SPRINGFIELD – Illinois Gov. Bruce Rauner recently announced the creation of a bipartisan commission to study the state’s controversial school funding formula.
The new Illinois School Funding Reform Commission will study the issue of school funding inequity among school districts and recommend reforms in a final report scheduled to be submitted to the governor and the General Assembly by February 1.
Hoy McConnell, executive director of Business and Professional People for the Public Interest, a nonprofit law and policy center based in Chicago, says the Illinois school funding formula favors wealthier districts because it largely relies on property tax. As a result, poorer districts on average can receive $5,000 per pupil in funding, compared to wealthier districts that may receive as much as $14,000 per pupil.
Three-fifths of total public school funding in Illinois is financed by local property taxes. The state finances less than 30 percent, one of the lowest levels in the nation.
BPI has represented plaintiffs in lawsuits challenging the state’s school funding system, including in 2005 when BPI filed a lawsuit on behalf of poor school districts against the Illinois Board of Education on the basis that funding favored wealthy areas. That lawsuit went to the Illinois Supreme Court, but was rebuffed.
“The heart of our case was exactly what is being considered now for a legislative approach to reform the school funding formula,” McConnell told the Cook County Record.
Under the current school funding policy, homes of identical value are taxed at different rates depending on location. McConnell said there is inequity in the formula, which he said is prejudiced against poor districts.
“The poorer taxpayers pay higher tax rates than property taxpayers in rich areas to get a decent level of school funding. We wanted to revise the state formula for funding to reallocate money to the poorer districts to raise them to a level closer to the rich districts,” McConnell said.
In the formula, property tax depends on the wealth of an individual school district, he said.
“Those districts with high wealth can tax with low rates and still raise much money, but those that are poor tax at a high rate comparatively, but raise little money because of the property tax base, so that is the source of the inequity,” McConnell said.
State funding, collected through state income tax, accounts for only about 25 percent of the total funding.
McConnell said, “Property tax will fund about 65 percent of the state education funding, in comparison to an average in other states of 40 percent. The formula in this state was formulated thinking that property tax would contribute less than 50 percent. Now it is approaching two-thirds.”
Reallocating state funding will help, McConnell said, but it will not solve the problem because only a fraction of school funding comes from the state portion.
“A comprehensive solution to school funding has to address both what the state allocates plus the overall funding formula,” McConnell said. “It is a two-pronged problem.”
McConnell said the formation of a bipartisan committee to study reform of the school funding formula is encouraging.
“To really address the issue of property tax versus state income tax, it requires some kind of property tax swap, meaning a reduction of property tax for an increase in state income tax,” he said. “A shift in the source of revenue between local to state revenue. It may lead to something productive down the road. I am hopeful.”