What happened with CPS EBF funding for FY 2023?
On Friday, August 5, 2022, the Illinois State Board of Education (“ISBE”) released its FY 2023 Evidence-Based Funding (“EBF”) calculation for the upcoming school year. In a typical year, the release of the EBF calculation for the upcoming school year would not be newsworthy. However, this year, the sixth year of the EBF implementation, was different. The reason that the
FY 2023 EBF calculation release became newsworthy is that the largest district in the state — City of Chicago School District 299, also known as Chicago Public Schools (“CPS”) — moved from being a Tier 1 district to a Tier 2 district.
EBF Tier assignments are determined by a district’s final Percent of Adequacy, which is based on a district’s Adequacy Target, Base Funding Minimum (“BFM”), and Local Capacity Target (“LCT”). A district’s Adequacy Target is based on costing out 34 different educational inputs or “elements” identified in the EBF legislation. These elements include everything from class size and professional development, to the number of core teachers, guidance counselors, and Tier 2 interventionists a particular district needs to enhance student achievement, based on the unique student population the district in question serves. Most of the elements are research or evidence-based, while a few, like maintenance costs, are predicated on statewide averages. The EBF then costs out these 34 elements for each school district to identify the dollar amount of funding that district needs based on its total enrollment, as well as the number of low-income, special needs, and English learner students it serves.
The BFM is the full dollar amount of all state funding for education that the district in question received in the immediately preceding fiscal year. Hence in FY 2023, a district’s BFM is the total amount of state funding that the district received in FY 2022. Under the EBF, a district’s BFM increases by the amount of any new EBF formula funding said district receives from the state in a year.
The LCT for each district is the dollar amount of its Adequacy Target that school district should cover from its own, local resources. A district’s LCT is based primarily on the EAV available for it to tax, versus the EAV available to all other districts. Under the EBF, low property wealth districts, which often have high property tax rates, are not expected to contribute as much towards the cost of covering their respective Adequacy Targets as are higher wealth districts.
After determining each district’s LCT and BFM, the EBF then creates a procedure for calculating how close or far that school district is from its Adequacy Target. This is determined by adding the dollar values of a district’s BFM in a year to its LCT and Corporate Personal Property Replacement Tax revenue for that same year. Then, this sum is divided by that district’s Adequacy Target for the year in question, which produces its final “Percent of Adequacy.”
In FY 2023, Tier 1 districts, which are those furthest away from Adequacy, have a final Percent of Adequacy of 73 percent or less. In FY 2023, 331 of the 851 school districts in Tier 1 have an average final Percent of Adequacy of 69 percent. In FY 2022, CPS had 68 percent final Percent of Adequacy. For FY 2023, CPS has 75 percent of the resources it needs. On the surface, this is excellent news and is proof that the EBF is working as intended.
EBF Tier assignments advise one important piece of the EBF formula: how much new Tier funding should a school district receive in a given year — aka, the distribution of new Tier funding. Tier 1 districts receive the majority — 89 percent — of new Tier funding each year. So, for CPS, the news that the district has 75 percent of the resources it needs, up from 68 percent, overwhelmingly a positive change, is actually more disconcerting. That is because 75 percent of final Percent of Adequacy means CPS is no longer a Tier 1 district, and thus, will receive less of the distribution of new Tier funding under the EBF — $27 million less to be specific.
Below is an explanation comparing key EBF metrics for CPS in FY 2022 and FY 2023, analyzed using data provided by ISBE. The figures include the following EBF steps:
1. Change in Adequacy Target elements for EBF calculation;
2. Change in Final Resources for EBF calculation; and
3. Final Percent of Adequacy/Tier assignment and Tier funding calculation.
Figure 1 displays the change in enrollment and student count that contributes to calculating a district’s individual Adequacy Target. For CPS, “ASE” — the three-year average of student enrollment — declined by 9,400 students between FY 2022 and FY 2023. Although this would be a large decrease for any other district, for CPS, this is only a decrease of 2.75 percent.
The data in Figure 2 is the most impactful to CPS’ EBF calculations for FY 2023. This is because the increase in Final Resources available for FY 2023 is the primary explanation as to why CPS realized an increase in its Final Percent of Adequacy for the year.
Overall, the EAV for CPS increased by $2 billion (3.3 percent). The Corporate Personal Property Replacement Tax (“CPPRT”) revenue grew by an unprecedented amount of $150 million, making up an additional 3 percent of revenue for CPS in FY 2023 over FY 2022. The LCT for CPS increased by $192 million in FY 2023 from FY 2022, while the BFM for CPS grew by $85 million, which includes the $56 million in new Tier funding in FY 2022, as well as any other grants and adjustments. The overall Final Resources growth for CPS was 11.3 percent, which is 10.1 percentage points greater than the growth in Adequacy Target, which mean that state and local growth in resources outpaces the growth in Adequacy Target.
As Figure 3 shows, CPS’ Adequacy Target grew 2 percent since FY 2018. However, CPS’ Final Resources grew by 20 percent. CPPRT grew 87 percent since FY 2018 and accounted for 23 percent of the Final Resource growth for CPS. Overall, this continued increase in CPPRT contributed to CPS’ final Percent of Adequacy growth by nearly 10 percent in FY 2023 over FY 2022, as shown below in Figure 4.
While it is positive that CPS has more of the resources it needs to teach the unique student population the district serves, this increase in resources shifted CPS from Tier 1 to Tier 2 because the Tier 1 Percent of Adequacy Target Ratio is set at 73 percent, and CPS is now at 74.6 Percent of Adequacy.
Given the structure of Tier funding distribution under the EBF, this means CPS is no longer included in the largest proportion of funding being distributed to districts furthest away from Adequacy and means they will receive nearly $30 million less in new Tier funding in FY 2023 compared to
FY 2022.
On the plus side, the growth in CPPRT is greater than the amount of funding CPS would have received from the state in new Tier funding, so CPS is not realizing a real loss of resources. However, CPPRT is not consistent in its growth and therefore could decline in future years. Thus, it is still important to continue the investment in CPS at the state level through the EBF, regardless of what Tier CPS is assigned. That’s because CPS is still underfunded and does not have the resources it needs to educate the students in the district.
For more information about the EBF, please read CTBA reports at https://www.ctbaonline.org.
