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Fun with terribly confusing numbers

Monday, Jul 24, 2017 - Posted by Rich Miller

* Illinois Policy Institute, July 18

The bill gives CPS the pension bailout Chicago officials have long demanded. SB 1 requires state taxpayers to give the district $215 million a year for CPS’ “normal” pension and health care costs – the additional benefits Chicago teachers earn annually – every year going forward.By forcing state taxpayers to pay for CPS pensions, lawmakers are bailing out CPS from the 10-year pension holiday it took starting in the mid-1990s. For nearly a decade, CPS failed to put any money in its pension plan, instead using money that should have gone to pensions primarily for salary increases.

Under SB 1, CPS is partially exempt from the new “evidence-based” formula to which every other district is subject. It gets to keep the early childhood education portion of its special block grant, which no other district receives. That will provide CPS with millions more from the state than it would otherwise get.

Under the bill, the district is allowed to look “poorer” than it actually is when applying for education state aid. CPS will get to subtract the cost of its old retirement debt from its local revenues. That means the district will get more state aid than it otherwise would. No other district will get to do that.

Chicago will also benefit from SB 1’s “hold harmless” provision. The “hold harmless” provision ensures that a district cannot receive less in state aid funds than it did the previous year. The provision protects a district’s state funding even if it experiences changes in demographics (e.g., a drop in student attendance that would have otherwise led to less state funding).

* Illinois Policy Institute’s news service, July 24

It also appropriates about $300 million in new state dollars to Chicago Public Schools to help bail out its failing pension system. Rauner and Republicans have said suburban and downstate taxpayers should not be paying to bail out Chicago schools.

* Sun-Times, July 24

According to the governor’s administration, CPS would get $145 million less under the amendatory veto.

* Chicago Tribune, July 17

The formula bill passed by Democrats in late May creates such an “evidence-based” system for distributing state aid, but Rauner opposes the bill because it includes $215 million in pension assistance for Chicago Public Schools and it allows the district to keep a special block grant worth $250 million.

Rauner indicated Monday that he plans to use his veto pen to zero out CPS’ pension money so that it instead would go to classrooms in rural and suburban school districts, which aren’t responsible for their own pension costs.

* Belleville News-Democrat, July 20

“If we’re not going to pick up the pension, then the $250 (million) could stay,” Rauner said. “We gotta do what’s fair.”

Rauner said his amendatory veto would shift close to $300 million from Chicago Public Schools to the rest of the state’s school districts.

* Rep. Teri Bryant, July 21

Under SB1 & SB6 (the budget bill) there is an additional $778M invested in K-12 Education. Under the amended SB 1, CPS would receive $495M of that $778M. That is 64% of all new money! Keep in mind that CPS has only 19% of the students in Illinois public schools. […]

The plan that I can support eliminates that extra $215 million payment to CPS pensions and allows that money to be redistributed through the new evidence based model formula.

* Greg Hinz tries to figure it out

It’s a staggeringly complex subject—I still can’t figure out where there’s a $100 million-a-year difference in some key figures the two sides are giving me—and no one here gets a pass. But the more I learn, the more I tilt against Rauner. He’s decided to demonize part of his electorate, Chicago, in a way I haven’t seen in this state’s politics for many decades. And he’s cherry-picking numbers even more than the other side. […]

On balance, CPS would receive an extra almost $300 million in 2018, according to the Democrats. They say that figure still is less than it ought to be, based on student population, and represents only a quarter of next year’s overall statewide increase in spending.

Republicans say the hike for Chicago is more like $400 million. I haven’t been able to get them to explain why. But part of it is the roughly $200 million-a-year block grant CPS gets from an old budget deal, money the Republicans want to phase out in exchange for the pension money. […]

In this fray, I find fairly convincing the contention that, even assuming the Democrats get their way, Chicago by their count would receive 16 percent of the money while educating 19 percent of the state’s public school kids. CPS is being shortchanged.

If Republicans have different figures, they’re not disclosing them. Believe me, I’ve asked. Instead, they respond that Chicago wouldn’t need as much if it hadn’t mismanaged and undercontributed to the Chicago Teachers Pension Fund. In other words: Dig yourself out of your own mess. […]

But by the “own mess” standard, the state’s Teachers’ Retirement System, which will get $4.56 billion from taxpayers next year, was even more mismanaged. It has only 39.8 percent of the assets needed to pay expected liabilities compared to the city fund’s 52.4 percent. So why can’t downstate and the suburbs dig themselves out of their hole?

       

41 Comments
  1. - Anonymous - Monday, Jul 24, 17 @ 1:57 pm:

    If you’re explainin’, you’re losin’. But with all these inconsistencies, they’ve got some explainin’ to do.

    Plus, so far, they’re losin’ anyway. So maybe it’s time to shake up the strategy.


  2. - wordslinger - Monday, Jul 24, 17 @ 1:58 pm:

    Rauner’s going to risk some Downstate schools not opening or closing early over numbers he obviously doesn’t understand?

    It would be the biggest mistake he’s made since last week.

    Seriously, although I’ve been appalled at Rauner’s actions and objectives, he didn’t make too many mistakes in achieving what he could get until this month.

    Been nothing but doozies this month.


  3. - DuPage Saint - Monday, Jul 24, 17 @ 2:07 pm:

    There has to be an easier way to fund all schools probably with the state doing its constitutional duty with a corresponding property tax relief. Also dealing with property taxes somehow the rates have to be adjusted as Chicago homes pay less than collar counties. Also I do not see why any district should be grandfathered in so if they get fewer students they still get same amount of money. Maybe state could reward districts that consolidate and eliminate so many districts
    Meanwhile I think the education establishment and politicians like the confusion and contrary numbers. They can all use the fuzzy math to demagogue


  4. - Roman - Monday, Jul 24, 17 @ 2:09 pm:

    I hate it when nattering nabobs of negativism like Greg Hinz and Dusty Rhodes inject facts into the debate.


  5. - Norseman - Monday, Jul 24, 17 @ 2:12 pm:

    Greg Hinz hits the nail on the head.


  6. - Amalia - Monday, Jul 24, 17 @ 2:17 pm:

    It’s times like this when I really miss the fiscal and legislative understanding of two people, Dawn Clark Netsch and Bill Luking. This would not be complicated for them to understand. They would probably not even need to consult notes to explain it but knowing them, they would do so to get everything just right.


  7. - Gooner - Monday, Jul 24, 17 @ 2:18 pm:

    The numbers are interesting (particularly the lack of defense of same) but I’m questioning whether it will matter to voters.

    I still think Rauner is playing this right (assuming that he cares only about politics and not about schools, which is, unfortunately, a relatively safe bet).

    Rauner is pointing the finger at Chicago. The reality does not matter. That plays well in most areas beyond the city limits and is not too bad for some people within the city.

    People think Chicago is corrupt. “Your schools will not open because of corrupt Chicago” is going to score points.

    I just don’t see voters dealing with reality and blaming the governor.


  8. - Markus - Monday, Jul 24, 17 @ 2:20 pm:

    Rauner’s creating a real predicament for an expanded group of GOP legislators representing school districts with insufficient funding to open/stay open. Talk about going all in. If more in the GOP defect and vote to override the AV, he becomes as irrelevant as the 35% IPI/Tea Party cohort he’s teamed up with.


  9. - City Zen - Monday, Jul 24, 17 @ 2:24 pm:

    ==SB 1 requires state taxpayers to give the district $215 million a year for CPS’ “normal” pension and health care costs==

    As it should.

    ==CPS will get to subtract the cost of its old retirement debt from its local revenues.==

    As it shouldn’t.


  10. - Original Rambler - Monday, Jul 24, 17 @ 2:24 pm:

    “So why can’t downstate and the suburbs dig themselves out of their hole?”

    As a Chicago resident I had not even considered this until now. Hat tip to Hinz. Sure RMD screwed the CPS pension fund but apparently school administrators across the suburbs and downstate were doing likewise. It’s just Chicago was doing it on the front end (skipping employer contributions) while suburbs and downstate were doing it on the back end (overly generous end of career pay increases to boost pensions). This has me thinking maybe it’s best for Chicago taxpayers to simply assume full responsibility for our shortfall so long as we can divorce ourselves of fiscal responsibility for suburban and downstate teacher pensions and their shortfall going forward.


  11. - emergentorder - Monday, Jul 24, 17 @ 2:27 pm:

    I’ve not come across a single lawmaker or staffer who can explain how the new formula would function. Some lobbyists can get through parts they worked on, but can’t describe the entire elephant. This thing is such a mess.


  12. - wordslinger - Monday, Jul 24, 17 @ 2:27 pm:

    Gooner, I don’t think those impacted by schools not opening are going to care about any reasons Rauner might offer.

    Rauner bluffed once on not funding schools, muscling all GOP legislators to vote against a K-12 approp.

    When it came time for him to take the heat, he buckled and signed the bill.


  13. - cdog - Monday, Jul 24, 17 @ 2:34 pm:

    It seems that a school funding bill should not even contain the word “pension.”

    AV every section and every line that conflates pensions with educating children.

    These two issues should be dealt with separately and then, maybe, the historical mess created by districts such as CPS, could be untangled.


  14. - The Truth With Numbers - Monday, Jul 24, 17 @ 2:34 pm:

    Rauner, GOP, and IPI vs. a respected business and political reporter. Hmmmm….whose analysis do you believe?


  15. - Keyser Soze - Monday, Jul 24, 17 @ 2:35 pm:

    My kingdom for a spreadsheet. The questions surely have answers. We just haven’t seen them yet.


  16. - cdog - Monday, Jul 24, 17 @ 2:36 pm:

    Is this swamp-like nature of pension entanglement with k-12 funding intentional?

    It sure seems to be confounding a lot of bright people.


  17. - Markus - Monday, Jul 24, 17 @ 2:39 pm:

    City Zen ==CPS will get to subtract the cost of its old retirement debt from its local revenues.==
    “As it shouldn’t. ”

    In that case, I would offer then that the pro-rata share of underfunded pension should be added into local revenue for non-CPS districts to offset the inconsistent means by which each “pension group” is held to account for historical pension underfunding. Admittedly ridiculous but you can’t hold CPS to account for underfunding their pensions and let the State off scot-free, particularly when the City pension is better funded than the State’s TRS liability.

    It seems to me that provision is meant to acknowledge both pension systems are screwed up and the base funds calculation to educate the kids is going to be determined without imposing a pension underfunding penalty.


  18. - City Zen - Monday, Jul 24, 17 @ 2:43 pm:

    ==AV every section and every line that conflates pensions with educating children.==

    But the normal cost of pensions should be conflated with total education cost because it reflects the true costs of compensation for that year.


  19. - Earnest - Monday, Jul 24, 17 @ 2:45 pm:

    Thank you to Greg Hinz for his efforts. I’ve always been a big fan of real numbers. Where he fails is in understanding one simple truth: no rational discussion until the bill is on the governor’s desk.


  20. - Das Opinionator - Monday, Jul 24, 17 @ 2:48 pm:

    We the people of greater Chicago have been bailing out, subsidizing and otherwise giving handouts to a collection of failing counties downstate for decades, and now they have the gall to tell us to give them more of our tax money. If Stark, Pulaski, Rock Island et al hate redistribution so much, maybe they should stop taking handouts from the one area of the state that generates economic value.


  21. - Illinois O'Malley - Monday, Jul 24, 17 @ 2:49 pm:

    @cdog, are you advocating for a 100% pension cost shift for the entire state?


  22. - NeverPoliticallyCorrect - Monday, Jul 24, 17 @ 2:53 pm:

    It’s complicated because it is meant to be. This system has been rigged for years in the interest of the powerful, the powerful politicians and CTU. CPS has property value in the billions, far more than any other district. Yes they have more Low income students but their percentage of state funding is 33.8% as opposed to the state-wide average of 24.9%. They are getting more state dollars than the average school in Illinois. The bottom line is that they (their politicians and union leaders0 made a bet that if the state funded CPS on its own they could operate with less oversight. They were right but unfortunately for children, the district mis-managed the money and didn’t right size the number of schools and staff as population declined. That was in addition to the lack of pension payments. These are facts, not interpretations. So we have to bail them out, that’s understood but we don’t have to bail them out on the old formula, that is what is unfair. But of course they are screaming, because it means less money for them to squander. When they close and consolidate the schools that need to be gone, when they downsize their staff to needed levels then maybe others around the state who live in the education world will feel better about this district.


  23. - Can - Monday, Jul 24, 17 @ 2:55 pm:

    It’s bad enough that Chicago would only get 16% of the money when they have to educate 19% of the kids. This problem is compounded by the fact that costs of, well, everything is so much higher in Chicago than they are downstate.


  24. - Sue - Monday, Jul 24, 17 @ 2:56 pm:

    Das- SB 1 doesn’t include pension funding for Greater Chicago. CPS is for Chicago only. Greater Chicago is the suburbs and we don’t want to fund your stinking pensions. Thank you very much


  25. - Illinois O'Malley - Monday, Jul 24, 17 @ 3:00 pm:

    @Sue, so you are for a 100% pension cost shift too?


  26. - Anonymous - Monday, Jul 24, 17 @ 3:01 pm:

    The votes are not there to over an AV. If they were madigan who have it released for veto and then quickly call a vote. Any Republican who voted overide who be ousted. Tax and hike and Chicago bailout would be too much for GOPimary voter to bear.


  27. - SimpleConcepts - Monday, Jul 24, 17 @ 3:05 pm:

    ==Is this swamp-like nature of pension entanglement with k-12 funding intentional?==

    Cdog - If the schools don’t open, which of these is more likely to put enough heat on a downstate GOP seat that they flip on Rauner:

    1) [Your local Senator] supports Rauner/GOP not signing a bill because they don’t want to fund k-12 schools and care more about politics than children.
    Or
    2) [Your local Senator] supports Rauner/GOP not signing the innapropriately-tacked-on aspect of an otherwise acceptable school funding bill that would use state funds to pay for unfunded CPS pensions and then create a legal fallacy that 1) those funds were used to directly pay for education and 2) that the funds are deductible from CPS’ revenue (despite being state funds) because the bill allows the cost of old debts to be re-accounted in the coming budget year so that CPS can later qualify for additional state funds and pretend like this $2XX million never happened; also, no other county or school district gets that benefit or gets to use those advantages.


  28. - Roman - Monday, Jul 24, 17 @ 3:09 pm:

    - Illinois O’Malley - might be on to something. “Pension parity” can work the other way, too. Shift the pension cost from the state to the actual employers: the school districts. Then every district will be treated like Chicago.

    And the system would be more equitable, because under the current structure, taxpayers in poor and working class downstate districts have to subsidize the six-digit pensions of teachers in affluent suburbs.

    Why hasn’t a Chicago GA member introduced such a bill already? Wake up Chicagoans.


  29. - Sue - Monday, Jul 24, 17 @ 3:19 pm:

    Sure- if the State gave every district the same per pupil funding it doles out to Chicago- they could all afford the pension shift


  30. - cdog - Monday, Jul 24, 17 @ 3:27 pm:

    TRS, SERS, SURS, etc., should all be funded and managed separately.

    By using the term “funding,” it seems a mix, not total shift would be appropriate.

    Clarity. Simplicity. Reconcilable and easily Audited.

    (I do think this is another argument for a tax swap and progressive tax amendment.)


  31. - cdog - Monday, Jul 24, 17 @ 3:28 pm:

    and Fair.


  32. - City Zen - Monday, Jul 24, 17 @ 3:32 pm:

    ==taxpayers in poor and working class downstate districts have to subsidize the six-digit pensions of teachers in affluent suburbs.==

    That is funny how it works. Affluent suburbs subsidize current education costs in poor and working class downstate districts who in turn subsidize the much larger pensions in the affluent suburbs.

    But my district would be more than happy to accept a CPS-type block grant in exchange for a pension cost shift. As would every single suburban district.


  33. - Illinois O'Malley - Monday, Jul 24, 17 @ 3:35 pm:

    @Sue, Do you even know how much SB1 would give per pupil to Chicago?


  34. - Illinois O'Malley - Monday, Jul 24, 17 @ 3:46 pm:

    @cdog, since you are for a partial cost shift for TRS you should support SB1 since it is a partial cost shift for CTU pensions. If I, as a Chicago resident, am paying for your towns pension costs you should be paying for mine. Remember “fair”


  35. - Anonymous - Monday, Jul 24, 17 @ 3:57 pm:

    Wordslinger,
    Gov Rauner will blame the Speaker, and people outside Chicago will believe him.
    They WANT to believe him.

    Pointing the finger at Chicago is far easier than dealing with reality.

    I just don’t have any faith that voters will make any effort to determine who is to blame.


  36. - Markus - Monday, Jul 24, 17 @ 4:59 pm:

    I go thru these SB1 funding comparisons to the GOP plan and I just don’t get the “bailout” argument. It seems reasonable and fair.
    http://fundingilfuture.org/sb1/


  37. - Chris - Monday, Jul 24, 17 @ 5:14 pm:

    ==sue==

    “if the State gave every district the same per pupil funding it doles out to Chicago- they could all afford the pension shift”

    The state gives CPS $4,654 per student (2016-2017)

    The total state budget for k-12 education is $11 billion.

    Statewide public school student count is (2016) 2,041,779.

    Thus, statewide, per student funding is $5,387, or 16% more than CPS per student funding.

    If you take CPS students out, you have 1.660,530 students sharing funding of $9.225B, or $5,555 per student–19% more than CPS per student funding.

    So, no, the non-CPS districts could not afford a pension cost shift at CPS funding level.

    Note–none of that accounts for poverty levels; I realize many don’t care about extra funding for kids from poor families, if it seems to help CPS, but that is part of CPS’s “better” funding–CPS kids are 30% of the state’s 1,000,000 public school kids from low-income families.

    So, give all students per pupil funding at about CPS level of $5000 (the first $10b), and then take the remaining $1B and give it per pupil for low income kids, for another $1,000 per kid. Along with 100% pension cost shift. Every district gets “more” than CPS’s current per pupil funding, so that should be fine, right?


  38. - blue dog dem - Monday, Jul 24, 17 @ 5:19 pm:

    Looks like vouchers must be the answer.


  39. - Yellow Dog Democrat - Monday, Jul 24, 17 @ 5:30 pm:

    The speculation is pointless. Polling a year ago showed voters were not buying the “Chicago bailout” argument, and were more likely to blame Rauner than Madigan.

    http://www.illinoisobserver.net/2016/06/14/poll-voters-blame-rauner-looming-risk-schools-opening/

    I believe that opposition to Rauner had grown slightly and hardened greatly since then. It just gets harder and harder to convince folks that you are not a career politician and are an outsider when you have held office and campaigned nonstop for over four years.

    Anyone have better polling?

    Rauner’s move here isn’t shrewd, it’s desperate. Every single effort to take hostages has failed. He is like Wile E. Coyote to Mike Madigan’s Roadrunner.

    And now, 30 months later, after promising to run the table, he has yet to sink a single ball. Worse, every time he is close to sinking a shot, he moves the pocket on himself, snatching defeat from the jaws of victory.

    Rauner COULD be signing a school funding bill right now that gives him 90 percent of what he wants. Traveling the state talking about new investments in education, flanked by school board memebrts, superintendents, teachers and parents.

    He could even do it while saying. He didn’t support the tax hike and thinks we need more reform.

    Instead, his staff is attacking superintendents on Twitter.

    I just don’t understand how this help him politically or legislatively.


  40. - City Zen - Monday, Jul 24, 17 @ 10:23 pm:

    Meanwhile, The US Census Bureau released its Public Education Finances report for 2015 (previous was 2013) and Illinois residents experienced the 2nd largest increase in per pupil funding across all funding sources at 12% (Cali was #1). A whopping 12% spending increase in 2 measly years. The national average was a 5.5% increase.

    And here we squabble about the semantics of a $200M pension shift. Is “can’t see the forest for the trees” the right metaphor here?


  41. - Das Opinionator - Tuesday, Jul 25, 17 @ 9:16 am:

    @Sue, most of you work in the city, while downstate (Stark, Rock Island, Pulaski et al) just take all of our tax dollars. The fact is that you’re already bailing them out, and have been doing so for years.


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