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January 21, 2015

Bruce Rauner is Illinois' first Republican governor in more than a decade.

If that isn't enough to shake things up, Rauner also never had held elected office, so there's no track record to assess. This means his policy "to-do" list is somewhat of an unknown, except in one area: education.

As a candidate, Rauner consistently promised that, despite the state's fiscal shortcomings, he would invest more in public education across the board. He reiterated this stance in his inaugural address, promising "to invest adequately in every neighborhood...[from] early childhood and K through 12 schools, community colleges and higher ed."

Given the data, it's hard to argue with Rauner's focus on education. By now, most are familiar with the value of providing quality, early childhood learning experiences to preschoolers, which helps reduce achievement gaps and more than pays for itself over time.

Then there’s higher education, which Illinois has cut by more than 40 percent in inflation-adjusted terms since fiscal year 2000. Meanwhile, since 1980, the only workers whose incomes, and hence purchasing power, increased at a rate greater than the cost of living have college degrees. So investing more in higher education is sensible.

The potential game changer, though, would be a real commitment to "invest adequately" in K-12 schools "in every neighborhood." After all, from either an adequacy or equity standpoint, Illinois' K-12 funding gets a failing grade.

Consider adequacy. According to the nonpartisan Education Funding Advisory Board, whose mission is to determine the cost of an adequate education based on the practices of efficiently operated schools, Illinois is some $4 billion to $5 billion short of what's needed. That's inadequate.

Then there's equity, where Illinois performs even worse, receiving an F in a recent national report card evaluating the relative fairness of states' education funding systems. The reasons are clear and pervasive. To cite just one: Illinois schools, where 30 percent or more of the students are low income, receive just 81 percent of the funding that schools with lesser poverty get. This is counterproductive, because all evidence indicates a greater investment is needed in the education of low-income than non-low income students, if the desired outcome is academic success.

The driver of this inequity is Illinois’ extreme over-reliance on property taxes to fund schools. How extreme? Illinois ranks 50th in the portion of school funding provided by the state and first in the portion provided by property taxes. This ties the quality of public education to the property wealth of the community.

If Rauner follows through on his pledge, he'll simultaneously address the fundamental inadequacy and inequity that define Illinois' education funding. The problem is that he can't get there from here — if there is adequate and equitable education funding, and here is Illinois' extant fiscal system.

Here's why. The state's temporary income tax increases just phased down, causing a loss of some $3 billion in recurring, annual revenue. There's also some $2 billion in one-time, nonrecurring budget tricks propping up the current FY2015 budget that won't be available in FY2016.

Hence, Rauner inherits a $5 billion year-to-year revenue shortfall before crafting his first budget. Meanwhile, hard costs for things like debt service are scheduled by law to jump by $900 million in the coming year, and there's some $6.8 billion in leftover, unpaid bills.

So if Rauner just wants to keep spending on core services level with last year, the accumulated deficit will almost double, hitting $12.7 billion.

Here's the kicker: the data show that the driver of Illinois' deficits isn't overspending but rather poor tax policy, and fixing tax policy is always politically contentious — so much so that it's prevented previous governors from keeping their pledges to invest more in education.

Let's hope Rauner is different.


Source: State Journal-Register