Education Funding

After six years of implementation, five of which included new year-over-year funding, Illinois’ school funding formula – the Evidence Based Funding for Student Success Act, or EBF – has worked towards its promise of closing Illinois’ drastic funding and achievement gaps between schools in property-rich and property-poor districts, as well as between schools in predominantly white communities and schools that serve predominantly students of color. The EBF accomplishes this by distributing new K-12 funding to those districts that are furthest away from having the resources to fund their respective “Adequacy Targets” – which is the amount the research indicates is required to provide the level of education the students they serve need to succeed academically.

The EBF replaced an old formula that was based on a one-size-fits-all “Foundation Level” of per-pupil funding that was both inadequate in amount and inequitable in distribution. Indeed, the state’s historic investment in K-12 has been so inadequate that local property tax revenue became the primary method of funding education. But after six years of the EBF, the formula has proven that it is working as intended to counter historic inequities by investing more at the state level each year, closing Adequacy Funding Gaps for students in every region of the state and of every race and ethnicity.

Beginning in 2017, Illinois decision makers replaced one of the least-equitable K-12 public education funding formulas in the country with the Evidence-Based Funding for Student Success Act, or EBF. The EBF commits to implementing best practice in school funding by investing a year-to-year increased Minimum Target Level of $300 million each fiscal year.  Illinois met the Minimum Target Level for increased year-to-year state funding of K-12 education in each of the first three fiscal years—FY 2018, 2019, and 2020—during which the EBF was implemented. That streak now stands to be broken, however, as the FY 2021 General Fund Budget, which recently passed, does not increase K-12 funding under the EBF, but rather holds it level with FY 2020.

The Impact of Underfunding the Evidence-Based Funding Formula report analyzes the steps the EBF takes when the Minimum Target Level is not satisfied and how limited or no new Tier funding would impact districts by Tier, income level, race, and geography. The report also analyzes how state funding would be allocated if the state is unable to hold funding level with the prior fiscal year, resulting in a reduction in funding for the EBF.

On August 31, 2017, Illinois decision makers finally jettisoned one of the least-equitable K-12 public education funding formulas in the country and replaced it with the Evidence-Based Funding for Student Success Act, or EBF. The EBF represents the best practice in school funding because it ties the dollar amount taxpayers invest in schools to those educational practices which research shows actually enhance student achievement over time.  David G. Sciarra, Education Law Center, Is School Funding Fair? A National Report Card, Seventh Edition, (Newark, NJ: January 2018).

However, the current maximum investment requirement under the EBF isn’t even enough to meet the statute’s stated goal of full funding within 10 years. This in turn means that if K-12 funding only grows by the $350 million annual maximum under the statute, generations of K-12 students would continue to attend schools that lack the capacity to provide them with an adequate education.

The following issue brief identifies four different scenarios – by the number of years and amount of additional yearly investment which would be necessary – to fund the EBF on a fully inflation-adjusted basis.

CTBA analysis shows that school districts around the state would see their funding threatened by Governor Bruce Rauner's amendatory veto of Senate Bill 1, the Evidence Based Model for School Funding Reform.

Part of the veto would require that property wealth in Tax Increment Financing (TIF) districts be included in a school district's total local resources-even though school districts cannot access tax revenue from TIFs. As a result, including the TIF value makes it appear as if school districts have more property wealth than is actually the case, and reduce the amount of state funding it receives.

In total, of the $313 billion in equalized assessed value (EAV) of property wealth in Illinois, $12.4 billion is in a TIF district, as of 2015.

If this amendatory veto were approved by the legislature, it would lead to less money going to school districts all over Illinois that desperately need all the state support they can get. 

This report analyzes some of the major differences between SB1, the "Evidence-Based Funding for Student Success Act" that passed both chambers of the General Assembly; and SB1124, an alternative education funding reform bill sponsored by Senator Jason Barickman.

It finds that SB1 does not favor any school district-it does not create any special "bailout" of CPS-and instead creates a proportional, equitable distribution of new state funding for K-12 education.

The report also raises concerns about SB1124. Specifically, the supporters of SB1124 had ISBE model the impact of running $672.3 million in K-12 education funding through the new formula that bill establishes. However, HB4069-a companion bill filed to cover the cost of paying for new school funding formula distributions under SB 1124-only appropriates $288.4 million over FY2017 education funding levels for this purpose. This means there is no revenue source to support over half-$383.9 million or 57 percent-of the distribution ISBE modeled for SB1124.

In addition, SB1124 reduces funding for CPS. The reduction in education funding for the classroom CPS would realize under SB1124 as contemplated by its sponsors and the Governor's office is hard to justify from an equity standpoint. That's because as it stands today, CPS has some $2.1 billion less in current funding than what both SB 1 and SB 1124 indicate would be adequate to meet the educational needs of the children it serves-85 percent of whom are low income and 90 percent of whom are minorities. By actually reducing the amount of existing funding CPS has to educate children, SB1124 would move CPS further away from adequacy than it is under current law.

Governor Bruce Rauner has made a property tax freeze a centerpiece of his demands for a full state budget, and the Illinois Senate passed a bill (SB484) that would enact a two-year freeze in May. But such a freeze, without provision for replacement revenue from the state, would effectively be a massive funding cut for K-12 education in Illinois.

CTBA analysis finds that in the second year of a two-year freeze, education funding would be between $430 million and $830 million lower than if a freeze were not enacted. The range is a result of the fact that SB484 allows school districts to increase their property tax levies by up to the amount of the Consumer Price Index, or inflation, if doing so is necessary to make debt payments.

These cuts would hit districts all over the state. In Cook County, per-student losses could be nearly $500 per year; in the collar counties, and roughly $380 annually per student in the collar counties and downstate districts. Coming after years of disinvestment in public education, with per capita state K-12 funding down about 13 percent between FY2000 and FY2015, adjusting for inflation, this property tax freeze would impose yet another cut that would impose unnecessary pain on public schools and students across Illinois.

Every school district in Illinois except for the Chicago Public Schools has its teacher pension payments made by the state as a consolidated payment to the Teachers Retirement System. Because of this, it is difficult to determine how much money these pension payments are worth to individual districts. CTBA has created per-district estimates for both normal cost (the payment that covers benefits being earned by current employees) and legacy cost (the debt service payment to make up for previous years' underfunding). These estimates show that state TRS payments are worth an average of $1,880 per student in the Chicago suburbs, and $1,420 per student in downstate school districts.

The Evidence-Based Funding for Student Success Act, or Senate Bill (SB) 1, was approved by the Illinois General Assembly on June 11, 2017. SB1 would significantly reform the how Illinois funds public schools by replacing an outdated, one-size-fits-all formula by calculating a unique adequacy level for each school district in the state, based on evidence-based best practices and demographics. New education dollars would then be prioritized to districts with the greatest gap between "adequacy" and actual funding levels. The bill promises to make Illinois education funding fairer, and give all students a better shot at success.

If Governor Bruce Rauner vetoes SB1, as he has threatened to do, he will be harming Illinois public school students—but downstate students will be hit disproportionately hard. That's because downstate districts have a larger per-pupil adequacy gap than the statewide average: while making up 34 percent of statewide enrollment, downstate districts have 40 percent of the statewide adequacy gap. As a result, they stand to lose more additional funding if Governor Rauner vetoes SB1.