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Illinois School Board Journal
May/June 2004
Funding flunks
Politics key to raising the grade
When a bad grade shows up on a report card, students may be embarrassed and parents can be understandably upset. So who should be more upset when a state earns a failing grade? Students or taxpayers? Or should everyone just be embarrassed?
In its Quality Counts 2004 report, Education Week awarded Illinois an "F" in education funding equity - the only failing grade for that category awarded in the entire country. According to the January report, one reason for the low grade is that the state contributes only a small share (40.2 percent) of total state and local funding for education.
Other findings about the state's financial support for education:
When a student comes home with a failing grade, parents usually vow, "something's going to change around here." But will a failing grade for Illinois be the impetus to get "something" done about education funding? And, if so, what should that "something" be?
When it comes to financing education in Illinois, a major point of disagreement looms large:
People can't agree on where the money should come from - the current system, which relies heavily on local property taxes, or income taxes, sales taxes and lottery money - a mix of all or some of these sources - or something totally new.
Where they can agree, however, is that the current system is not equitable for either taxpayers or the children their money serves. In fact, the president of one education organization goes as far as to call the inequities of the current system "embarrassing."
Across the state,
To get a feel for what people are really thinking, The Illinois School Board Journal sought answers from a variety of school officials and financial experts. Those participating were:
While the answers may not be groundbreaking, when coupled with headlines like those above, they point to one conclusion: "something" must be done if school districts are to survive financially.
Impact of state funding
Q: Illinois' total tax burden as a percentage of personal income ranks 49th in the nation, and the U.S. Bureau of the Census, in its Annual Survey of Local Government Finance, reported that Illinois' state share of public elementary and secondary education revenues ranks us 48th in the nation. How has this comparative lack of state effort to pay for education impacted Illinois' public schools and students?
"Our system of education funding in Illinois has helped create an unprecedented public education crisis in Illinois that is leaving hundreds of thousands of children behind," Batchu said. "Overcrowded classrooms, outdated materials, crumbling facilities and teacher shortages are now common realities confronting schools across the state. Without adequate state support, schools across Illinois struggle to meet federal and state mandates, with more than 40 percent of Illinois' 3,919 public schools failing to meet the NCLB requirements last year.
"The latest ‘nation's report card' shows Illinois has the largest student achievement gap ... between students in poverty and wealthier students, and this gap is only growing wider. Illinois' achievement gap closely mirrors its funding gap."
"The Illinois Constitution states that education is the responsibility of the state," Madonia said. "This verbiage implies that the majority of funding (50 percent or more) should come from the state. Public schools currently receive funding below the levels that meet this responsibility.
"A lack of state effort to fund education forces districts to use local funds to operate schools. This has resulted in higher local property taxes. In districts with higher corporate and commercial properties, homeowners are not as heavily impacted. On the other hand, districts that have very little corporate and commercial properties yield a situation where the homeowners carry the fiscal need."
"There is an over-reliance on property taxes, which places disparate burdens on local property owners," Schiller said. "Consequently, due to wide variations in local equalized assess valuations (EAV), tax caps, etc., there are wide disparities in available resources in each school district."
Even property-rich Chicago suburbs find themselves more reliant on local taxes, according to Baiocchi. "In many cases, suburban communities fund 90 percent or more of this cost through the local property tax, with state and federal dollars making up 4 to 10 percent of education costs. Along with diminished state revenues, our schools have experienced the cumulative effect of other negative factors, including tax caps, property tax appeals and TIFs/Tax Incentives. Under-funding education in Illinois has resulted in unprecedented financial difficulty for schools statewide."
What it boils down to, according to Nowlan, is inequality. "Low state effort means high local effort which means uneven effort and support, as EAV varies so much across 900 districts. Many schools have more than they probably need, while others struggle mightily."
Allard, who is an assistant superintendent for business in Geneva CUSD 304, points to the Property Tax Extension Limitation Law (PTELL) as a direct contributor to the inequality. "PTELL does not allow Geneva to access its wealth," she said. "Geneva's 2002 tax extension was limited by over one million dollars because of the tax cap formula. The loss of local revenue is directly related to the district being designated by the Illinois State Board of Education (ISBE) as ‘Financial Early Warning.'"
"This isn't a statistic that's very popular with the citizenry of Illinois," Dunn said, "But it is a fact that our tax burden in Illinois is not as heavy as many believe, and the state's level of support borders on pitiful, given the spirit of our state constitution.
"It is difficult to document the ‘opportunity cost' of such a weak level of support, but I think we see the program impact more starkly in middle and high schools across the state. Unless a wealthy property tax base is available to fund a local district, the comprehensiveness of the curriculum, the numbers and types of courses offered, the range of co-curricular activities, the provision of technology and other program effects are all diminished.
"The tragedy of this is that many students and parents in schools, especially in my part of the state (Southern Illinois), don't know what it is they're lacking or sacrificing - again, the opportunity cost - unless they have the opportunity to visit and spend some time in a wealthy suburban school system. But they would know it if they were able to spend just a day in one of those ‘lighthouse' schools.
"Of course, the differential in teacher salaries is another way to quickly distinguish between schools with money, and those without. Like it or not, what a school district can pay does have an impact on the teacher quality that is being purchased.
"As much as everyone may hope otherwise," Dunn said, "having been in many schools rich and poor around the state, many schools in Illinois do not have the capacity at present to meet high standards, nor provide a first-in-the-world education. This two-tiered educational system - one for wealthy communities and another, very different one for poorer communities - has become the legacy of how we pay for schools in this state."
What should be done?
Q: We have been through numerous studies and state finance task forces. The bulk of money for schools, however, still comes from local property taxes. What, if anything, needs to be done in order to increase the present level of state funding for Illinois' schools? Or should we be looking at other sources?
"A good many ideas for increasing state funding have already been floated and discussed," Dunn said. "It is a question of political will to increase the level of state funding - not a question of finding some magic bullet that everyone will agree with or buy into.
"There has been some talk once again of looking at a strengthening of the Article X constitutional language so that the wording, ‘...the State has the primary responsibility for financing the system of public education,' becomes more than a goal, and instead affirmatively requires the State to fund the majority cost of the P-12 Illinois education system. Assuming we got the language changed, we'd still be looking at years of court battles to determine if indeed the General Assembly had met the constitutional standard if someone challenged the level of funding provided. We don't have that kind of time.
"I'm not sure anything can be done right now that smacks of an increase in state taxes - even if coupled with a reduction in the local property tax - so I'm kind of pessimistic about getting more than the incremental increases we've frankly been lucky to hold on to for the past couple of years," Dunn said.
"Since education is the responsibility of the state," Madonia said, "it is time to step up to the plate, raise revenue and give it to the public schools. The state should be cautious not to give new money to schools and then cut funds from those same schools in other areas (like categorical funding). While on the surface the public views the extra revenues as good for schools, sometimes they are not aware that other funds have been cut resulting in a zero net increase. This has occurred in the past and should not be repeated."
"We need a better tax system in Illinois that does not create such an over-reliance on the property tax to fund our schools," Batchu said. "Statewide, over half of the funding for schools comes from the local property tax and only 36 percent comes from the state. In most other states, the state share of school funding is about 50 percent.
"A+ Illinois supports creating lasting property tax relief, reducing at least 25 percent of the education-related portion of the property tax bill and replacing these revenues with state resources. We also need additional targeted tax relief for distressed communities or schools.
"Our state's fiscal system must be reformed to generate enough revenues to provide for adequate school funding, deliver property tax relief, and protect human services and community supports that are vital to the well-being of children, their families and their communities," Batchu said. "According to a new statewide survey, released earlier this year, 66 percent of voters support a comprehensive package that would cut the portion of property taxes that funds education, broaden the sales tax, and increase the income tax to provide more money for the poorest school districts."
"The state must increase the present level of education funding with a dedicated revenue source of new money," Baiocchi said. "This new source could be comprised of the income tax, sales tax, service tax, a combination of those or others."
But, she added, all the financial responsibility should not rest with the state. "At the Federal level, Congress must live up to its statutory responsibility to fund the cost of IDEA (Individuals with Disabilities Education Act) at 40 percent. Congress has ignored this 40 percent promise since its inception in 1975. Currently, IDEA is funded at approximately 16 percent. According to an ED-RED study, from 1999-2001, the tax burden on local property owners in Illinois for special education averaged $900 million annually - nearly a billion dollars a year!"
"We have four options to provide adequate school funding in Illinois," Schiller said: continue to cut programs at the local level; increase the burden on local resources; increase the burden on existing state resources; or find a new state revenue stream or streams.
"Cutting at the local level will inevitably reduce programs and services, which could have moved failing students and schools forward," he said, "... and over-reliance on local property taxes has frustrated local taxpayers and exacerbated the disparities among communities.
"Currently, 26.6 percent of all state general funds are dedicated to education. Dedicating a greater percentage of state funds to education would force cutbacks in other important state programs. Increasing the state income tax or broadening the base of the sales tax are two recent proposals that may have some merit."
Nowlan also advocated increasing state income tax as a way to offset property taxes, but Davis said an increased reliance on income and sales tax might create an unstable source of funding.
"The recent economic slow-down has brought into focus the problem with using income tax and sales (or service) taxes to fund education," she said. "For all the problems that we know property taxes have, property taxes are the single most stable source of funding for public services. Had we been more reliant on, for example, income tax as a revenue stream for the funding of public education, we would be in worse shape than we are.
"If we assume that schools have the ability to reduce services when the economy slows, then increasing our reliance on other taxes makes sense. If we assume that the need for educational services is not dependent on the state of the economy or, if we assume that education, as has traditionally been the case, is in higher demand during periods in which the economy is slow, then the revenue stream used to fund education should be one that is not dependent on the health of the economy.
"Many policy makers have argued for years that a broad base of tax types should form the revenue stream for all public funding in general, and for education in particular," Davis said. "In fact, had we created a system that used more kinds of taxes in Illinois, our revenue would have been more constrained in the recent past than has been the case."
Allard also pointed to the economy as problematic in resolving school funding issues.
"The current economy makes it difficult to generate additional state funding for education," Allard said. "Therefore, until the politicians are willing to alter the manner in which the state of Illinois taxes its citizenry, it is almost impossible to generate additional monies for education or any state supported service.
A recent K-12 study to determine the cost of providing an adequate education to every child in the state concluded that New York State as a whole would need an educational funding increase of 19 percent and that New York City alone would need a 31 percent increase, Allard said. "The current Illinois economy and system of taxation does not permit this kind of funding increase."
Rewarding local effort
Q: What can we do to make the education funding formula reward local effort?
For Madonia, the answer was succinct: "In order to make the funding formula reward local effort it must not reduce state funding when communities pass local referenda. Reward the district by some level of increase to match the local effort."
Nowlan suggested a reward that would tie some funding to a local tax rate effort, such as a percentage of the district's state aid being added to aid based on high tax rate for instruction.
Schiller went a step further by offering a specific plan:
"Using a Guaranteed Tax Base (GTB) formula would provide additional state funds as the local effort increases. The basic premise of the GTB is that a specific local wealth base would be guaranteed for all districts. If all districts tax at the state average then they would receive an equal amount of money.
"Districts with a local wealth base above the guaranteed amount would not receive any funding from the state through the formula. This is an equalization formula to help districts with a lower wealth base get more from the state. This formula equalizes fiscal capacity but does not equalize spending.
"It is just one idea given our current funding formula and assuming it remains static," Schiller said, but the formula would require looking at two issues: whether the state would require a minimum tax rate and whether there should be a cap on the tax rate.
"As a district raises its tax rate, the local effort increases along with the state contribution. If a cap is imposed, where at a certain tax rate the state no longer provides additional funds, then a disequalizing effect would result. If a cap is imposed where no additional local or state funds can be raised, then the effect is an expenditure cap and a constraint on local control.
"There doesn't seem to be an easy solution given our current funding situation," Schiller added.
"Studies going back over a decade have suggested rewarding local effort," Batchu said, "either through the funding formula or as a supplemental grant. A+ Illinois is looking at these options as a part of advocating for school funding reform that is fair for all districts and guarantees adequate funding for all students."
However, Allard said, "Before you can reward ‘local effort,' the state would need to fund all schools at the same level. Unless there are conditions written into legislation that prevented the state from altering the contribution level to the local schools, no school district would, could or should reduce its reliance on property taxes."
"The funding formula currently rewards local effort by allowing the local district to levy for their unique education needs," Baiocchi said. "This provision should not be changed. Any change in the formula should bring up the level of funding and should not force districts to ‘level down.'"
"Unless we want to make the current inequities in the Illinois system more pronounced," Davis said, "any reward for local effort, for using a higher tax rate, needs to be tied to local wealth. If this provision is not present, the wealthiest districts are just rewarded with more state dollars as they tax more locally.
"One might tie any reward for local effort to a ‘floor' of revenue produced locally for a given tax rate. For example, if a tax rate of $3.50 is generating $10,000 per student, or more, perhaps there should be no reward for local effort. If our purpose is to focus the funds on districts that demonstrate a lack of educational goods and services, then rewarding the rich does not improve the system."
For Dunn, the larger question is: "Are we being as efficient at the local level as we can be?" His answer: No.
"Until we can be more efficient in the structure and operation of education at the local level," Dunn said, "I'm not sure we deserve a drastically stronger level of state support.
"I'm not saying we have to have mass consolidation - quite the opposite. I think there are creative ways to be more efficient locally. I'm generally in favor of larger districts, but small schools.
"In central and southern Illinois, folks think that one district means one high school. Of course, this is not necessarily true! And I'm certainly no proponent of having elementary students being bused all over God's creation to get to their school. The impact of consolidation should be felt more so at the secondary level, and the evidence seems to be that kids deal with that adequately, though the parents often don't.
"Until we address the multiplicity of school districts in this state, nothing is going to get much better financially short of a mass infusion of new funds, and I don't see that happening in the near-term," Dunn said. "Obviously, this whole arena is a political ‘third rail' in Illinois."
Equitable funding
Q: The latest Quality Counts! report gives a failing grade - the only one in the country on this issue - to Illinois education funding. How equitable is the current funding formula? (i.e. How fairly does it serve every school district and every student?)
Allard's answer: "It doesn't. The quality of a child's education should not depend on where the parents can afford to live."
And even in some of those "quality" districts, the influx of money provided from an increase in the foundation funding level has been nil, according to Baiocchi. "Of the 40-some Flat Grant school districts, ED-RED represents 35. Flat Grant districts receive $218 per student annually, no more and no less for the past several years.
"Most ED-RED Districts are on the Alternate Formula and received only $8 to $11 more per pupil from the FY03 $250 Foundation Level increase," she said. "However, ED-RED remains supportive of an increase in the Foundation Level and has testified on that issue before EFAB and both chambers of the General Assembly."
"The definition of ‘equity' in either the General Assembly or in one's local school community has come to mean - ‘how much money is my school district going to receive?' Until we can get politicians and local education leaders to focus on funding the state's educational system," Davis said, "we will always have trouble addressing the issue of equity."
Schiller believes the formula is equitable. It's just that the level of funding the formula provides is inappropriate.
"In addition to the existing revenues dedicated in statute to the Common School Fund," Schiller said, "we would recommend that the state consider dedicating a larger share of the existing sales and income taxes and any new revenues to the Common School Fund.
"Moreover, there needs to be continuing appropriation of these revenues to assure the statement in the Illinois Constitution: ‘The State has the primary responsibility for financing the system of public education.'"
"In order to make it equitable," Madonia said, "we need to have more money generated by the state for schools. This can come from many potential sources.
"This extra money then needs to be put in the formula to ‘level up' all schools. More dollars should be given to districts with little local revenue and less dollars given to districts that have strong local revenue.
"The outcome," he said, "would be the fiscal ‘leveling up' of all schools. We would be closing the gap of fiscal diversity for schools in the state. This would yield a more equitable formula."
"The current funding formula does a good job of targeting resources to districts unable to generate enough revenue locally because of their low property tax base," Batchu said. "However, the current amount the state guarantees per child (i.e. the foundation level) is more than $1,000 short of what research shows is needed to provide a good education for a child.
"Because of this egregiously low foundation level, many districts across the state simply do not have adequate resources to deliver a quality education for their students," she added. "How can we expect schools and students to make it across the finish line when they are essentially riding the education landscape with several flat tires?"
But equity is still a relative term, according to Dunn.
"In a theoretical sense, the system is perfectly equitable because the state education funding system guarantees the same minimal amount behind each student's education - also known as the ‘foundation level, which is $4,810 for the 2003-04 school year," he said.
"In practice, however, the Illinois system is highly inequitable, with the most wealthy district having as much as five times more to spend on the average student's education than the least wealthy district. As we all know, this is directly attributable to the over-reliance on the use of local property taxes as the primary vehicle for funding our school districts statewide.
"Our ‘F' grade in the Quality Counts! report is certainly well deserved - it should be an embarrassment to the politicians and policymakers of the state of Illinois, and I might add that such disparity in funding levels among students across a given state is a moral injustice.
"It's been said many times before, but it probably bears repeating yet again: The amount of money spent, and the type of education received by a student in Illinois, is more a matter of geography than anything else. That's a tragedy."
Dealing with PTELL
Q: Describe the financial picture, as you see it, for districts currently under PTELL. What do you see in their future ... short term and long term?
"Difficult," "running out of money" and "subject to referenda" were the recurring themes. Only one respondent - Anne Davis - has seen little change in the way districts under PTELL must operate. And here's her reasoning:
"In a relative sense, PTELL changed very little for our school districts. Since districts under PTELL are still able to access new property growth, revenue increases are not really limited to CPI.
"Now, it is true that PTELL has slowed the rate of revenue growth for our districts. It is also true that, if CPI ever exceeds 5 percent, there is likely no way in which most district will be able to match their spending increases to inflation. However, that being said, districts that experienced high rates of property growth before PTELL realized greater increases in revenues than districts in areas of low property wealth growth.
"PTELL has not served the taxpayer well, especially in Cook County, because of the different assessment practices there. Homeowners are experiencing double-digit increases in property tax bills while school districts, and other taxing bodies, are limited to 6 and 7 percent increases in revenue.
"Once again, local wealth has determined how districts have, and will, fare under PTELL," Davis said. "Those of moderate wealth have spent down reserves and are in serious financial trouble. PTELL limits the ability of those districts to generate revenue. Property wealthy districts experience greater rates of growth under PTELL and are in relatively better shape than less wealthy neighboring districts."
Other respondents, however, paint a much bleaker picture of districts under tax caps.
"I am deeply concerned about education in Illinois. Moody's Investors Service has already given Illinois a ‘negative outlook on the Illinois School district sector and anticipates downgrades will continue to outpace upgrades,'" Schiller said. Short term: "We have 74 percent of school districts in deficit spending. If any go under, or are dissolved, the students would have to be absorbed into neighboring districts. Districts that are simply trying to keep the ‘lights on' will limp along another year or two before going under."
His long-term prediction: "Even well-to-do districts will suffer the pull of their poorer cousins as students and their families try to move into their districts and increase the demands of those services. Worse, people considering moving into Illinois will look to the better operating and academic districts. Property taxes will continue to feed those districts while others get ‘starved' for lack of new property income."
His sentiments were echoed by others:
"Tax capped districts are running out of money," Baiocchi said, "if they haven't already done so. The tax cap limit for 2003 was 1.9 percent, well below the 5 percent maximum rate of growth envisioned by the General Assembly when tax caps were enacted. Short term, districts are spending down reserves, if they have them, to minimize staff and program cuts. Long term, severe staff and program cuts are inevitable. The number of school districts declaring insolvency will grow dramatically."
"One thing is certain," Batchu said. "PTELL has restricted school funding to all districts that are affected. School funding problems now exist throughout the entire state - from Chicago to the suburbs to downstate. Meanwhile, taxpayers continue to pay high property taxes because of the state's over-reliance on the property tax. There simply has to be a better way to collect taxes and fund schools that is fairer to both school districts and to taxpayers.
"PTELL will continue to have adverse impacts on school districts," she added, "until comprehensive school funding and tax reform are finally adopted."
Nowlan said the actuality of PTELL is not much different than it was prior to their adoption: "Districts under PTELL can go to referendum. That is what has always been required under tax rates themselves."
But asking taxpayers to approve a referendum is not always easy. As president of the school business officials, Allard sees a referendum every five to seven years for those districts under PTELL. If those referenda are not successful, she said, districts will be forced to reduce their level of programming, increase class sizes and/or subject parents to additional student and extra curricular activity fees.
"Districts under PTELL are continually forced to run referenda to restore tax rates that communities have already passed," Madonia said. "The short-term and long-term effects of PTELL are that it will decrease a tax rate with the loss of dollars.
"Community approved funds will disappear because of a district's inability to extend levies to the ceiling rate. Extending this thinking to the Operations and Maintenance fund, some districts have experienced putting capital improvement projects on hold, thus costing more dollars in the future."
On the other hand, Dunn said, "PTELL does what its authors intended it to do, but the law is reflective of the range of problems associated with such a heavy reliance on local property taxes.
"While PTELL, like many of these concepts, has a logical basis behind it, let us admit that the property tax system in this state has been gamed to death - through commercial and residential TIFs, Enterprise Zones, other local abatements, exemptions and the poor quality (or virtual lack) of reassessment in a few counties. The manner in which PTELL has played out is yet one more indicator of a broken system for funding education in Illinois."
Biggest obstacles
Q: What is the biggest obstacle to school finance reform; and what can we do to overcome it?
Political will is seen as the biggest obstacle to school finance reform - that and the public's perception of taxation as a whole.
"Political will, pure and simple," Dunn said. "We do not lack the tools or techniques or formulas to address our problems, just the willingness to use them and fund them. The blame does not just rest on the heads of our elected representatives in Springfield, either. It is the nature of most legislative bodies in a democracy to react when a problem has reached critical mass, or near-crisis proportions. We're not there yet, but we may be on the cusp of it.
"How many more times do we need to rescue an East St. Louis, Hazel Crest, Round Lake, Livingston or Cairo? If one takes the time to study the school district financial profiles on the ISBE Web site, it is not hard to see that it's just a matter of time before the floodgates of systemic financial crisis open unless something is done to stop it. But in this case - as in most public policy areas - I'm afraid we will again react instead of pre-act. Unfortunately, the pain has not yet become severe enough."
"Instead of doing what's right for the children of Illinois," Allard said, "politicians make decisions that will not hinder the reelection process. Increasing any tax is detrimental to being reelected."
Nowlan cited skepticism, both on the part of the public and politicians. The public is skeptical that more money will improve outcomes in the classroom; lawmakers and the governor are skeptical that tax increases or tax restructuring is politically acceptable. "A fear of reprisal for tax increases is part of an election process that has become mean spirited and in which a lawmaker who supports tax increases becomes highly vulnerable to opposition and attack."
In addition to the unwillingness of elected officials to make the necessary commitment to fund education, Baiocchi also noted the complexity of the system as a big obstacle. For things to change, she said, Illinois will need to "elect courageous members to the General Assembly and implement large-scale campaign finance reform. As things stand now, money, not statesmanship, drives Illinois politics."
Schiller also sees the attitude of elected officials as the biggest obstacle to increasing statewide revenue streams. "Education funding needs to be made a priority," he said. "Addressing the state's education funding problems may be the most difficult act of ‘collective will' ever undertaken by the state, local districts and taxpayers."
Batchu put it this way: "One of the largest challenges and opportunities is to generate the political will to reform the current system of school funding. People's frustration over soaring property-tax burdens is perhaps rivaled only by their consternation over cuts in school programs that work against educational quality - such as teacher layoffs, greater class sizes and fewer gym, music and art classes.
"A growing number of policymakers recognize that we are out of other options, and that it's past time to put our money where our mouths have been, for our children's benefit. Yet hundreds of others have campaigned on the pledge to improve public education. We must hold them accountable to their promises by making sure educators, parents, property owners and other constituents voice their concerns that we cannot continue business as usual in Illinois and put our children further at risk."
Davis sees three major obstacles:
"School tax rates are one of the only areas in which most citizens can say no to tax increases. Most of our districts are highly reliant on local property tax (something that is not all bad) and only about 30 percent of the taxpayers have children in school.
"Business income taxes have become an increasingly smaller part of the education funding ‘pie' in Illinois, and those taxpayers are well organized and not eager to turn corporate profits into tax payments.
"In general, across the nation, the egalitarian ideal of free public education as the cornerstone of democracy is fading. Private schools are becoming more popular. Parents of wealth are using private schools and are not willing to pay for the education of children whose parents are tied to the public schools because of economic status. We are called upon to revitalize a product, to create public schools that can compete with the finest in the private sector, and we are asked to do this with a shrinking base of resources, especially in our poorest areas.
"A system that moves our public school districts toward a more equitable funding base is not just a hope, it's the only answer to this problem. However, as with so many things, the entire enterprise hinges on the ability of the educational community and our elected officials to quit viewing the school funding issues as a parochial issue, but what is good for students in the entire state."
Closing comments
After answering the questions posed by the Journal, respondents were offered a chance to make any other comments about school funding.
Allard: Frustrations prevail when the state of Illinois notifies you in late June or early July that state funding has been reduced. A school district budget is typically 80 percent to 85 percent salaries and benefits, making it very difficult to modify budgets when you can't alter staffing patterns. The process that the state legislature follows for appropriating education funds is partially responsible for schools adopting deficit budgets.
Baiocchi: Foundation Level - Alternate Level - Flat Grant Level. The complex Illinois school funding formula is not understood by the majority of voters, and is probably not understood by the majority of elected officials. Tax caps, which apply to half the counties of the state, are layered on top of the funding formula, further confusing the electorate and the elected. A convoluted tax classification system in Cook County has forced the state to employ a multiplier to equalize the assessed value of property. There is now before the General Assembly a proposal to place a 7 percent cap on Equalized Assessed Valuation - a misguided attempt to lower tax bills for a select group of property owners.
Meanwhile, business and industry successfully appeal property tax bills, a backlogged appeals board and the circuit courts issue refunds in the hundreds of millions of dollars, and school districts pay for the refunds directly out of their current tax-capped revenue. Mayor Daley recently suggested blowing up the tax assessment process and starting over. It is hard to argue against his idea, but in the meantime, the property tax should be left alone. The property tax is the only predictable, consistent and reliable revenue source. History shows that the only thing predictable, consistent and reliable about state funding of education is that schools have been shortchanged every time.
Batchu: Investing in the better education of our children is the most important investment we could make in our state's future, helping today's children to get better jobs tomorrow, raise strong families and contribute to their communities' well-being. Better schools would ensure a better Illinois economy, over the long haul, generating a strong workforce that will help Illinois companies and communities stay competitive. We've been talking for 30 years about the need to fix school-funding problems. It is long past time to act, and A+ Illinois wants to work with policymakers to ensure our state takes the right action.
Davis: I'm reminded of the old Mr. Goodwrench commercials. "You can pay me now, or you can pay me later." Fixing the problem will be expensive today; the cost will go up tomorrow.
Dunn: I applaud the IASB taking a strong lead on keeping the funding issue on the front burner with educational leaders and policymakers in Illinois. This is difficult terrain for a professional association in Illinois because so many districts have varied and competing interests when it comes to fixing a broken funding system, i.e., what helps one district may hurt another. The longer we wait to deal with this problem though, the more difficult and painful it will become, especially with the requirements of No Child Left Behind layered on top of everything else the schools are attempting to respond to.
One of the toughest issues in taking on this momentous challenge to funding our system of schools in Illinois is the sustained leadership necessary to create change. The IASB and other groups have recognized this and are doing their best to step into the breach. We need to support their continuing efforts to get action on this crucial issue.
Madonia: Funding reform in the State of Illinois should be the process of "leveling up" not "leveling down" school districts. Taking away from one school district to give to another is not appropriate or fair. The tax swap theory is an example of this. Districts that have local monies should be allowed to keep that money in their schools. This is their money and they should have local control of it. For those school districts that do not have good local sources of dollars, the state should step up to the plate and create new revenue streams (i.e., state income tax or sales tax) to give them appropriate funds to operate. New state revenues should be unequally distributed so that "leveling up" will occur in all school districts.
Nowlan: Gubernatorial leadership and fiscal crisis will have to be combined to make significant change in school funding.
Schiller: Illinois has had ethics reform and campaign finance reform. Now it is time for funding reform for education. The general public, if informed properly, would likely demand education funding reform if they realized how much was at stake.
Answering the questions
Rebecca Allard is president of the Illinois Association of School Business Officials. She also is assistant superintendent for business at Geneva CUSD 304 in Geneva, Illinois.
Donna Baiocchi is executive director of ED-RED, a legislative monitoring organization for school districts and education cooperatives in Cook, Lake and DuPage Counties.
Bindu Batchu is currently campaign manager for A+ Illinois, a statewide campaign committed to reform in the funding and quality of public education. Previously, she was a technology associate at the Metropolitan Planning Council and manager of Network 21, a school reform coalition advocating property tax reform for education.
Anne Davis is the president of the 118,000-member Illinois Education Association. A sixth-grade teacher in Harvey, Illinois, she is a long-time public education advocate and has held association leadership roles at the local, state and national level.
Randy Dunn is chairman of the educational administration department at Southern Illinois University-Carbondale with a specialty in school superintendency. His interests also include school improvement, teacher and community involvement, and school finance.
Robert Madonia is currently superintendent of Frankfort CCSD 157C in Frankfort, Illinois, and previously was superintendent in Komarek SD 94 in North Riverside.
James D. Nowlan is editor and publisher of The Stark County News in Toulon, Illinois. A member of the Institute of Government and Public Affairs, he also is an adjunct professor of public policy at Knox College and served as president of the Taxpayers' Federation of Illinois from 1991-94. He was elected to the Illinois House of Representatives in 1968, at age 26, and was Governor Richard B. Ogilvie's running mate in 1972.
Robert Schiller is superintendent of education in Illinois, with a 33-year career as an educator. His previous state experience includes superintendent of public instruction in Michigan, as well as deputy state superintendent in Delaware and Louisiana. He has been a local superintendent in districts with enrollments between 5,000 and 129,000 students.
How budget reductions change an organization
by Don White
Don White is superintendent of Pekin Public SD 108. This is an open letter that he sent to his board members.
I have been giving a lot of thought to what occurs in an organization when it goes through a time of budget cuts. From being in the unfortunate position of recommending reductions at too many times in my administrative career, I now have a perspective on what happens to an organization during lean times.
This is not an argument for avoiding the recommendations necessary to balance the budget. Instead, I hope we can gain a common understanding of shifts that may occur inside the district once we start down that path.
Perhaps the best way I can explain what happens is to put this in the perspective of three types of organizations: 1) proactive, 2) maintenance and 3) reactive. From experience, I have learned that an organization with adequate resources is usually in a position to be proactive.
Proactive organizations have the people and resources to better predict the future and put systems in place to best address that future by responding to identified growth areas. People in a proactive situation, as well as the entire organization, have time to reflect on both the micro and macro aspects of organizational needs.
Fortunately, District 108 has been afforded the opportunity to be extremely proactive and this has created an exemplary organization that has been recognized for excellence. Examples of proactive programs that have been implemented would include TIPS, Professional Development School, learning consultants, NCLB coordinator and a coordinator for special education.
In contrast, organizations in a cycle of budget reductions often fall into maintenance and even reactive positions.
Maintenance organizations focus on the status quo. On the surface, this does not seem to be negative. However, an organization that is not looking into the future and not constantly seeking improvement is an organization that will fall behind.
In the school business, this equates to not keeping up with research and falling behind in textbook adoptions. It means not giving employees an opportunity to explore new ideas in teams or as individuals. It means reacting instead of being proactive in regards to mandates and pushing efficiency to the point where the organization falls into a trap of narrowing the focus too far.
Reactive organizations are those that simply "put out fires." They are overwhelmed by special interest groups and must respond to constituents whose needs are no longer being met as a result of the reductions. Clearly, implementing budget reductions means someone's needs will no longer be met.
My fear is that the next round of budget reductions may cause District 108 to become more of a maintenance or reactive organization rather than continuing its proactive environment.
Obviously, this shift will not happen overnight. However, it will mean that all employees and board members will need to shift our thinking and make sure we understand our core values and priorities.
This does not mean that budget reductions will not be recommended. Instead, this perspective is offered to provide a vehicle for dialogue that needs to take place in the district.
You can choose to dream or you can dream and do something about it. I prefer the latter.