The amount of funding that a school district will receive from SB1 can vary greatly from what the Evidence Based Model shows that a school district should receive to meet their student needs. There were multiple adjustments to the distribution portion of SB1 to prioritize who receives future State education funding.
These changes accomplished the goals of directing more money to communities with low property value and CPS and to hold affluent school districts harmless. They moved away from the goals of providing more funding to the school districts that have the highest need based on the Evidence Based Model. The results were that communities with average property value will need to continue to rely on higher property taxes to fund their schools. Unfortunately, in order to try to make as many people happy as they could, the middle class was de-prioritized for future State education funding.
Future State Education Funding
The Evidence Based Model itself provides for full "means testing" of what a school district should be spending based on their unique students needs, how much the community should be expected to contribute locally and how much existing State education funding they are receiving.
- The portion of future State education funding middle tier school districts would receive was reduced by XXX compared to the amount of funding these school districts should receive based on the unadjusted Evidence Based Model.
- Based on the ISBE model, middle tier school districts would be asked to contribute XXX more in local property taxes to fund their schools.
- "Tier 2" school districts would only receive new State education funding if the State appropriates more than $150 million dollars in new education funding each year. This is the funding tier that most middle tier communities are in.
Introduction of a Separate Property Tax "Swap"
These change were offset by language added to SB1 that would provide the opportunity for property tax relief for high tax communities. This is a verypositive change that was added to SB1. However, as currently written the property tax swap appears to limit the amount of relief that middle tier communities would receive. ISBE has not modelled the property tax relief component of SB1, but the information posted on the Funding Illinois Future website shows that middle tier school districts like Oak Lawn-Hometown would not be eligible even with a (unit equivalent) education tax rate near 7%.
With some basic modifications, this component of SB1 has the potential to help communities with high taxes throughout the State.
The following changes should be considered for the property tax relief component of SB1:
- Expand the property tax swap proposal to provide meaningful property tax relief for all high tax communities.
- Do not reduce the amount of property tax relief that middle tier communities would be eligible for.
- Only provide property tax relief for the amount of extra local revenue that has been provided to reach adequacy.
- Do not provide property tax relief for any extra local revenue that is provided above a school district's adequacy target.
- Add language to ensure that a portion of future State education funding is allocated to the property tax relief component.
The following decisions should be discussed further:
- Revisit the decision to ask middle tier communities to provide a greater proportion of property taxes to fund their schools.
- Revisit the decision to reduce future State funding for middle tier districts.
- Review calculations in the formula that may be incorrectly overstating some school district's actual property tax revenue by 10% and may be understating other school district's actual property tax revenue by 10%.
As part of the appropriations discussions, the following should be considered:
- Ensure that next year's appropriations includes sufficient funding for the property tax relief component of SB1.