Quick Hit Ellyn Fortino Wednesday February 12th, 2014, 3:17pm

Ralph Martire: Illinois School Funding Reform Must Include Changes To Tax Policy

Reforming Illinois' public education funding system has to include fixes to the state’s tax policy, argued Ralph Martire, executive director of the Center for Tax and Budget Accountability, at a DePaul University education forum Tuesday evening.

“For decades, Illinois has denied an adequate education to the vast majority of its school children, and it’s set up a structurally-racist system of education finance that specifically singles out African Americans and Latinos for very poorly funded education,” Martire said at the discussion about equity in education. “To fix that, we need to raise taxes the right way.”

Martire pointed to a number of findings that show public education funding in Illinois is “woefully inadequate.”

After adjusting for inflation, funding for K-12 public education in Illinois will be nearly 17 percent less in the current fiscal year than it was in fiscal year 2000.

In the state’s 2014 budget, the K-12 foundation level, or the minimum amount to be spent on each student, is $4.7 billion less than what the Illinois Education Funding Advisory Board (EFAB) has said it would actually cost to get two-thirds of the state’s students who are not at-risk to pass standardized tests.

And going forward, funding for Illinois schools will be in even worse shape if the 2011 temporary income tax hike begins to phase out, as it is scheduled to do January 1, 2015.

Martire, who is also a member of the U.S. Department of Education’s commission on Equity and Excellence In Education, noted that the temporary income tax hike has stabilized the state’s deficit at about $8 billion to $9 billion a year. Currently, Illinois has an accumulated deficit of $7.6 billion, he said.

Without the revenue from the temporary income tax, the state’s deficit for this fiscal year would have reached $32 billion. To put that in perspective, the state’s budget as a whole is $35 billion, including debt service, he explained.

“You want to lose all this revenue? Then you’ve got to cut education and social services,” Martire said. 

Caroline Bilicki, a parent of three Chicago Public Schools (CPS) students and a member of the Raise Your Hand education coalition, stressed that Chicago and Illinois schools cannot endure any more cuts.

She pointed to Raise Your Hand’s research, which found that CPS budget cuts this year alone resulted in the loss of 180 arts instructors, 79 librarians, 90 high school English teachers, 80 physical education teachers and other positions. The city is planning to use tax increment finance funds to pay part of the expense of rehiring some of the arts and physical education teachers, but the individual schools will be saddled with finding ways to fully pay for the returning employees by the 2016-2017 school year. 

And even more sobering education funding facts were presented at Tuesday’s forum.

Illinois ranks dead last out of the 50 U.S. states when it comes to the portion of public education funding covered at the state level. And the Prairie State is number one in the nation regarding its reliance on property taxes to fund schools, a practice that leads to large disparities between wealthy and poor school districts.

“If the kid lives in a property-wealthy community, they get a world-class education in this state. If they don’t, not so very much,” Martire said. “So that’s a highly inequitable way, the most inequitable way, to fund the schools.”

Fifty-five percent of African-American children in Illinois live in the state’s five percent of school districts with the highest rates of poverty and the lowest property taxes. Moreover, 93 percent of African-American children in the state live in school districts where the concentrated poverty rate is at least 30 percent.

Overall, Illinois has spent, on average, $1,500 less on public education for K-12 African-American students than their white peers for the past 40 years, he said.

“Our starting point for education funding is woefully inadequate, and then we really single out African-American kids for horribly-funded education,” Martire stressed. “So there is really no wonder those kids don’t credential themselves on a competitive level with their white peers at higher levels, and that of course will show up in your wage data.”

The wage gap between whites and minorities in Illinois, he said, has actually gotten worse since 1980.

Between whites and Hispanics in the state, the wage gap was $4.01 in 1980 and $5.86 in 2010. And between whites and African Americans, the wage gap jumped from $1.60 in 1980 to $3.08 in 2010, he said.

So what can be done to help tackle these problems?

Even if the temporary income tax increase was kept in place, Illinois would still have a structural deficit. And if the state does not get rid of its structural deficit, it “will never have the money to invest in education needed to not only bring it up to a sufficient level but to take off this over-reliance on local property taxes and create a more equitably-funded system as well.”

Therefore, the state needs more resources.

Troy LaRaviere, principal of Blaine Elementary School in Lakeview, asked whether tax increment financing (TIF) surplus funds could be the solution to education funding woes in Chicago.

TIF surplus funds are a "one-time revenue", Martire responded, so it cannot be the only remedy. 

Instead, the state should expand its sales tax base to include services and implement a graduated tax system that would apply higher rates to larger incomes and lower rates to smaller incomes. Illinois currently has a flat income tax, meaning all taxpayers are taxed at the same rate, 5 percent, despite their income.

If Illinois were able to pull in $4 billion to $4.5 billion in new tax revenue over a few year's time, Martire said the state could pay off its massive backlog of unpaid bills. And after about four or five years, the state could actually fund education to at least the EFAB recommendation.

“That tax increase represents less than 1 percent of our economic activity in our $695 billion economy. And that is standing in the way of doing the right thing,” he added. “We, as thoughtful citizens, ought not accept our politicians lack of political will to fix this problem.”

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