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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

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