Can Illinois schools break away from property taxes
October 18, 2013, By Benjamin Yount | Illinois Watchdog, Local taxpayers, through local property taxes, pay $12 billion of the $20 billion it costs to educate kids in the state. State government pays about $6 billion a year and the federal government kicks in another $2 billion or so.
But each year, local schools complain that they do not have enough money.
Instead of rehashing the annual fight over how much to spend on public schools, some lawmakers want to change the way the state pays schools to begin with.
“If we don’t get a distribution method, that addresses the diversity in terms of rich and poor districts, in terms of demographics … if we don’t get that right, we’ll never get the ‘how much we spend’ right,” state Sen. Andy Manar said.
Massachusetts uses an “alternative wealth,” which blends property taxes with a community’s income level, to pay for schools.
North Carolina uses a formula that attaches a net worth to students. For every 30 students, for example, the school sets a set dollar amount to hire a teacher.
Manar said Illinois is unique in that it relies too much on local property taxes to pay for schools.
“The lopsided nature of how property taxes in Illinois fund a large majority of education, that wasn’t the case a decade ago or certainly two decades ago,” Manar said. “The world has changed significantly. Unfortunately the Legislature hasn’t.”
Perhaps the biggest change has been the explosion of state grants for local schools.
The state’s school funding formula is complicated, but essentially schools are promised $6,119 per pupil. Wealthy schools get less — sometime far less — while poor schools get more.
State grants are in addition to those per-pupil dollars and are worth hundreds of millions of dollars to some school districts.
“There is more money going to Chicago Public Schools than downstate (schools) because of the change,” State Sen. Sue Rezin said.
Chicago Public Schools, the largest school system in the state, receives the lion’s share of the $1.5 billion Illinois spends in “poverty grants” every year.
Poverty grants are supposed to boost school funding where there is a high percentage of low-income families. But Illinois also sends millions of dollars in early childhood education grants and grants designed to offset the impact of tax caps to local schools.
Rezin said as grant funding goes up, regular school funding goes down.
“(Per pupil), which originally was 80 percent of our education funding formula is now down to 50 percent,” Rezin said.
“That’s not paltry change we’re talking about,” Illinois State Superintendent Chis Koch said. “If you move around some of those things, and use that money differently, it can have a fairly substantial reach in terms of paying for education.”
But the biggest change on how Illinois pays for students to learn could come from a change in how the state pays for teachers to retire.
Illinois House Speaker Mike Madigan has been talking for more than a year about “shifting” the nearly $4 billion annual cost of teacher pensions from the state to local districts.
Some of that $4 billion could be then be sent back to local schools.
But Rezin, Manar, and many other lawmakers worry that a “cost shift” will only force local schools to rely on property taxes even more. And likely raise property taxes as well.
Contact Benjamin Yount at BYount@Watchdog.org and find him on Twitter @BenYount.