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SDem analysis: Rauner AV would blow a $221 million hole in state budget

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Though Gov. Bruce Rauner says his amendatory veto of a state school aid bill is designed to keep Chicago Public Schools from grabbing money that should go to other districts, his rewrite actually potentially dings hundreds of other communities statewide and would shift resources away from the neediest. Downstate schools could be particularly hurt.

That’s the bottom line of a preliminary analysis of Rauner’s action by Illinois Senate Democratic staff, which also concludes that the veto would poke a $221 million hole in the just-approved state budget. The analysis was distributed to Democratic senators a bit ago, and a copy passed on to me.

Overall, the document suggests the governor didn’t just amend a measure revamping the formula used to give more than $5 billion a year to local grade and high schools, but effectively rewrote it in a complex fashion that will take some time to unravel.

In a statement, Rauner’s spokeswoman denied that the amendatory veto creates a budget hole or that it will cut funding for any district in fiscal 2018 compared to fiscal 2017.

* The Senate Democratic analysis…

AMENDATORY VETO OF SB1 FORMULA CHANGES

• SB 1 holds all districts harmless, using FY 17 as a base year. The governor’s amendatory veto provides only a 3-year district level hold harmless. Beginning with the 2020-2021 school year, any district that loses enrollment would lose funding. 222 districts lost enrollment from FY 15 to FY 16.

• SB 1 includes a Minimum Funding Level that is intended to distribute funds more progressively to districts furthest from adequacy in the case of appropriation lower than the MFL. In SB 1, the MFL was $350 million. The governor’s amendatory veto r emoves the Minimum Funding Level (MFL) entirely.

• SB 1 includes a Regionalization Factor to account for the varying costs of education students in different parts of the state. The governor’s amendatory veto places a cap on the Regionalization Factor of 1.04. SB 1 only contained a floor of 0.9 and did not have a cap. A regionalization cap would reduce the adequacy target for 313 districts. This includes every district in Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will counties.

• SB 1 includes a number of provisions to account for the rising cost of education for districts. The governor’s amendatory veto removes these escalators (teachers, school support personnel, and adult basic education) for the adequacy target. Without inflationary measures, the adequacy target will fail to reflect the true cost of education, which is the purpose of the evidence based model.

• The governor’s amendatory veto also makes the following changes regarding TIF and PTELL:

• Counts TIF EAV as formula EAV. This would penalize districts because typically revenue from TIF EAVs is not accessible to districts.

• Removes adjustments for PTELL EAV. PTELL limitations would no longer be considered. This would have an impact on 70 districts throughout the state

CPS

• SB 1 provides CPS funding within district’s Base Funding Minimum to cover CPS’ normal pension costs. In FY 18, this is $221.3 million. The governor’s amendatory veto would no longe r include CPS’ normal cost in the base funding minimum. Instead, the governor is adding language to the pension code that provides a contribution of $221.3 million for CPS’ normal cost in FY 18 and establishes a continuing appropriation Chicago teacher normal pension costs in future years.

• SB 1 reduces CPS’ Local Capacity Target by the amount of the district’s unfunded liability in a given year. The governor’s amendatory veto removes this language entirely.

• SB 1 increases CPS’ Adequacy Target by the amount of the district’s normal pension cost in a given year. The governor’s amendatory veto does not remove this provision. However, it does remove language that would apply this language to other school districts if a statewide pension cost shift were to occur and local districts became responsible for paying that cost.

• SB 1 sunsets the Chicago block grant for line items not included in evidence based funding, but holds CPS harmless for the $203 million impact to the district as a result of the sunset. In the future CPS would submit claims for reimbursement like all other districts. The governor’s amendatory veto repeals the block grant and does not hold CPS harmless for line items not consolidated into the new formula. This would drive an additional $203 million through the tiers of the EBM.

EFFECT ON ENACTED FY 18 BUDGET

Absent any change to the enacted FY 18 budget, the amendatory veto will (i) drive an additional $424.3 million through the EBM distribution formula (above the $350 million anticipated), and (ii) increase overall state spending by $221.3 million

And, of course, that new hole doesn’t include the $100 million tax credit program for private school scholarships idea.

The governor said today that he believes the State Board of Education will complete its numbers-crunching on his AV by Monday.

posted by Rich Miller
Wednesday, Aug 2, 17 @ 2:54 pm

Comments

A good case to get GOP to negotiate. Especially after Rauner staff did such a poor job on messaging.

We’re really not looking at the AV being accepted.

Comment by Norseman Wednesday, Aug 2, 17 @ 3:02 pm
== by Monday==

Why Monday? Isn’t that outrageous.

Comment by Anonymous Wednesday, Aug 2, 17 @ 3:07 pm
Rauner should just pay it out of pocket.

It’s the only way he can still have a relatively positive impact on education.

Comment by Blue Bayou Wednesday, Aug 2, 17 @ 3:14 pm
The Governor who vetoed the budget and the tax increase to cover those costs, who claims that the budget is not balanced, is now proposing to spend an additional $321 million.

This guy really is a fiscal conservative.

Comment by Juice Wednesday, Aug 2, 17 @ 3:15 pm
Wouldn’t you think the numbers would have been crunched prior to making AV changes? Is that how he did business working for his private equity firm? Ink the deal and then determine if it is fiscally sound.

Comment by MauiSlick Wednesday, Aug 2, 17 @ 3:16 pm
Just introduce an amendment to cut $221 million from Republican districts and pair it (if and only if language) with a motion to accept the Governor’s amendatory veto and see how many votes it gets.

Comment by 360 Degree TurnAround Wednesday, Aug 2, 17 @ 3:20 pm
==Wouldn’t you think the numbers would have been crunched prior to making AV changes? ==

Ready, fire, aim

Comment by Anonymous Wednesday, Aug 2, 17 @ 3:21 pm
I am not sure about this section: “The governor’s amendatory veto repeals the block grant and does not hold CPS harmless for line items not consolidated into the new formula. This would drive an additional $203 million through the tiers of the EBM.”

CPS would simply lose this money and it would go into the SB 1 pot for distribution to all districts based on their need to meet the definition of adequacy in the bill. But the $221.3 million being cut from funding for CPS pensions in SB 1 should simply be removed from the SB 6 ( PA 100-0021) funding for evidence based k-12 funding and transferred to the pension line funding in PA 100-0021 . That could be done if the GA agreed with the change, but it won’t.

The Governor however has no legal authority to order such a transfer in his modification of SB 1 because PA 100-0021 is now law, so this all becomes very confused. I think those who have argued he overstepped his authority in this veto are probably now proven correct. Best to just override this and be done with it.

Comment by Rod Wednesday, Aug 2, 17 @ 3:25 pm
You know who the $221 million figure from the budget will attract? The house republicans that voted to override. Rauner is trying to sabotage a budget that he never wanted.

Comment by 360 Degree TurnAround Wednesday, Aug 2, 17 @ 3:25 pm
#TeamAmerica Best Team in America

(Left the exclamation in the first)

Comment by ArchPundit Wednesday, Aug 2, 17 @ 3:35 pm
The Rauner veto will NOT “increase overall state spending by $221.3 million.”

SB 1 is a formula bill, not an appropriation bill.

Comment by winners and losers Wednesday, Aug 2, 17 @ 3:35 pm
Other then raising a competence issue assuming these reports are accurate- isn’t it kind of irrelevant since the AV won’t become law?

Comment by Sue Wednesday, Aug 2, 17 @ 3:36 pm
What’s another hole inside an existing crater?

Comment by City Zen Wednesday, Aug 2, 17 @ 3:44 pm
winners and losers, it creates a continuing appropriation for CPS pensions. That is new spending. But the same amount of money is still in the formula, just being spent in a different manner, thus a net increase in spending.

Comment by Juice Wednesday, Aug 2, 17 @ 3:44 pm
W&L: but changing the formulas can change the results. That’s just basic math.

Comment by Anonymous Wednesday, Aug 2, 17 @ 3:45 pm
winners and losers you are correct the Constitution is clear on that. The Senate Democrats should have stated it differently in effect stating that as the AV is written SB 1 would force a transfer of funds under PA 100-0021 that can not be ordered under the provisions of the Constitution.

Comment by Rod Wednesday, Aug 2, 17 @ 3:46 pm
SB 6 was not balanced. The $321 million would be added to this deficit. SB 1 was not passed by a 3/5th vote and because the bill officially passed both houses on July 31 (when Seen. Trotter’s motion to reconsider was withdrawn), the only way it can become law with an immediate effective date is by both houses adopting the governor’s amendatory veto by a 3/5th vote. It looks like negotiations on everything need to occur.

Comment by Northside Dude Wednesday, Aug 2, 17 @ 3:46 pm
Northside Dude, you really need to go back and look at the rules.

Comment by Rich Miller Wednesday, Aug 2, 17 @ 3:48 pm
Juice where does the Constitution allow Governor Rauner to create a new appropriation in an existing law for CPS? This would not in anyway be a continuing appropriation, the state covering the normal costs for Chicago teachers pensions has not existed prior to SB 1 in the history of Illinois.

Comment by Rod Wednesday, Aug 2, 17 @ 3:53 pm
Only the GA can make an appropriation. The Governor can only reduce or eliminate an appropriation. So if Rauner’s AV creates an appropriation, the AV will not stand (h/t Geo. H.W. Bush).

Comment by My New Handle Wednesday, Aug 2, 17 @ 4:16 pm
==This would not in anyway be a continuing appropriation==

I had another post that didn’t make it in so forgive me if this sounds like a broken record.

I’m not sure you understand what a continuing appropriation is. You don’t have to have had any appropriation prior to putting a continuing appropriation in statute.

Comment by Demoralized Wednesday, Aug 2, 17 @ 4:36 pm
Sue, it’s all about putting out an effective message. The best case scenario is that the message generates enough pressure to change GOP votes on override. Otherwise they’ve got a good message to counter Rauner.

Comment by Norseman Wednesday, Aug 2, 17 @ 4:56 pm
Where’s the Sen. Jeff Flake among the Illinois GOP?

Comment by Anonymous Wednesday, Aug 2, 17 @ 5:00 pm
Rich,

On May 31, SB 1 passed with 60 votes in the House and only 35 concurred in the Senate. SB 1 officially passed both houses on July 31. Any bill that has an immediate effective date that passes on June 1 or after requires a 3/5th vote. An override of the veto would enact a law that cannot be effective until June 1, 2018.

Comment by Northside Dude Wednesday, Aug 2, 17 @ 5:06 pm
Northside, I’ll be getting to your silly argument tomorrow. Worry not.

Comment by Rich Miller Wednesday, Aug 2, 17 @ 5:11 pm
Wasn’t the Governor’s Secretary of Education, Beth Purvis, the chairperson of the Governor’s committee that hammered out the funding model in SB1 (less the Chicago amendment)? Was she not cloaked with the authority to strike the deal for the Governor? The Rauner AV of the Chicago piece (Thanks, Will Davis) is understandable; the rest of his red-pen antics are not. Secretary Purvis must feel betrayed and damaged.

Comment by Eight Zero Wednesday, Aug 2, 17 @ 10:47 pm