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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.

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