PI Original Angela Caputo Thursday March 26th, 2009, 3:48pm

Education Funding Takes A Ride

Those concerned about Illinois education have found themselves on quite the roller-coaster as of late, watching historic school funding opportunities
repeatedly surface, then slip away.

First, the original draft of the federal stimulus plan included over $4 ...

Those concerned about Illinois education have found themselves on quite the roller-coaster as of late, watching historic school funding opportunities repeatedly surface, then slip away.

First, the original draft of the federal stimulus plan included over $4 billion in spending on Illinois schools.  But the version ultimately passed by the U.S. House stripped out all school construction money, including about $900 million tagged for the Prairie State.  After the package became law, officials here started looking forward to the billions headed our way, including $2 billion worth of "state stabilization" funds (82 percent of which was earmarked for education). But their angst grew when Gov. Quinn's proposed budget made it clear that most of this money would be used to cover shortfalls in other state operations.  Furthermore, Quinn's spending plan included an income tax hike, which education backers have been pushing for decades. However, schools won't likely see much of the extra money -- at least not in the short term.

You can understand why advocates of school funding reform would be frustrated.

On Tuesday, Illinois State Board of Education Supt. Chris Koch rolled all the bad news into a single memo (PDF) explaining how the stimulus funds will be poured into the state's gaping $11.5 billion budget hole instead of classrooms:

As part of his FY 2010 budget recommendation, Governor Quinn proposes using the $2 billion from the State Fiscal Stabilization Fund to plug holes in the budget and support education. He proposes to use approximately $800 million during the current fiscal year to help pay down the backlog of bills to schools, which currently stands at nearly $700 million. In addition, he would use $1.2 billion next year to fund education, which would translate into roughly a $174 million increase—exactly what the Board recommended in January.

I recognize that there may have been an expectation that the dollars from the State Fiscal Stabilization Fund would be in addition to what education was already receiving in Illinois. Unfortunately, given the current economic climate, this is the most reasonable scenario.

That $174 million "increase" is actually the smallest in more than a decade, state Sen. Heather Steans (D-Chicago) points out. This is why only the wealthiest Illinois school districts can get ahead. Rather than supporting teachers and students in the state's most cash-strapped schools, Illinois officials opt to play shell games each time extra money is freed up for education. 

But Sen. James Meeks (D-Chicago) calls this a “now or never” opportunity for reform and is continuing his push for Senate Bill 750, as Bethany Jaeger reported earlier this week:

[A] so-called tax swap ... would increase the state income tax and expand the state sales tax to apply to services. The new revenues would help offer property tax relief. Sen. James Meeks, a Chicago Democrat who has been pushing the idea for seven years, says relying less on property taxes to fund public education would help address funding disparities between property rich and property poor school districts.

Legislators’ reluctance to raise state income taxes has been one of the main roadblocks to various tax swap proposals advanced in the past seven years, but Meeks said the likelihood of an income tax hike this year creates a “now or never” opportunity for reform. The latest proposal, SB 750, would raise the state income tax from 3 percent to 5 percent for individuals and from 4 percent to 8 percent for corporations.

Quinn doesn't seem too open to the idea, however. On Sunday, he told WLS Radio's Bill Cameron that the state simply can't afford such a plan.  But as Jaeger goes on to write, Meeks is proposing a compromise that involves shifting the added income tax revenue to education once the deficit is resolved in a couple of years:

While the tax reforms traditionally have been proposed as a way to reform education funding, Meeks said he’s open to using new tax revenues to plug the state’s budget deficit for up to two years. But then it would have to switch to fund education. If lawmakers only consider the deficit, he said, “we’ll end up raising taxes, but we won’t end up fixing anything.”

That's an idea that bears watching.

The good news is that federal restrictions on the other $1 billion in stimulus money earmarked for special education and Title I (poverty-related) reimbursements are strict, so there's no chance for the state to siphon that money away from the neediest districts. And if a capital bill is passed, the proposed $4 billion school program will help some districts ditch the construction debt that's been diverting money from their classroom for years. Of course, neither of these measures are a substitute for true education funding reform.

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