Illinois K-12 Education Funding

The state of Illinois politics has been and appears like it will continue to be in utter disarray for the foreseeable future. As of the publication of this article, and barring a budget miracle by June 30th 2017, Illinois will have been without a budget for almost exactly 2 years. This has resulted in, as of June 10, 2017, over $14.6 billion in unpaid bills. According to Reboot Illinois, this number could rise to approximately $25 billion in FY-2019, if the current path continues. The issues surrounding the continued budget impasse are innumerable and include issues surrounding state pension system reform, higher education funding, medicaid payment backlog, and raising the minimum wage. The continued impasse, and furthermore lack of state funding, has also prompted substantial layoffs across nearly every sector of state government operation.

While the issues noted above are critically important, I specifically want to touch on Illinois K-12 education. On June 30th, 2016 a stop-gap spending bill for K-12 education was passed by the Illinois Congress and signed by Illinois Governor Bruce Rauner. This was a great win for K-12 education, but has since become big problem number 1. The money promised by the state government to school districts across the has not arrived for a majority of school districts. In sum, the issue is while they did pass a k-12 education spending bill, the State simply could not afford to do so. To illustrate this point for fiscal years 2016 and 2017, it promised to pay $1.76 billion each year, but this year has missed three of its four quarterly payments. The total owed to schools is at least $1 billion, according to the comptroller’s office.

This backlog of payments is due most notably to Chicago area schools rather than the more rural south, which rely more heavily on local property tax revenues than than their northern counterparts. However, that is not to say that rural school districts are unaffected by any stretch of the imagination. Intensifying the problem further, a recent federal court case decision obligates the State to prioritize the $2 billion currently owned to medicaid providers, likely pushing obligations such as education further back in line.

Luckily for rural school districts that depend on a combination of local property tax revenue and General State Aid, the State has continued to keep current with its General State Aid payments. However, now comes the biggest potential problem yet for local taxing bodies throughout the State, but most notably the southern half, a proposed property tax freeze.

While the specifics of a property tax freeze may include ways for municipal governments and local taxing bodies to opt out, there is not way to predict exactly what a property tax freeze bill would look like. It is however fairly easy to predict the detrimental impact it would have on school districts who rely heavily on consistent property tax revenue annually. So what exactly would this mean for public schools?

“In one word, death!” exclaims William Phillips, a professor of  Educational Leadership at the University of Illinois Springfield “No new tax money assumes that all a district’s bills are going to stand still… I can’t believe they’re thinking along those lines. It’s really horrible. I don’t know how school districts can survive with the forces aligned against them,” says Phillips.

According to Monticello Community Unit School District 25 Superintendent Vic Zimmerman, “School districts” expenses increase,” he said. “The property tax is a stable revenue source … If they take away our one stable revenue source, how do they want us to continue to function? Tighten our belts? That’s been going on because of proration over the last several years.”

Without a doubt, a property tax freeze of any sort would be detrimental and in many ways unthinkable for school districts who rely heavily on these local revenue streams. A freeze would undoubtedly lead to measures that reduce the teaching force, special education  programs, extra curricular activities, etc. I dare to suggest that in many cases, it would simply be a fight to keep the doors, which may already be a serious problem for many school districts across the State this coming Fall.

What makes the whole issue of a property tax freeze even more difficult to digest, is the simple fact that these savings in property tax, while great for landowners’ and business pocket books, does absolutely nothing in terms of providing the State with more financial stability. Simply stated, these are local funds and the State does not share in these revenues at all. It can be argues that several areas of the State economy would receive a “boost” from a freeze, but at what cost to the local service providers such as municipalities,  police and fire districts, park districts, and of course, school districts.

While impacts of the State budget impasse have been felt by millions of Illinois residents, Illinois Congress and Governor Rauner have so far avoided catastrophe through stop-gap spending bills and last minute deal making. Unfortunately for all of us residents who have so far not felt the direct impacts of the impasse, the time is coming. In sum, our State government is too politically polarized. There is no better time than today to put politics aside and  find places of compromise for the current and future well-being of the State and its residents.

The Illinois Unemployment Misconception

About one year ago, we published an article called “The Illinois Wage Misconception” briefly detailing Illinois’ appearance of a strong average wage statistic. In reality, the high average wage was a false generalization. The finding’s foundation was built on the fact that the small percentage of high-end wage earners simply averaged more wages than other regional states’ high earners did. This specific finding balanced and further hid the usually low wages of a majority of Illinois workers. This wage dichotomy, or conflict, created an “illusion” of a high average wage for all of Illinois Workers.

This article discusses another Illinois economic misconception that is easily hidden by broad statistical generalizations. This misconception, or “illusion” is the State of Illinois’ lowest unemployment rate in nearly a decade of 4.6%. On face value, this record low unemployment rate would likely equate to an increase in both employment opportunities as well as employed individuals throughout the State. However, in Illinois, this is unfortunately not the case.

What is seemingly a state economic success is actually an indication of a deeper issue. The out migration of the Illinois labor force. The path towards low unemployment has not been unemployed workers seeking out and finding new jobs, but rather giving up on finding work altogether. So, simply stated, as unemployed workers quit looking for jobs altogether they are no longer included in the unemployment statistic. Therefore, as motivated job seekers go down, so does the State’s overall average unemployment rate. So the central statistic missing from this equation is the State’s active labor force. If the active labor force goes down alongside the unemployment rate, it becomes easy to surmise that decreasing unemployment signals economic distress rather than success.

Over the last ten years, from May 2007 to May 2017, Illinois has a total of 230,000 individuals leave active labor force and completely end their search for work. Interesting, over the same time frame, neighboring Wisconsin’s labor force is up 70,000 and Indiana’s labor force is up 130,000. Although not regionally adjacent, Texas has seen a labor force increase of 2 million over the last ten years. So it seems three basic conclusions can be made from these labor force statistics, (1) Illinois’ political quagmire has created an unmotivated workforce that is likely causing them to simply give up on searching for work, (2) those individuals who are motivated to work are moving elsewhere to find employment (neighboring states such as Indiana and Wisconsin), and (3) until Governor Bruce Rauner and the Illinois Congress can solve it’s budget crisis and began to dig itself out, these trends are more likely to continue than they are to dissipate.

While problems are easily identified, solutions to those problems take a certain type of courage by politicians that is not based on political leanings, but rather on what is best for the citizens of the State, despite which side of the aisle you sit at. The financial and social burdens are only growing, and to this point, the solutions being proposed are simply not keeping up.

While local leaders and economic stakeholders cannot control or often even predict the actions taken in Springfield, they do have the ability to make a difference in their community, no matter how small it may appear. First, it is absolutely critical to maintain regular contact with community employers. Engaging in economic development retention techniques allows the community to understand the needs of  local business and industry, and help both the community and the business plan for the future.

In some cases,  local business and industry may be planning an expansion of operations that could range from an additional 1-2 employees all the way to a multi-million dollar expansion and 20-40 new employees. With this type of information in hand, local stakeholders can reach out to area community colleges and universities to engage in curriculum discussions to help fill the future needs of the communities employers. While I am simplifying these often arduous conversations down to a few sentences, making a difference can happen locally, you simply have to take the first step.

Source: Illinois Policy Institute