Produced by the BGA's Civic Engagement team, the BGA Backstory project is a non-partisan guide to Illinois' most important government issues. Don't see what you're looking for? Ask us your burning questions about Illinois government.
Where does Illinois school funding fit in the big picture?
Nationwide, Illinois has had the biggest funding gap between its high-poverty-concentration school districts and districts with low concentrations of poverty for years because it relies primarily on local property taxes and property wealth to finance schools.
According to a study by the Education Trust, Illinois school districts have vast disparities in funding compared to other states, making Illinois’ system the “most unfair” nationwide. Several other studies have shown1 that other states prioritize districts under a different lens, primarily based on varying demographics, race and poverty concentrations. With each state ultimately relying on its own mechanisms for providing funding to schools, the result is largely inconsistent: Some states provide substantially more funds to districts with the highest-poverty rates, while other states provide very little.2
The one constant in this picture however, as the graphic below demonstrates, is that Illinois remains the most regressive state in terms of school equity: It provides the lowest amount of funding to those who need it most—children in districts with the highest levels of poverty.
States are considered relatively progressive when they divert a larger portion of state and local funds to school districts where poverty rates are high. Utah for example, allocates 21 percent more in state and local funds per student in high-poverty districts than in low-poverty districts. In Illinois, high-poverty districts receive 22 percent less state and local funding than low-poverty districts.3
Fifty-State Picture: Gaps in State & Local Revenues Based on Poverty
School districts in the property-rich northern Illinois suburbs spend more than $30,000 per student per year on average, while districts in property-poor parts of Illinois, primarily downstate, pay only about $8,500 per student on average.4
Per-Pupil Funding Comparison (2015)
1 Education Trust, Funding Gaps, An Analysis of School Funding Equity Across the U.S Within Each State (2018).
4 Jake Griffin, Spending Per Student Ranges From $8,500 to $32,000 in Suburbs, Daily Herald (Apr. 19, 2017).
How is Illinois trying to fix its funding gap?
In August 2017, Illinois lawmakers enacted Public Act 100-0465 (SB1947) which introduced significant changes to the school funding system. The new law imposes an “evidence-based” model to fund schools. A series of factors are weighed to calculate a school district’s adequacy to raise the base level of funds required to educate a child.1
The evidence-based model takes twenty-seven components into consideration in weighing what financial resources will be needed to educate children. Those are totaled to create a funding level needed to meet standards of equality and adequacy. The components include class-size ratios, teacher training, and full-day kindergarten facilities, among others.2
In future years, new funds appropriated for schools will be sent to districts with the most need first, based on the adequacy targets set with the evidence-based model.
1 Funding Illinois’ Future, Evidence Based Model (EBM), FAQ.
2 Jose Sanchez, Illinois School Funding Approved: 6 Things You Need to Know, Better Government Association (Aug. 29, 2017)
Where does money to fund schools come from?
The Illinois State Board of Education (ISBE) publishes its budget each fiscal year along with a budget hearing schedule and funding request for the subsequent year. In the 2016-2017 fiscal year,1 state, local and federal resources for elementary and secondary education broke down this way:
State: $11.7 billion
Local: $17.5 billion
Federal: $3.6 billion
Total2 : $32.8 billion
State, Local and Federal Resources For Elementary and Secondary Education
What do each of these amounts consist of?
State funds include amounts appropriated by lawmakers along with supplemental funds, for things like school bus funding and special education, as well as teachers’ pension contributions.3
Federal funds are distributed through Title I of the Elementary and Secondary Education Act. This formerly was known as the No Child Left Behind Act and has since been replaced by the Every Student Succeeds Act, which governs federal K-12 public education policy.
Most federal grants require state boards to provide supplemental educational services for children from low-income or non-English-speaking families or for neglected and delinquent children from preschool through 12th grade.
Local funds include property tax revenues as estimated by the total property tax extension of individual school districts, as well as corporate Personal Property Replacement Funds. For instance, the local property taxes in 2015 (which are collected in 2016) were $16.87 million.4 These are then added with the Cook County Replacement Property taxes (also known as the CPP replacement fund). These are taxes on corporations, partnerships, and other business entities that are collected by the State of Illinois and paid to local governments.5
A school district in Illinois determines how much money it needs to be levied from all the property in its district in order to operate each year and that money is then collected through property taxes.
Illinois School District Averages - Revenue Percentages 2016:
1 Illinois State Board of Education, 2006 Annual Report, p. 16 (“Fiscal years and school years start July 1 and end June 30. Tax years start January 1 and end December 31. The state and federal funds shown are based on fiscal years while local funds are based on tax (calendar) years.” For example, the 2012-13 year includes actual state and federal appropriations for state fiscal year 2013 and local revenues accruing to school districts from the 2011 tax year. 2011 property taxes are payable to the districts in calendar year 2012, usually after July 1).
2 Illinois State Board of Education, 2017 Annual Report, ISBE Office of Communications (Jan, 2018).
3 Illinois State Board of Education, 2017 Annual Report, State, Local, and Federal Resources, pg. 9 (Jan.12, 2017).
4 Illinois State Board of Education, 2017 Annual Report, Elementary and Secondary School Income from Local Sources, pg. 10 (Jan.12, 2017).
5 Illinois Department of Revenue, Local Government, Personal Property Replacement Tax, http://tax.illinois.gov.
What is the foundation level?
The “foundation level” in Illinois is an amount set by the state that is the minimum guaranteed amount of funding per student that should be available at all schools.
Who Determines The Foundation Formula in Illinois?
In December of 1997, the Illinois General Assembly created the Education Funding Advisory Board (EFAB). The EFAB was specifically tasked with developing a methodology structured around the “best spending practices gleaned from low-income, high-performing school districts”1 which would, in turn, be used to draft a recommendation for the foundation level.
In fiscal year 2000, the General Assembly adopted the first recommended foundation level of $4,560 per pupil. However, this was the first, and final, time that the General Assembly followed the recommendation of the EFAB. Since 2002, lawmakers have set the statutory foundation level far below the amount recommended by the board. Over the years, the General Assembly gradually has increased the difference between the EAFB-recommended amount and the foundation level set in statute in order to meet inflation costs.
At first, the difference in the amount adjusted for inflation was negligible—only $120 per pupil in 2003,2 but it soon grew into the thousands. In 2010, the EFAB recommended a foundation level of $8,672 per student. The General Assembly, however, adjusted the amount to $6,119. This reflects a difference of $2,553 and that difference has not been changed since 2010.3
In 2013, “Illinois districts were paid only 89% of what they were statutorily entitled to receive from the state, a function that has become known as ‘proration.’”4
As a result, property-poor districts, which cannot generate enough property tax revenue to fund their schools and which rely heavily on state aid to function, suffer the most.
Illinois State Funding Formula for Education
1 Joshua J. Cauhorn, The Search for the Magic Formula: History of Illinois School Funding Reform, p. 8 (May 13, 2015).
2 Id. at 8
3 Id. at 5
4 Id. at 9
How is state funding determined for each district?
There are two types of state funding—General State Aid and the Poverty Grant.
General State Aid (GSA) is further split into two grants: The equalization grant and the supplemental GSA grant for low-income students. The equalization grant ensures that every district achieves a foundation level and receives a specific dollar amount per student. Equalization grants are based on the “local property wealth” of each district.1
The poverty grant is a supplemental grant and is the second largest portion of state aid. This grant increases based on the number of “at-risk,” low-income pupils in a district. The poverty grant starts at $355 per pupil for districts where low-income student enrollment hovers around 15% and increases along with the percentage of low-income students, topping out at $2,994 for those districts with 90% to 100% low-income enrollment.2
In addition to these grants, state support also includes block grants. Block grants serve a variety of different purposes and fund different areas within school systems such as special education, school safety, early childhood education, and reading improvement.3
THE STATE FUNDING FORMULA
1 See Illinois State Board of Education, General State Aid Overview (Feb, 2017); Illinois Education Funding Recommendations, A Report Submitted to the Illinois General Assembly by the Education Funding Advisory Board (Jan, 2011).
2 Illinois Education Funding Recommendations, A Report Submitted to the Illinois General Assembly by the Education Funding Advisory Board (Jan, 2011).
Why has Chicago been handled differently?
Chicago Public Schools receive a separate block grant.
In 1995, the Legislature passed the Chicago School Reform Amendatory Act which effectively changed four major areas in CPS governance: the management structure, fiscal areas, the Illinois State Board of Education’s relationship with the Chicago Teachers Union, and school board governance.1
In an attempt at providing Chicago Public Schools with greater financial flexibility, state funding for Chicago was streamlined by creating two block grants—one which paid for general education and the other for educational services.2
Therefore, since 1996, Chicago Public Schools has received a fixed percentage of each program contained within a block grant. This percentage is derived from a formula created in 1995 based on CPS enrollment at the time. The formula takes into account the amount of state funds the district receives for those specific programs in proportion to the total amount distributed to all other local education agencies.3
While other districts in the state submit grant applications for funding certain programs such as Agriculture Education, the Early Childhood Block Grant and the Truants Alternative Optional Education Program—CPS does not need to submit any such application. For the 2015-16 school year, CPS received $119,369,900 through the General Education Block Grant which includes funding for all three of the aforementioned programs.4
The CPS Educational Services Block Grant is given to public schools in Chicago by the state from six mandated categorical programs. These six mandated categories make up 21 percent, or $1.5 billion, of the major line items within the ISBE budget.5
The six mandated categorical programs include:
- Special Education Funding Personnel Reimbursement
- Funding for Children Requiring Special Education Services
- Special Education Private Facility Tuition Reimbursement
- Special Education Summer School Reimbursement
- Special Education Orphanage Reimbursement
- Special Education Transportation Reimbursement
1 See, The 1995 Chicago School Reform Amendatory Act; Haney, Leviis, "The 1995 Chicago School Reform Amendatory Act and the Cps Ceo: A Historical Examination of the Administration of Ceos Paul Vallas and Arne Duncan" (2011). Dissertations. Paper 62.
3 Illinois School Board of Education, Memorandum, City of Chicago School District Block Grant Data (2015-2016), (Feb.1, 2017).
5 Illinois School Board of Education, Illinois School Funding Reform Commission Meeting Minutes, p. 2 (Nov.2, 2016).
Why is the Chicago Public Schools block grant a contentious issue?
Historically, the block grant for Chicago Public Schools has been the subject of much political debate for these reasons:
1. The Chicago Public Schools are guaranteed a fixed percentage of the state’s special education budget, regardless of the number of special education students they serve.
2. As noted in the previous section, while other districts in the state submit grant applications for funding certain programs such as Agriculture Education, the Early Childhood Block Grant and the Truants Alternative Optional Education Program—CPS does not need to submit any such application.1
3. Downstate and suburban school districts, therefore, must compete for the remainder of the funds by submitting vouchers for reimbursement of actual costs incurred.2
1 Illinois School Board of Education, Memorandum, City of Chicago School District Block Grant Data (2015-2016), (Feb.1, 2017).
2 Joshua J. Cauhorn, The Search for the Magic Formula: History of Illinois School Funding Reform, p. 8 (May 13, 2015).