Illinois is on the verge of reforming its inequitable school funding system

SB1, the “Evidence-Based Model,” would redirect money to the students who need it most — but Gov. Rauner is threatening an inequitable amendment

Governor Bruce Rauner at a school in Rockford. Illinois Public Radio / Flickr

Back in May, the Illinois legislature passed Senate Bill (SB) 1, which would completely overhaul the backwards way that Illinois has distributed money to local school districts. It is called the “Evidence-Based Model” because it attempts to determine what each school district actually needs, per pupil, given their local resources and the demographics of their student body.

But Governor Bruce Rauner has supported a different bill — SB1124, and a companion House Bill (HB) 4065 — that have not passed the legislature, and contain serious flaws. Now he’s threatening to use an “amendatory veto” on SB1 to unilaterally change key provisions to be more like his preferred legislation.

Moving towards equity

The central purpose of SB1 is to create a new funding formula that puts every school district in the state on equal footing, given its demographic needs. To do that, it addresses several ways in which Chicago Public Schools has been treated differently than other districts in Illinois.

One way it does that is by eliminating a separate “block grant” stream to CPS, folding all funds into a single sum called the “Base Funding Minimum.” (SB1 ensures that no district, including CPS, will see an actual decrease in funds, so the Base Funding Minimum is simply the amount that each district received from the state in the year before SB1 goes into effect.)

Another important way is by addressing the fact that CPS is the only district in Illinois that has to pay its own pension costs. In Fiscal Year 2016, the state paid $896 million in newly-earned pension benefits (the “normal cost”) for school districts in the rest of the state — much of which represented tax money raised from Chicago residents who don’t benefit from the same state support.

To remedy this, SB1 puts CPS on equal ground by making the state responsible for its normal cost pension payments. (Funding gaps for benefits earned in previous years, the so-called “legacy costs” or “unfunded liabilities,” would still belong to CPS.)

Thanks to these and other provisions, SB1 would distribute funds around the state in almost exact proportion to the size of student bodies at the regional level.

The problem with Gov. Rauner’s alternative

The changes the governor prefers have several problems.

First, they don’t go all the way in putting CPS on equal footing with other Illinois school districts. SB1124/HB4065 would cover the cost of some of CPS’ retirement benefits, but not health care — even though Illinois covers health care costs for every other school district’s retirees. That one difference would cost CPS $65 million next year alone.

The way SB1124 deals with the CPS block grant would also result in an absolute decline in funding for Chicago students — to the tune of $37.7 million less in the coming year.

SB1 needs to be signed

The budget passed by Democrats and Republicans over the Governor’s veto specifies that school funding for FY2018 must come through an evidence-based formula. SB1 is the only such formula that has passed the legislature, and the only one that truly puts all of the state’s students on level footing.

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