By: Mark Glennon*
We know much more now than last week about both the original version of SB-1, the bill passed the General Assembly, and Governor Rauner’s amendatory veto of it. However, distortions abound and key points remain unreported or unknowable.
With headlines like the following, the average voter, who barely has time has time to skim the headlines, probably thinks Rauner’s veto would slash Chicago school funding:
“CPS would lose nearly $500 million under gov’s school funding plan” – Chicago Sun-Times.
“As expected, Rauner’s AV drastically short-changes CPS” – Rich Miller, Capitol Fax.
“Rauner analysis shows his education veto would cost CPS $463 million” – Chicago Tribune.
And with “adequacy” being the main them of the original bill’s supporters, most folks probably assume this is a fight between the left wanting to spend more and right wanting cuts. I just heard a radio ad by the Illinois Education Association saying Rauner’s veto would mean “schools around the state will be forced to open with fewer teachers and with fewer students crowded into classrooms.”
On those points, here are facts we know stated more objectively — at least as I see them. They’re based on the analysis just released by the Illinois State Board of Education, which the accuracy of which I have not seen challenge.
First, both sides would increase statewide K-12 educational spending significantly, although the original SB-1 increase would be somewhat more ($786 million versus $584 million under the veto).
Second, in addition, both sides would have the state begin funding the normal annual cost of the Chicago teachers’ pension, which is about $221 million.
The net result for CPS under Rauner’s amendment, including that pension pick-up, is an increase of $47 million over what it would get under the current formula. However, that would be $242 million less than it would get under the original SB-1.
Whether that’s a cut or an increase, or “robbing Peter to pay Paul,” as SB-1’s chief sponsor (Andy Manar, D-Bunker Hill) says, is up to you.
Understand, however, that much of the difference for Chicago under Rauner’s veto results from counting property in TIFs as part of city wealth. SB-1 as originally drafted doesn’t, and Chicago has vastly more TIF wealth per capita than the rest of the state. It’s beyond ironic that Chicago progressives, who have long complained — correctly — about how Chicago hides its wealth in TIFs, are happy to do that when it comes to state funding.
But other important items are not yet getting to light:
First, the pension cost “shift,” as it’s being called, will mean local school districts will start paying pension costs for newly hired teachers, who will be in Tier 3 pensions, even while the state begins picking up the Chicago teachers’ pension normal cost. I suspect most folks outside Chicago wouldn’t like that if they knew. NPR Illinois is among the few that has covered this. The JournalStar says the “pension cost shift could mean ‘financial’ ruin to local school districts, but that’s far from clear to me. I can find no good numbers on it.
Rauner’s veto would remove this cost to local school districts from the funding formula, which might seem to make the impact on them more severe. However, CPS would also start picking up pension costs for its new teachers, so on this issue the veto just puts CPS and other school districts in the same position. Also, under the formula for determining need, an automatic 30% is already tacked on to salaries to allow for benefits.
Second, the long-term effects of the tiered pecking order are unquantified and mostly unreported, but unquestionably heavily favor Chicago. SB1 assumes between $3.5 to $6 billion of additional funding will come from the state to local school districts over the next ten years to meet “adequacy.” If that much more money doesn’t materialize, a very complicated four-tier system determines who gets whatever new money is there, and it’s clearly rigged to keep Chicago in the top tier.
That money almost certainly won’t show up in full. The state just doesn’t have it. The consequences will favor Chicago, among other ways, by allowing it alone to include legacy pension costs in the funding formula. That will keep Chicago in Tier 1, making it look poorer and entitled to more money. In other words, through this, state taxpayers would start picking up the tab for the $9 billion unfunded liability of CPS pension.
There’s another important point on that $3.5 to $6 billion that, unrealistically, is assumed will appear. Under SB-1, it takes that much to get to “adequacy.” When a school underperforms for whatever reason, and that money doesn’t show up, do you think the educrats supporting the bill like the Illinois Education Association will be blaming bad outcomes on funding that’s inadequate according to their “evidence based” formula, regardless of the real causes? Count on it.
Finally, nobody is reporting on what the detail and complexity of the 482-page bill represent. It’s central planning on steroids — at the expense of local school control. Abide by the details in the formula or you don’t get your state money. The exceptions are only wealthy districts. They get negligible state money so they can do what they want. Another triumph of the self-styled champions of the poor in Springfield.
I expect the school funding debate will be settled soon because nobody wants them to close. Just don’t expect it to be in the light of day. State Rep. Steve Reick (R-Woodstock) put it this way last week:
This is a prime example of how bad legislation gets passed. We wait until the last moment to vote on something none of us has seen, and then we spend months figuring out what we did and how to fix it.
*Mark Glennon is founder of Wirepoints. Opinions expressed are his own.