State school funding overhaul dispute centers on CPS dollars

By Kiannah Sepeda-Miller 
Associated Press

SPRINGFIELD — After years of unsuccessful attempts, Illinois lawmakers have approved a plan to overhaul the state’s antiquated method for funding public schools.

But the age-old tug-of-war between the financially troubled Chicago Public Schools and those in the rest of the state has re-emerged as the legislation awaits a trip to Republican Gov. Bruce Rauner’s desk.

Despite efforts by the proposal’s Democratic sponsors — neither of whom represents Chicago — to bridge the familiar divide in the final weeks before the bill’s passage, it has incited a fierce partisan struggle over whether the nation’s third-largest school system is getting a “bailout” from Springfield.

Detractors say the proposal unfairly benefits CPS by allowing the district to keep hundreds of millions of dollars from lump-sum payments lawmakers negotiated with Chicago decades ago. The plan would also have state taxpayers begin picking up portions of the district’s obligatory contributions to teachers’ retirement plans, something they do for every other district. It’s prompted Rauner to promise a veto if lawmakers send him the measure in its current form.

Proponents say it’s all part of rebuilding the process in the name of fairness.

“We’re realigning the whole system to make sure that everybody plays by the same set of rules,” said Sen. Andy Manar, the Bunker Hill Democrat who sponsored the plan. His caucus has placed a hold on the bill, preventing it from moving straight to the governor’s desk in an attempt to let tensions cool.

The proposal would steer more dollars to the state’s neediest schools by directing new money to districts based on the needs of their student populations and their available local resources. The long-underfunded current formula has created the nation’s widest gap between low- and high-income districts because schools must rely on local property taxes to cover more than 60 percent of their costs.

Pushed through by Democrats after a deal negotiated with Republicans fell short, the school-funding plan was a highlight of an otherwise largely futile legislation session, in which lawmakers failed for a third straight year to negotiate an annual budget plan with Rauner. It’s the longest any state has gone without a budget since at least the Great Depression and has left the state billions of dollars in debt.

Underpinning the plan is broad agreement that no district would receive less money from the state than it did in the 2016-2017 school year. Previous efforts to revamp Illinois’ funding formula have fizzled when lawmakers realized their districts stood to lose funds so others could gain.

But that’s also where the friction begins. Under current law, school districts outside of Chicago get reimbursed for special “categories” such as bus transportation and special education. In 1995, Republican lawmakers changed state statute to give Chicago a set percentage of that “categorical” funding. That amount is now greater overall than what CPS spends annually on those categories.

This year, the difference was roughly $250 million. The legislation makes those dollars part of CPS’s guaranteed base funding.

Republicans say that money should be redistributed through the formula, particularly when the legislation provides a new check to pay the employer’s portion of the annual costs incurred for teacher pensions, which amount to about $215 million this year. They argue the difference would provide enough dollars to fully fund all districts’ categorical expenses for the first time in years.

The GOP also contends allowing CPS to keep that money in addition to a pension subsidy gives the district an immediate boost in available funds, while others, some in worse financial straits, only gain based on how much lawmakers decide to put through the formula. That’s an uncertain prospect given Illinois’ fiscal morass.

“They’re getting those dollars baked in to their formula where they can’t be taken away,” said Bloomington Republican Sen. Jason Barickman, who sponsored his own version of the model this session. “Every other school district is left to rely on the budgeting process for funding.”

The proposal’s widespread coalition of supporters counters that ensuring no district loses money also means maintaining current funds for Chicago, where the majority of students are racial minorities and about one-third of Illinois’ low-income students attend school.

“Everyone begins in the new system where they left off in the old system,” said Manar, who has spearheaded efforts to change Illinois’ funding model since 2013. “That means we have to account for all of the good and all of the bad and put that in the base funding.”

Republicans have also criticized a provision in the bill that says dollars CPS pays toward past pension debt wouldn’t be counted as part of the district’s available local funds. The more local resources a school district has, the less a district can benefit from the new formula.

Rauner’s administration has said taxpayers shouldn’t be on the hook for years of Chicago’s skipped pension payments. But Democrats point out the state pays nearly $4 billion dollars in total pension costs for other districts — an expense expected to grow by more than $660 million next year, according to the Illinois Teacher’s Retirement System.

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