Alliance Legislative Report 97-46

Distributed via Email: April 3, 2012

CONTACT LEGISLATORS IN DISTRICT OFFICE

With the Illinois state legislature on a two week hiatus, now is a good time to contact lawmakers in their district offices to convey positions on legislation. The General Assembly is at the half-way point of the spring legislative session, and there are plenty of issues on which to weigh in. School administrators and board members should contact their legislators and let them know exactly how proposed legislation would affect their local school district.

Transportation Reimbursement Formula Changes

The Illinois State Board of Education (ISBE) is looking at changing the formula to calculate a school district’s reimbursement for transporting students to school. In fact, ISBE is looking at not requiring a school district to transport children at all. Obviously, school districts will continue to run school buses whether or not the state mandates such transportation. School boards realize that the responsibility to provide safe, efficient ways to school without overburdening parents is not a responsibility or duty they will absolve themselves from. Such a move to “de-mandate” transportation could, however, make it even easier for the state to drastically cut or even eliminate transportation reimbursement payments to school districts.

ISBE is looking to change to an average per mile or average per pupil reimbursement system. This new formula would establish “winners” and “losers” among school districts where some districts could receive more transportation reimbursement funding while others would see a significant reduction in reimbursement. What is known is that the total amount of funding being made available for transportation reimbursement in Fiscal Year 2013 will be reduced even further than the 25% reductions the past two fiscal years.

Some points to consider when discussing transportation reimbursement:

• The governor’s budget proposal for FY 2013 would appropriate $205 million for transportation reimbursements to schools, 42% below the FY 2010 amount
• ISBE’s proposal to make student transportation permissive for all school districts could contain a provision to allow school districts to charge a fee to transport students, adding another burden on the parents of students
• Students with the fewest personal resources would be hit the hardest if the school district would shift the burden of transportation to the parents
• School buses are the safest method of transportation for students to get to school, and school drives and traffic patterns are geared toward bus traffic, not personal cars bringing children to school
• ISBE’s proposal for a new formula includes the ability for unit districts to increase their tax levy for transportation from .20 to .24

Fiscal Year 2013 State Budget

As was reported in the last Alliance Legislative Report, the Illinois House of Representatives has approved resolutions which would set the total Fiscal Year 2013 budget amount, cutting K-12 education funding $258 million below current FY 2012 funding levels. It is unclear whether or not the Senate plans to go along with this spending level. This spending level is predicated on the fact that the legislature will cut $2.7 billion out of Medicaid payments. If the full amount of Medicaid cuts is not achieved, deeper cuts to the education budget could be the result.

Some points to consider when discussing the FY 2013 state budget:

• In current FY 2012, General State Aid (GSA) will be prorated at 95%, likely resulting in the loss of the final state aid payment to school districts
• According to the State Superintendent of Education, education funding has declined by nearly $660 million since FY 2009
• The current statutory GSA foundation level is $6,119 per pupil; the current year’s actual level will be $5,953 per pupil; with an additional $250 million spending cut, the FY 2013 foundation level is estimated to fall to $5,631 per pupil
• With our current funding formula being based on local property tax wealth, the drop in the GSA foundation level amount will widen that gap between the haves and have-nots among school districts
• If further education cuts are made to protect Medicaid spending, the $205 million earmarked for transportation reimbursement could be targeted for elimination

Pension Cost Shift to School Districts

The proposal to shift part of the state’s pension obligation onto the local school district is very much alive in the State Capitol. Governor Pat Quinn, Senate President John Cullerton, and House Speaker Michael Madigan are all supporting the plan. They propose to shift the “normal costs” of the Teachers’ Retirement System (TRS) – about 1/3 of the total pension liability – onto the budgets of local school districts. The other 2/3 of the pension costs, the unfunded liability caused by the state not making the proper pension payments over the years, would still be borne by the state. A similar proposal for the State University Retirement System is also in the works.

The “normal costs” for TRS would amount to about $700 million statewide. School districts can calculate their annual share by multiplying the entire TRS payroll of the district by 7.65%.

There is no legislation drafted at this time, but it is likely that there will be no property tax levy to generate revenue to pay this new cost. It is still possible that this new cost will be due in total, up front, without any phase in period.

There is also still discussion of making changes to the retirement benefits of those currently participating in TRS. A new “Tier II” benefit level was implemented for those employees who began participation in TRS beginning January 1, 2011. Talks now revolve around making some of those same “Tier II” benefit changes for employees who began participation in TRS before January 1, 2011. Specifically on the table are proposals to raise the retirement age from 62 to 67 and to end the provision for a compounding Cost of Living Adjustment (COLA).

The Springfield State Journal-Register recently printed an article after it found a TRS document describing the possible insolvency of the retirement system (http://www.sj-r.com/top-stories/x1440921815/TRS-director-Retirees-might-have-to-take-COLA-cut). In the TRS memo, it explained how it might be necessary for the system to cut the benefits of current TRS annuitants.

Some points to consider when discussing the pension cost shift:

• Shifting the pension costs to the local school district will mean a cut in the education program (explain exactly what cuts would have to be made locally)
• If the shift is done immediately, approximately 20,000 teachers could be laid off statewide
• Because of education labor laws, it is too late for school districts to lay off teachers for the 2012-13 school year
• Collective bargaining agreements are currently in place in school districts, making it difficult to make required cuts until the bargaining contracts expire
• Shifting the cost of pensions to the school district should include shifting the authority for setting pension benefits to the school district as well – including placing school board members and administrators on the TRS Board of Trustees
• New costs should be added to the local school district without relief from other costs (removing mandates such as driver’s education, physical education, bilingual education, etc.)

OTHER LEGISLATION PENDING

SB 639 (Delgado, D-Chicago) includes the rehabilitation of aging buildings to eligibility criteria for the School Construction Grant Program.

SB 3168 (Link, D-Vernon Hills) prohibits a school board from hiring multiple people who are retired and are receiving a retirement annuity under TRS in order to fill, as a group, a teaching   or administrative position that would ordinarily be occupied by a single, full-time person.

SB 3244 (Frerichs, D-Champaign) requires ISBE to work with stakeholders to develop a model mathematics curriculum that must be available to school districts, though districts would not be required to implement the curriculum.

HB 3259 (Lightford, D-Maywood) increases the compulsory school attendance age from 17 to 18.

SB 3367 (Garrett, D-Lake Forest) makes significant changes regarding drivers’ education.

SB 3415 (Garrett) requires all school officials, including teachers, guidance counselors, and support staff, to immediately notify the office of the principal if a student commits certain specified offenses.

HB 5114 (Burke, D., D-Chicago) r equires all students enrolled in grades 6-8 in the public schools to watch a training video on CPR and how to use an automated external defibrillator.

HB 5290 (Cassidy, D-Chicago) defines what a school district “policy on bullying” must include.

HB 5495 (Nekritz, D-Northbrook) provides that if a school board offers a 403(b) or 457(b) plan to its employees, then the board, and the persons acting under its authority, must act in accordance with the prudent investor rule when making plan-related decisions.

HB 5602 (Sente, D-Lincolnshire) makes changes to the law regarding reciprocal reporting of information between a school district and the local police department.

HB 5689 (Lilly, C-Chicago) creates the Eradicate Domestic Violence Task Force to develop a statewide effective and feasible prevention course for high school students designed to prevent interpersonal, adolescent violence.

This legislative report is written and edited by the lobbyists of the Illinois Association of School Boards to provide information to the members of the organizations that comprise the Statewide School Management Alliance.

Bill Text/Status: Illinois General Assembly www.ilga.gov

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