Last week, Governor Rauner issued an amendatory veto of Senate Bill 1 (SB1) that significantly changed the provisions of the bill to the point where the Illinois PTA cannot support the amended version of the bill. As a result, Illinois PTA is calling for members to contact their legislators to override the governor’s veto. Here’s what you need to know about the governor’s veto.

What’s the process for the General Assembly to deal with the governor’s veto?

The Fix the Formula coalition, of which Illinois PTA is a member, has an informative flow chart that explains the process for the General Assembly. The veto starts in the Senate, where senators must vote with a 3/5 majority (36 votes) to either override the veto or concur with it within 15 days. If they can’t get a 3/5 majority, the bill dies and schools will not receive funding until a new evidence-based funding model (EBM) bill is passed. Since such a bill would be passing after May 31 and take immediate effect, it too would require a 3/5 majority to pass.

If the Senate votes to override or concur, the bill then moves to the House, where again a 3/5 majority (71 votes) is needed to pass whatever the Senate voted to do. That means that if the Senate votes to override, the House cannot vote to concur, only override as well. If the House can’t get a 3/5 majority, the bill dies and schools don’t receive funding. If the House agrees with the Senate to override, the new funding formula would be installed, schools would receive funding with the new formula, and Illinois would begin to close its worst-in-the-nation inequitable school funding. If the General Assembly concurs with the governor’s veto, the vetoed version of the bill will become law, and many of the current funding problems would continue or get worse.

Will my school open on time?

Probably. School districts should have some cash on hand to start school, but some districts may not have much in reserve to keep the doors open. Some districts have said they have enough reserves to stay open for the full year, others have said that they can last until around Thanksgiving, and some are struggling to the point where they are already limiting payments to payroll, electricity, water, and other costs needed to keep the school open, but are not purchasing items like pens, paper, or workbooks.

Illinois is also behind in some payments from last year to school districts, which has put a strain on many of them, and without an EBM in place, funding for this year cannot be sent out. SB1 is the only EBM that has passed both houses of the General Assembly after four years of negotiations and compromises. No other EBM bill has even been through committee at this time.

School districts are due their first payment of the year on August 10 and their second one on August 20. The Illinois State Board of Education (ISBE) and the comptroller’s office say they will need about 10 business days to run the evidence-based model to calculate how much each school district will receive before they can cut the checks. That means that those first two payments will likely be missed while the General Assembly attempts to override or concur with the veto.

It is unclear if or how the state will handle those missed payments. They could make them as soon as an evidence-based model is passed into law or pro-rate the missed payments into the remaining payments for the year. Complicating matters is that the comptroller can’t write checks first for the districts that are struggling the worst. All of the school districts must be paid at the same time, which also means that the state has to have the cash on hand to pay all the schools at once.

I’ve heard my school district will get more money from the governor’s veto. Others say we’ll get less. Who’s right?

That’s hard to say, because ISBE has not yet calculated how much school districts will receive under the model created by the governor’s veto. The numbers showing your district receiving additional funding are likely from other proposals that were not passed by the General Assembly.

The governor’s veto eliminated the block grant for Chicago Public Schools (CPS), which is used by CPS to pay for special education, transportation, and other “categorical” spending. Eliminating the block grant cuts just over $200 million from CPS and parcels that money out to all the other school districts in the state, so other than CPS, district may see a bit more money initially. But other changes the governor made to the bill will likely cost every school district money in the long term. One of the key designs of SB1 was that no school district would lose funding from its current level. The governor’s veto breaks that by cutting CPS’s funding.

How does the governor’s veto hurt school district funding in the long term?

Governor Rauner originally stated that he was opposed to the “Chicago bailout” in SB1, and it was anticipated that his amendatory veto would target the CPS block grant for special education and other categorical spending and how pensions are handled for CPS in SB1. When the veto was made public, it went much further than expected. Here are the key changes and how they affect school districts:

• Eliminates inflation indexing of costs in the SB1. This was one item Illinois PTA specifically asked for in our testimony in May. SB1 calculates how much money a school district needs to educate a student on a variety of factors, and many of those factors have a set dollars per student amount in the bill. Without accounting for inflation, those values will essentially be cut over time just like an apple doesn’t cost a nickel any more. That means school districts will see cuts in funding even as increasing technology use in the classroom and inflation increase the real costs of educating a student.
• Changes the hold harmless provisions. One item critical to Illinois PTA’s support of SB1 was that no district would lose state funding from its current level—the hold harmless provision. The governor’s veto changes the hold harmless provisions from per district to per pupil in the 2020-2021 school year. That may not sound like a big change, but for school districts that have declining student populations, it means they will see less funding even if they are far from being adequately funded by the state. Fix the Formula has an interactive map that lets you see which districts would be affected by this change, almost all of which are outside the greater Chicago area.
• Includes TIF districts and PTELL in the properties in the calculation of school districts’ ability to raise money. School districts raise money through property taxes by taxing the Equalized Assessed Value (EAV) of the properties in their district. Tax Increment Financing (TIF) districts remove the value of properties in those districts from school property taxes, so schools do not get any taxes from those buildings. PTELL is Illinois’s tax cap law that limits the ability of school districts (and others) from increasing the total amount of taxes collected to the rate of inflation, even if the value of the property in the district has increased faster than inflation. SB1 recognizes the fact that school districts can’t get some tax money when calculating how much they should be raising to pay for themselves. The governor’s veto includes those TIF properties and ignores the PTELL limitations when making that calculation, so it looks like a school district can raise more money through property taxes and thus needs less state funding. The Fix the Formula interactive map also shows which districts have TIF and PTELL issues (select it in the “Indicator” drop down box).
• Moves the CPS pension adjustment out of SB1 and into the pension law. Under SB1, every school district’s pension payments were treated the same way. The state would pick up the normal (current) cost of pensions, including CPS who currently pay for their own pensions, but keep CPS responsible for its legacy (unfunded liability) pension costs. SB1 did recognize that CPS can’t spend the same tax dollar twice, once for legacy pension costs and again in the classroom, so those legacy costs were cut from the calculation of what CPS could raise through taxes, but did not give CPS any money for those costs. This also protected the funding of every other school district if the state were to make them responsible for their own pension costs, as has been considered in recent years with the state’s financial difficulties. The governor’s veto essentially takes money from the classrooms in CPS to pay for pension costs and will do the same for all other districts should they become responsible for their own pensions.
• Caps regional wage differences. SB1 put in a cost adjustment calculation to account for regional differences in salaries when calculating the amount of money needed to educate a student. SB1 has a floor for this adjustment to ensure downstate districts with low costs of living could compete with and retain high-quality teachers without wealthier districts outbidding them. The governor’s veto also adds a ceiling to this adjustment, meaning that districts with higher costs of living are penalized by artificially decreasing salaries. As the Fix the Formula interactive map for regionalization shows, this change would cost CPS and districts in the Chicago suburbs.

Illinois PTA believes that these changes by the governor’s veto fundamentally change the basis of the evidence-based model. The veto removes the protections that no school district will lose funding from current levels going forward, which is a critical reason for Illinois PTA’s support of SB1. Illinois PTA cannot support a school funding bill that cuts funding to any district, nor will we support a bill that uses vouchers, even under the guise of “scholarships,” to divert public education funding to private and parochial schools.

What can I do?

Illinois PTA is asking everyone to contact their legislators to encourage them to override the governor’s amendatory veto of SB1. It takes only a minute or two to use our prewritten letter. All you need to do is type in your signature to the letter, and provide your e-mail address, zip code, and street address to identify your legislators and provide them with the ability to contact you (usually just a “thank you for your letter”).

Illinois PTA president Brian Minsker spoke on Tuesday at a press conference in Decatur calling on Governor Rauner to sign Senate Bill 1 (SB1), a bill that would change Illinois’s school funding formula. His remarks are below, and you can view a video of the press conference courtesy of the Decatur Herald and Review (President Minsker’s remarks begin at 8:25). In addition, Illinois PTA encourages every PTA member to take a couple of minutes today contact Governor Rauner to urge him to sign SB1 using our ready-to-go letter.

Much of the news since the passage of a state budget has focused on the requirement of an evidence-based funding model in order for schools to receive funding this year. The need to keep our schools open for this school year, which for some has already begun, is certainly one reason to support SB1, the only evidence-based funding model that has passed both houses of the General Assembly.

But that budget requirement is not the primary reason that the Illinois PTA is urging the governor to sign SB1. Illinois PTA has long supported education funding that is adequate, equitable, and sustainable as part of our legislative platform. While our state remains far from meeting those three goals, SB1 is an important first step towards achieving them.

As a statewide association with PTAs in rural, suburban, and urban school districts, it was essential that no school district lose funding under an evidence-based model and that such protections last for more than a handful of years. SB1 provides just that, locking in current levels of funding as a foundation.

In Illinois, we currently spend a worst-in-the-nation $0.81 on a low-income student’s education for every $1.00 we spend on a non-low-income student. By determining the unique cost to educate a student in each Illinois school district, by measuring that against the district’s ability to raise its own funding, by treating every school district in Illinois the same in how current, but not legacy, pension costs are handled, and by providing more funding for districts the further they are from their target funding, SB1 begins the process of providing a more equitable distribution of funds throughout Illinois.

This approach is essential to guaranteeing that the quality of a child’s education does not depend on their zip code. Governor Rauner promised to fix our funding formula. His bipartisan commission recommended an evidence-based funding model, which SB1 now implements. The time has come for the governor to deliver on that promise and sign SB1.

We have spent the last two years without a budget, and we have seen the lasting damage that has been done to our community colleges, our universities, and our social services. Now that we finally have a budget, let’s not shift the political fight to our schools and our children, for that is what this fight is truly about. Do we move to provide every child in Illinois a quality education, or do we use our children, our future, as pawns to score political points? Governor Rauner, Illinois PTA urges you to sign SB1 for every Illinois child.

Senate Bill 1 (SB1) is aimed at improving how Illinois distributes money to local school districts. The bill uses an Evidence-Based Funding Model, as recommended by Governor Rauner’s Illinois School Funding Reform Commission to distribute new state education funding in a more equitable manner than the existing formula. SB1 has passed both houses and awaits the governor’s signature or veto. The budget passed by the legislature requires that school funding use an evidence-based model, such as SB1, without which no funds will be distributed to K-12 schools this fiscal year. SB1 is the only such funding formula bill to pass both houses.

Why do we need a new funding formula?

Last fall, Advance Illinois released a report on public education in Illinois called The State We’re In 2016-2017 noting that an increasing number of Illinois school districts are teaching more children living in poverty and more children learning English, both populations that require extra supports for success. As state funding for education has fallen further behind the foundation level (the state-determined cost to adequately educate a student in Illinois), school districts have increased property taxes to make up the difference. However, property wealth is not evenly distributed across the state, with some districts able to raise significant funding through property taxes, while others are able to raise very little even with high tax rates. The funding provided by the state is also not evenly distributed under the current funding formula, as for every $1.00 Illinois spends on a non-low-income student, it spends only $0.81 on a low-income student—the worst ratio in the country.

How will the new formula work?

The new formula calculates a unique adequacy target for each school district by applying 27 evidence-based criteria based on a district’s demographics (e.g., class size, technology, up-to-date materials, special education teachers and aides). The formula also identifies how much state funding a district currently receives and locks it in as the district’s base funding minimum and measures how much local capacity the district has to raise funds through property taxes, called its local capacity target.

Districts are then divided into four tiers based on how close they are to their adequacy targets, with Tier 1 districts being furthest away and Tier 4 districts being the closest. When new funding beyond the base funding minimum is allocated, Tier 1 schools get the first 50%, Tiers 1 and 2 split the next 49%, and the final 1% is split between Tiers 3 and 4. Those additional funds are then counted as part of the following year’s base funding minimum, so districts will move out of the lower tiers as they get closer to their adequacy target.

Will any school districts lose funding?

No. The formula locks in a district’s current funding level as its base funding minimum. All new state funding for education going forward is in addition to what districts currently receive, and it is those additional funds that will be allocated using the Evidence-Based Funding Model.

Is this a Chicago Public Schools (CPS) bailout?

No. Under the current formula, CPS is handled differently, receiving a block grant that other districts do not but also paying for their teacher pensions that the state pays for other districts. That means that CPS currently has to keep tax dollars away from the classroom to pay for pension costs that other districts do not have to pay. It is estimated that state pension payments on behalf of districts other than CPS are worth an average of $1,880 per student in the Chicago suburbs and $1,420 per student in downstate school districts.

With SB1, the block grant is folded into CPS’s base funding minimum and eliminated going forward. Regarding pensions, CPS is treated like every other school district, with the state paying for the cost of pension benefits its teachers are earning today. That means that CPS receives approximately $220 million that it is required to use for pensions, just like every other district has had in years past. However, CPS will still be the only school district required to pay for its own legacy pension costs, or “unfunded liability.” That means that CPS will spend approximately $0.14 on its unfunded pension liabilities and $0.86 on educating students. The new formula accounts for this by crediting CPS’s local capacity target, since it can only spend a tax dollar once, but does not give CPS additional funding for these legacy costs.

Additionally, if the state were to push pension costs to all local school districts to reduce the state’s pension liabilities in the future,  SB1 would treat all districts identically to CPS.

Where can I learn more about SB1?

There are several places you can find more information about SB1:

• The Illinois State Board of Education (ISBE) has released an estimate of the amount of money each school district would receive in the first year under SB1 (Excel spreadsheet). The estimate is based on an additional $350 million dollars appropriated for education in the first year, determined using the Illinois School Funding Reform Commission’s recommendation of an increase of $3.5 billion over the next ten years to adequately and equitably fund public education in Illinois.
• Center for Tax and Budget Accountability, a nonpartisan think tank, has an extensive collection of education articles, including one on the value of state pension payments to districts.
• Advance Illinois, a nonpartisan education policy organization, has information and interactive tools to dig into poverty, funding, and post-secondary attainment for all Illinois school districts.

What is Illinois PTA’s position on SB1?

Illinois PTA’s mission is “to make every child’s potential a reality.” Our legislative platform supports adequate, equitable, and sustainable funding for education in Illinois. The current state funding formula and level of funding meets none of those three conditions. SB1 represents an important step in moving public education funding in Illinois towards being adequate, equitable, and sustainable. The hold harmless clause in SB1 protects existing levels of state funding for every school district in Illinois indefinitely, rather than phasing out like previous funding formula proposals did. For these reasons, Illinois PTA supports SB1 and urges Governor Rauner to sign the bill into law.

What can I do?

Contact Governor Rauner and urge him to sign SB1 into law. Should the governor veto SB1, Illinois PTA will issue a call to action that will provide you with a message to your legislators asking them to override the veto. Sign up for the Illinois PTA Takes Action Network to be sure you get the call.