* Dusty Rhodes on the governor’s cost shift proposal…
Because Chicago Public Schools have traditionally paid their own pensions, the new law incorporates normal pension costs into the calculation of each district’s financial needs, called the “adequacy target.” A cost shift would require recalculating funding targets for all 850 districts, and could drastically change the amounts each district would get.
Although there’s no published models of how such a change would affect each district, Manar predicts that it would end up sending more state aid to wealthy districts, and less state aid to poor districts. That’s because wealthy districts tend to pay higher salaries to their teachers and administrators, and therefore have higher pension costs. Lower-income districts, on the other hand, tend to have lower salaries and higher teacher turnover rates, resulting in lower pension costs.
If those numbers are rolled into the formula, wealthy districts will “appear needier” and thus get more state aid, while poor districts will “appear wealthier,” and get less state aid.
* I asked around yesterday afternoon to see if this was a real possibility. From the Center for Tax and Budget Accountability…
We haven’t actually run any numbers to see for sure, but it would certainly make sense based on how the model works, for exactly the reasons laid out in the article.
* Illinois Federation of Teachers…
We agree. All districts would show up as farther from adequacy (“needier”), but particularly the wealthier districts with higher salaries.
* Jessica Handy at Stand for Children Illinois…
The introduced budget is a net cut to education, violates the carefully-negotiated funding formula fix, and singles out Chicago to absorb the cost shift immediately while other districts have a 25% shift this year. So that’s not the way to accomplish it. But, we are very open a gradual cost shift if – and only if – the entire amount of savings in the TRS contribution is invested in the formula on top of the required $350 million increase. That’s because we know that the state picking up teacher pension costs across the board is an inequitable way to deliver state funds to schools.
The new funding formula accounts for the cost shift in the definition of adequacy by adding the exact cost that TRS certifies to each district’s adequacy target calculation. As a result, every district will look (and, indeed – be) less adequately funded. Some districts – the richest ones – will have that added into their adequacy target and still have enough local capacity to cover it and still be fully funded. But generally yes – as Manar told NPR – districts with higher payrolls will have a higher amount added to their adequacy target calculation, and districts with lower payrolls will have a lower amount added. We know that the state paying TRS is incredibly inequitable. It is better to put that money through EBM, even while recognizing it will make every district look less adequately funded with wealthier districts having a bigger gap. The formula covers that gap by a combination of state and local resources, so those with more local wealth will be expected to cover a greater proportion of the costs locally – which is better than the state paying the whole thing for everyone.
In retrospect, it would have perhaps been more true to the principles of the Evidence-Based Model to accomplish this normal cost adjustment to the adequacy calculation by including normal cost as a percentage of the payroll assumed for each district through the EBM inputs, rather than using actual costs, because EBM uses average/best-practice salaries, class size ratios, numbers of positions, etc. and leaves the actual expenditure to the locals. Thus, if a richer district has higher salaries and more experienced teachers and a higher payroll, its benefit costs would stay in line with EBM’s adequacy levels, rather than rising up to match whatever the district actually spends.
* Advance Illinois…
The pension cost shift in the Governor’s proposed budget doesn’t bring districts closer to adequacy and equity and perpetuates a system that overly relies on local sources for funding of education. Under the proposed cost shift in the Governor’s budget, all district adequacy targets will increase, and wealthier districts will likely see their targets increase more. Even with new dollars going into the formula almost all districts will be less adequately funded, but that doesn’t necessarily cause them to get additional funding through the formula.
Districts will also be expected to contribute more to the formula from local property taxes. However, districts with less property wealth and greater student need will see less of an increase in their local contributions than wealthier districts.
Whether a district will get more or less new state money is dependent on both how much their adequacy target goes up and how much their local contribution goes up. We believe that the Governor’s proposal will mean that poor districts could get somewhat more money out of the formula, but this will be offset by the money districts lose from having to pay their own pensions.
* The AP also has a cost-shift story…
Schools argue that picking up the tab would have devastating effects and exacerbate inequity, which last year’s funding change aimed to end. Educators said it would undo many of the effects of that evidence-based funding model, which gives needier districts extra money for educational services.
“The governor just poured water on our campfire,” said Tony Sanders, CEO of Elgin School District U-46. He said that if his district — the state’s largest outside Chicago — doesn’t raise property taxes, it would have to cut programs just to “make ends meet.”