cuts.

He was also careful to point out the 28 percent figure is a statewide average. Some poverty-stricken districts depend much more on state aid, while more affluent districts with a strong property tax base depend little on state funding.

Local examples

Districts such as Frankfort 168 in West Frankfort are heavily dependent on general state aid. Local tax payers in that district pay $2,230 per pupil, while the state contributes $6,947 per pupil. Murphysboro CUSD 186 contributes $4,273 locally, and the state pays $8,237 per pupil. In contrast, the local share for Carbondale CHSD 165 is $12,240 per pupil, and the state only kicks in $2,989 per student.

Joseph said general state aid is distributed by a complex set of formulas, but there are two basic components — a district’s property tax wealth and poverty grants. The less property tax wealth a district has the more state aid per pupil it will get. Poverty grants, he said, are based off of how many students a district has and what percentage are low income.

Districts like Frankfort 168 and Murphysboro 186 have some of the lowest local revenue per pupil because the district’s property tax wealth is exceptionally low, said Joseph. Their state aid is a larger portion because both districts have a high percentage of low income students.

Joseph said it’s important to understand the basic formula because cuts to general state aid affect school districts differently.

Per pupil

Calculations done by the Fiscal Policy Center that are not included in the Illinois Kids Count report shows the estimated affect per pupil.

The 89 percent state aid proration averages out to about $275 less funding per pupil statewide. But in districts that are more reliant on state aid, the per pupil average has a bigger impact. In Frankfort 168, state aid cuts equate to a $630 per pupil reduction in funding, in Murphysboro 186 it’s a $515 per pupil drop, at Marion CUSD 2 it comes out to about $294 less per pupil. The Carbondale districts with a stronger property tax base fare a little better, $200 per pupil at CES 95 and $146 at Carbondale CHSD.

The impact per pupil could get much worse if education funding remains unchanged from what the state board of education has been anticipating since the governor’s proposed budget was released. The board is expecting an additional seven percent cut in general state aid, down to 82 percent.

Changes?

But some lawmakers are still optimistic the state can find more money for education.

State Rep. John Bradley, chair of the House Revenue Committee, said legislators are still negotiating the budget and trying to fit as much money into education as possible. Bradley previously told The Southern Illinoisan receipts for the previous fiscal year were better than expected, and on Tuesday he was still hopeful the general state aid figure anticipated by the state board will not be as drastic as originally thought.

“We gave all appropriations committees spending authority last month and held back 1 percent from last year,” he said. “That’s obviously a lot better than what the state board anticipated, but we’re still up in the air whether or not we can put more money into education.”

In order to lessen the impact on low-income districts, Joseph said the state board could make some changes.

“They could allocate the reduction a different way,” he said. “They could instead of doing it on a percentage basis… if instead they said we’re going to reduce general state aid for every school district by the same dollar amount, $275 per pupil, then it would be much more equitable because the heaviest burden wouldn’t be on the school districts that need the money the most.”

More affluent districts that don’t get that much state aid to begin with wouldn’t feel an 11 percent reduction the same as Frankfort 168 or Murphysboro 186, but if instead the affluent district’s state aid was reduced by the same dollar amount, Joseph argue the reduction would be more equitable.

The politics

Equality in state education funding has come to the forefront recently after House Speaker Madigan commented that downstate and Southern Illinois school districts get a “free lunch” when it comes to education funding.

Madigan made the statement in support of the idea local school districts should pay into teacher pensions to address the state’s $97 billion pension liability.

State Sen. David Luechtefeld pointed to a Senate Republican Caucus report that says Chicago schools get a disproportionate amount of state money even though the district makes up only 18 percent of the state’s average daily attendance.

“It’s pretty glaring we don’t have a free lunch,” Luechtefeld previously told The Southern Illinoisan.

The Chicago Public School District, despite accounting for 18 percent of the Illinois’ student population, gets 27 percent of the personal property replacement tax revenue distribution, 35 percent of the state’s special education funding, 37 percent of early childhood education funding, and 49 percent of PTELL Grant Funding. The grant aids counties that have a cap placed on real estate tax percentages, according to the Republican report.

Luechtefeld argues the “free lunch” claim isn’t a justifiable reason to shift pension costs to local districts.

House Democrats countered with their own report this week saying the Republican report used selective data to make its argument against downstate districts funding pension costs.

Joseph said the data included in the Republican report is misleading because it looks at total dollar amounts rather than per pupil figures. Looking at per low-income pupil levels would be even more accurate because much of the grant funding, such as the Early Childhood Block Grant targets at risk children. Chicago gets more of those grants because of its high concentration of low income children.

‘Trying to survive’

“The numbers on the face of it are probably right,” Joseph said. “But the numbers are fundamentally distorted.”

According to the Kids Count report, Chicago Public Schools receives $5,435 per pupil from the state. Two hundred school districts across the state, including Frankfort 168, Murphysboro 186 and Mount Vernon 201 get more funding per pupil than Chicago. The per pupil levels include all state aid, including grants.

“We’re trying to survive,” Anna-Jonesboro Superintendent Jim Woodward said. “I don’t have time to worry about what an inner-city or a suburban school gets. I just wish we were getting the dollars we’re supposed to be getting. It’s tough on all of us.”

Woodward’s district receives $5,241 from the state per student, and since state aid has been cut has lost $432 per pupil. The district has weathered the storm fairly well, but has had to dip into its reserve fund. A further loss to state aid, coupled with a shift in pension costs would be disastrous for Anna-Jonesboro.

“If you’re talking about shifting that cost back to the schools, that’s robbing Peter to pay Paul,” he said. “You’re putting something else on us and you’re not giving us the money we’re supposed to be getting now.”

A pension cost shift will force school districts such as Anna-Jonesboro CHS 81 to seek a property tax increase in order to continue to operate.

“I don’t know what they’re planning on us doing because you’re going to see a lot of schools that are going to be in a situation where they have to close the doors because they can’t run them,” Woodward added. “You can only deficit spend for so long, you can only borrow money for so long. There are some schools out there that have to borrow to meet payroll.”

Woodward believes the added cost of pension will have an immediate drastic impact.

“Within two years from now you’ll see 50-60 kids in a classroom, you’ll see no sports programs, there will be no extra curricular – those things will have to be fund-raised for because people will have to cut down to the bare minimum.”

No easy answers

Correcting the situation will not be easy and will require a number of actions, said Joseph.

“There’s not an easy way out,” he said. “The way out has to include several things. It has to include some kind of pension restructuring because pension costs are consuming more and more of the state budget. Now one out of every four dollars of the state’s own revenue goes for pension costs. Back in 2008 it was less than 10 percent. That’s not sustainable.”

He believes the state has to maintain the revenue from its current income tax rates, which are scheduled to roll back in 2015.

The state must also look to expand its revenue base, possibly by taxing consumer services.

To make improvements in the short run the state not only needs to reduce its backlog of bills, but look at resources outside of the general funds that could be used.

Joseph said the Fiscal Policy Center at Voices for Illinois Children will be releasing a report this week that shows there are dozens of funds in the state budget that are sitting idle but have a surplus of more than $10 million each. The money is earmarked for other purposes, but is not being used.

“The reason that the fiscal policy center has been promoting this idea is that there needs to be shared sacrifice,” he said. “A lot of these special funds haven’t been subject to budget cuts the way the general funds have been because they’re not scrutinized in the same way. The funds are essentially protected from scrutiny. Given the state’s fiscal crisis we can’t be doing that anymore.”

Read the article at TheSouthern.com.

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