* Tom Lisi is now at the Decatur Herald & Review and filed this report about school funding reform…
The Republican grievance over Chicago centers around language in the formula that would essentially fold the city into the rest of the state. Chicago Public Schools, one of the largest districts in the country, has long acted as a separate creature when it comes to state money for schools: It’s responsible for items the state covers for all other districts such as teacher pension costs and debt service payments.
Instead, CPS has been getting a unique state payment known as the “block grant.” Officials from Chicago have long argued their standalone finances are far more than what the state gives them, but Republicans say the city has done a terrible job of management.
The Democratic formula tries to change all that by establishing a uniform mechanism for all districts. What was formerly the block grant would be folded into Chicago’s total state aid and counted toward the district’s need. But Rauner said that’s special treatment and siphoning money that should be going downstate, along with the contention of a need for new money.
Manar said that’s entirely wrong. “The block grant is gone in this bill. In exchange, we cover a piece of the pension cost — not their full pension cost — a piece.” The legislation would include $215 million to go to Chicago’s suffering teacher pension system.
Purvis and Rauner say the state should not be doing that on top of including the block grant money in the new formula. “They got the block grants, but I think everyone agrees they should get one or the other,” Purvis said.
Hmm. I thought the governor was OK with both as long as he got pension reform. A Senate Democratic official put it this way today: “That was the deal he was for before he was against it.”
* Anyway, that brings us to our deep dive. At my request, Fix the Formula Illinois & Funding Illinois’ Future Coalition, which includes the Illinois Association of School Administrators and the Illinois Association of School Business Officials among others, sent me this…
SB1 ends the special Chicago Block Grants going forward, and the dollar value of those grants last year are incorporated into Chicago’s base funding under SB1. In other words, Chicago students keep their prior year funding just like all other students keep their funding from the prior year. That’s pre-existing funding Chicago students get to keep, not new money.
However, because this pre-existing funding is included in Chicago’s base under SB1, it moves CPS closer to its Adequacy Target. That means a reduction in the amount of formula funding CPS shares in when new state funding for schools is distributed under the new Evidence Based Model.
As you know, the state pays the pension costs for all districts but Chicago Public Schools. Resolving this lack of pension parity under current law is crucial to getting school funding right in Illinois. To accomplish this, SB1 covers the “normal cost” of teacher pensions. Normal cost is the actual employer contribution required to cover the future pension benefits teachers are earning in a single year. For CPS that’s $220 million. For the rest of the school districts in the state it’s $900 million for normal pension costs, according to the Center for Tax and Budget Accountability. The amount the state contributes for CPS’ normal cost under SB1 doesn’t grow in the future. Moreover, if in the future other districts become required to pay their own pension costs, they would be handled the same way. CPS’ pension bill goes directly to them while the bill for every other district gets sent to the state. That doesn’t change.
The same is true for legacy (unfunded liability) costs. CPS is the only district that must pay its own legacy pensions costs. That means CPS has to use a portion of its local property tax dollars to cover this pension legacy cost. Obviously, CPS can’t spend the same tax dollar twice, so the local revenue it has to spend on pensions is not available to spend on students and just 86 cents on the dollar can go to the classroom. The formula in SB1 accounts for this by reducing Chicago’s local capacity target—that is the amount of local tax resources CPS is able to use to fund schools. It doesn’t give Chicago these dollars, but recognizes it must use a portion of local property tax resources to pay the required unfunded liability for its pension system.
Many districts moved across funding tiers as changes were made following the initial introduction of SB1 and similar legislation in HB2808. For example, many low-wealth downstate districts that started in Tier 1 moved to Tier 2 in one of the amendments. After a series of changes, many of these districts ended up back in Tier 1, as did CPS, as dollars were added to the tier to account for lower adequacy. That is part of the process of refining a bill as complex as school funding reform. In the end the formula helps those districts it intends—districts with more low-income students or low property wealth, whether in Chicago or elsewhere in the state.
After all is said and done, CPS would receive $70 million from the $350 million new funding modeled in the formula, or 20%, proportionate to the number of Chicago students. This is less per pupil than districts with similar low-income populations and somewhat more than districts with similar property value. Which makes perfect sense given CPS serves a greater percentage of low-income students than do most districts with similar property wealth available to tax, but has more property wealth than most districts that serve a similar proportion of low income children.
The good news is the evidence-based formula in SB1 accomplishes its intended purpose of providing new funding in a manner that equitably accounts for both student demographics and population. Over 80% of new dollars go to districts with greater than 50% low income students, while 70% of new dollars go to districts with lower than median property wealth.
Click here for the full deep dive.
- 47th Ward - Tuesday, Jun 13, 17 @ 3:04 pm:
===After all is said and done, CPS would receive $70 million from the $350 million new funding modeled in the formula, or 20%, proportionate to the number of Chicago students. This is less per pupil than districts with similar low-income populations and somewhat more than districts with similar property value. Which makes perfect sense given CPS serves a greater percentage of low-income students than do most districts with similar property wealth available to tax, but has more property wealth than most districts that serve a similar proportion of low income children.===
Rauner keeps calling this a bailout of CPS. Governor, I don’t think bailout means what you think it means.
- winners and losers - Tuesday, Jun 13, 17 @ 3:12 pm:
Rich - Comments from the group that wrote SB 1, and all of its Amendments is not much of any objective deep dive.
I am not one to defend a Rauner position, but the deal was NEVER BOTH the $250 million extra CPS receives in the Block Grant AND the $215 to $220 for pensions.
==back in Tier 1, as did CPS==
That is other key last-minute change. After 5 Senate Amendments to SB 1, and 1 other House Amendment, in House Floor Amendment 2 (which went directly to the House Floor), Chicago Public Schools finally went from Tier 2 to Tier 1 (the poorest schools getting 50% of all NEW funding).
- Rich Miller - Tuesday, Jun 13, 17 @ 3:14 pm:
===any objective deep dive===
Didn’t say it was objective. It’ll have to do until we get one.
- Texas Red - Tuesday, Jun 13, 17 @ 3:15 pm:
The CPS funding crisis is one they created themselves. Two things created the monster - first in 1981 when CPS picked-up the majority of pension contributions in a CTU contact negotiation. and secondly the 1995 law that allowed Chicago to combine all property tax lines into one in an attempt to fix the districts finances at the time . The agreement also created the block grant and eliminated the categorical state aid. Of course the CPS pension payments that were once a separate and must pay line item were often neglected. The last thing that resident of Illinois should do is send more state wide money to CPS.
- walker - Tuesday, Jun 13, 17 @ 3:17 pm:
““That was the deal he was for before he was against it.””
Sounds like Governor Rauner did to Purvis what he did to Radogno. –Negotiate an agreement on my behalf for months, but don’t count on me signing what you committed in the agreement.
- winners and losers - Tuesday, Jun 13, 17 @ 3:20 pm:
Also, in House Amendment 1 to SB 1 (when Chicago was in Tier 2), 10% more money was shifted into Tier 2; and in Amendment 2 that 10% was shifted back to Tier 1 (when Chicago was in Tier 1).
- Opiate of the Masses - Tuesday, Jun 13, 17 @ 3:31 pm:
=winners and losers=
The deal was always no districts will lose funding (hold harmless). Chicago is now treated like the rest of IL (pensions) and did not lose funding (block grant rolled into the formula).
This is no bailout. In fact, the district where I live does better than CPS and nobody is calling it a bailout around here.
- Rich Miller - Tuesday, Jun 13, 17 @ 3:36 pm:
===but the deal was NEVER BOTH the $250 million extra CPS receives in the Block Grant AND the $215 to $220 for pensions. ===
===The deal was always no districts will lose funding ===
That second statement is factually correct. If they killed the block grant, CPS would lose funding. And Rauner has said many times he’d do the CPS pension deal if he got pension reform.
- winners and losers - Tuesday, Jun 13, 17 @ 3:39 pm:
Opiate: I did not use the word bailout. Chicago may need the money.
But everyone should know what happened to SB 1, and why it happened.
Eventually we may get to a discussion on which of the 27 elements in the Evidence Based Model are actually based on evidence.
And on why schools are NOT required to do any of the 27 elements, but can spend the State money as they choose (with a vague limit for special ed and English language learners).
- wordslinger - Tuesday, Jun 13, 17 @ 3:43 pm:
–Hmm. I thought the governor was OK with both as long as he got pension reform. A Senate Democratic official put it this way today: “That was the deal he was for before he was against it.”–
Gov. Lucy has a well-established pattern.
- winners and losers - Tuesday, Jun 13, 17 @ 3:49 pm:
==Rauner has said many times he’d do the CPS pension deal if he got pension reform==
Yes, but Rauner was always in favor of CPS receiving less money.
- Annonin' - Tuesday, Jun 13, 17 @ 3:59 pm:
Bottom line…a formula change that hurts too many districts and/or chicago will never pass.
Take the new plan and end of block grants. See if can teach the kids for awhile
- Anon - Tuesday, Jun 13, 17 @ 4:13 pm:
The letter makes sense as including the Block Grant in CPS’ Adequacy Target would result in a higher Adequacy Target and thus fewer new State dollars flowing towards CPS. However, artificially lowering the Local Capacity Target (by subtracting the pension legacy cost) will decrease their local revenue, dropping CPS into Tier 1 and moving them up in line for new State aid. So it’s a double-edged sword. Increasing the Adequacy Target in one provision, but decreasing the Local Capacity Target in another.
Add to that the fact that the local contribution required by CPS is already much lower than other school districts because, compared to the rest of the state, Chicago is under-taxed. The effective tax rate for a homeowner in the City of Chicago is 1.71%, far below tax rates in other school districts. What’s even more off-putting is that this $500 million windfall will continue to grow over the years as the pension payments ramp up and will continue to drive down its Local Capacity Target.
Finally, the bill provides for the use of PTELL EAVs under certain conditions. This provision lowers the local contribution required by the City of Chicago by billions of dollars. As property values continue to grow, use of the PTELL EAV will continue to drive down the amount of funding the City of Chicago should be contributing locally to its schools.
- Rod - Tuesday, Jun 13, 17 @ 4:19 pm:
Much of what the coalition provided Rich in the attached document is a reasonably honest presentation, but this important passage is not: “First, ISBE’s analysis of the bill, posted to its website, is the only official analysis of SB1. It shows the gains realized by every school district in Illinois, when state funding for education is increased by $350 million over the prior year, which is aligned with the $3.5 billion over 10 years discussed by both the House Education Task Force and the Governor’s Commission.” The $3.5 billion figure was in fact the lowest estimate discussed.
The Commission report to the Governor clearly stated: “At the time of writing this report, the amount of additional state money needed for all districts in Illinois to be at or above their adequacy target is estimated to be a minimum of $3.5 billion over the next decade. It should be noted that this figure makes several assumptions and will fluctuate over time as adequacy targets and local capacity change. In fact, for the state to take an increasingly larger share of responsibility for education funding (e.g., 51%), this figure is projected to rise by at least $2.5 billion. However, how the rate at which we achieve that goal has not been decided. Furthermore, this figure does not account for additional capital needs of the districts.” [page 3 of the report]
What is being done by the coalition is hiding the ball of potential costs of SB 1. That is not surprising given the incredible fiscal situation of our State.
- Mr. Peabody - Tuesday, Jun 13, 17 @ 4:24 pm:
Rich -
I believe that if we all step into the Wabac or speak to those who were involved at the time, we would recall that the whole idea behind the “block grant” to CPS was specifically so that the funds could be diverted from the teacher’s retirement system and used for other things.
Essentially, Mayor Daley was annoyed that he did not have the ability to skip pension payments in order to deal with fiscal emergencies or simply kick the can down the road on pensions while avoiding tax hikes.
Atleast, that is how I remember it.
- Truth Teller - Tuesday, Jun 13, 17 @ 5:46 pm:
Winners and Losers -
I read the language in the final amendment to SB1 - the special education and english language resource allocation is not vague at all. In fact it was strengthened in that amendment. It specifically requires those dollars to be spent in accordance with current statute (BFM) and outlines specific FTE requirements (EBM). Plus the public spending plan requirement will give every citizen an opportunity to comment on how a district allocates all the resources. Transparency and accountability are higher in SB1 than anything currently in place. Stop painting an inaccurate picture of what SB1 really does.
- Roman - Tuesday, Jun 13, 17 @ 6:05 pm:
- Texas Red - said: “The CPS funding crisis is one they created themselves.”
Few have clean hands on this. That 1995 law you referenced that eliminated the special pension property tax levy and created the block grants was opposed by CPS, CTU, and every single Chicago member of the General Assembly. In other words, downstaters (Edgar) and suburbanites (Pate, Daniels and their members) helped create the crisis too.
- Truth Teller - Tuesday, Jun 13, 17 @ 6:08 pm:
Anon -
Seriously - you just cut and paste from an ILGOP letter. You have obviously taken the Gov’s pill and swallowed it hard. What is really amazing to me is that I always thought redistribution was a DEM ideal. Now the Gov and you are promoting taking $250M away from children in Chicago to give it to others as good policy. Let’s be real - this is about politics and not kids for you. Unfortunately, that could mean kids will lose.
- 47th Ward - Tuesday, Jun 13, 17 @ 6:28 pm:
====The CPS funding crisis is one they created themselves.===
Fine, but that only gives you the right to be angry about the solution. That doesn’t give you the right to block a solution. Delaying the solution makes the problem worse, and then those responsible become complicit.
The time for finger-pointing is over. It is time for solutions. That’s why we have elected governments: to solve problems instead of litigating grievances.
- Texas Red - Tuesday, Jun 13, 17 @ 7:41 pm:
CPS/CTU and Chicago GA members may have been against the 1995 tax levy change - that did not keep them from using the hard money that was set aside for pensions and not only spending it on other things, CPS took pension holidays from 1995 to 2006. So the lesson is CPS is not a wise steward of tax dollars. And I’m all for a solution - here are some suggestions - CPS should work on controlling costs , absent that they should rely on local City of Chicago revenue sources.
- 47th Ward - Tuesday, Jun 13, 17 @ 8:42 pm:
Red, Manar’s legislation does a lot more than help CPS. It helps districts across the state, particularly those serving large numbers of low income students. It also holds all districts harmless. You are mad at Chicago for mismanaging CPS. Fine, but why are you insisting all other districts get punished too?
If you have the votes to pass something that ignores the admittedly self-inflicted financial wounds caused by CPS, and thus leaves Chicago school children to fend for themselves, by all means, bring it forward and call it for a vote. That’s how democracy works.
If you don’t, then shut up while the rest of us try to fix this mess. Guess what? I’m just as mad about it as you are. But I live here and not fixing it isn’t an option for me.
- Debbie - Tuesday, Jun 13, 17 @ 8:52 pm:
SB1 is 90% there and Andy Manar deserves a tremendous amount of credit for his non-stop effort on this difficult, but important topic.
It is interesting that nobody is discussing what the impact to future statewide education funding will be as the unfunded pension costs for CPS continues to grow.
According to the CPS website the total pension payments will grow to $830 million by 2021. The $500 million dollar “pension credit” for this year was the primary reason that the adequacy target for CPS was lowered from 74% adequacy to 62% in the last ISBE model and moved them into tier 1. How much more will their adequacy target decrease by each year from this change?
Solutions like the State picking up the normal pension costs and allowing Chicago to reinstate the pension levy will help pay those costs without impacting CPS classrooms or statewide education funding. Do we really want to include the unfunded pension costs for CPS directly in the funding formula or should Chicago, CPS and the State continue to look for other ways to pay for them outside of the formula?
- winners and losers - Wednesday, Jun 14, 17 @ 1:04 am:
“Truth Teller”: I have read the final amendment to SB 1, and have quoted the actual language on the special ed parts on Capitol Fax.
Funds NOW spent on SUMMER SCHOOL for special ed students are ELIMINATED (page 281).
Funds NOW spent on special education teachers (Personnel Reimbursement) are ELIMINATED (page 254).
And the new language: use these funds “for special education services”. Pretty damn vague.
Another section of SB 1 offers a definition: “provision of special educational facilities and services, as defined in Section 14-1.08 of this Code”.
14-1.08 is an old section of law. So old it does NOT mention the federal special education law, IDEA, does NOT mention spending in accordance with each child’s individualized plan (the IEP), does NOT mention Summer School, and allows spending on all sorts of things (including maintenance, consultants, and administrators).
- JS Mill - Wednesday, Jun 14, 17 @ 9:48 am:
@whiners and losers- You apparently do not understand MOE and IDEA.