Monday, August 28th, found the House of Representatives unable to override the Governor’s previous veto and approve Senate Bill 1. However, a compromise bill created by the 4 leaders from the House and Senate, was able to approve a bill that not only provides a mechanism for school funding with an evidence-based funding model, but many other components.
This new bill now goes to the Senate. If approved, it will then go to the Governor, who has already stated he would sign this historic legislation.
This bill represents a school funding reform agreement between all 4 legislative leaders and the Governor. The amendment contains the provisions of SB 1, with adjustments described below, as well as additional items. There are no changes to the following items, which Republicans had previously requested: the hold harmless provision, third party contracting, inflationary measures in SB 1, accounting of TIF and PTELL funds within the school funding formula, the regionalization factor cap, diminishment of collective bargaining rights, CTPF legacy considerations within the formula, CPS block grant considerations within the formula,
removal of pension considerations within the formula for all districts, and the removal of the Minimum Funding Level.
CHANGES TO SB 1 COMPONENTS
Minimum Funding Level (MFL) – Keeps the MFL at $350 million, but allows up to $50 million in Property Tax Swap funds to count towards this amount in tandem with Evidence Based Model funding. This creates an incentive to fund the swap, while maintaining the MFL.
Property Tax Swap – HFA #5 would require that any amount of new EBM funding in excess of $300 million be dedicated to the Property Tax Reduction Swap, up to $50 million. For example, if new appropriations in FY 19 total $350 million, $300 million will be distributed through the formula, and $50 million would be spent on the tax swap.
CPS’ normal pension costs will be moved out of the education formula, and instead will be provided in the Pension Code; and
The adjustment to CPS’ local resources for the district’s unfunded pension cost will be extended to all school districts. If any school district develops a legacy pension cost attributable to Tier 3 members, the district will get the same deduction.
Streamlined Waiver Process – All 4 legislative leaders will review school district waiver requests. If 3 of the leaders flag a proposed waiver, it will go through the current G.A. waiver process. If a waiver is not flagged by the leaders, then the waiver request is approved. The G.A. typically approves most if not all waiver requests. This will expedite the
process for the vast majority of waiver requests.
Physical Education – School districts will have the ability to reduce daily P.E. to not less than 3 days per week. Additionally, individual students in grades 7-10 will be able to seek an exemption from P.E. if they are involved in athletics (currently available to grades 11-12).
Drivers’ Education – School districts would be able to use a third party to provide drivers’ education without going through the waiver process.
OTHER NON-FORMULA ISSUES
Property Tax Reduction Referendum – If 10% of registered voters sign a petition, a referendum question can be brought forth at a consolidated election to reduce a school district’s educational tax levy by a maximum of 10%. This could only happen if the district is above 110% adequacy, and the levy reduction could not reduce a district’s adequacy below
110%. If a referendum is brought forth then the question cannot be posed again for the following 2 consolidated elections.
CTPF Levy – Under current law, the Chicago Board of Education can levy up to 0.383% for teachers’ pension costs. This proposal would increase the allowable levy to 0.567%, or an additional $120 million if fully realized.
A TIF Reform Commission is created to study and make recommendations on TIF reform.
TAX CREDIT FOR SCHOLARSHIP DONATIONS
A tax credit would be created to incentivize donations for private school scholarships. Individuals or businesses could receive a 75% tax credit for each dollar donated, for which they cannot receive a federal tax deduction. A maximum of $75 million in credits may be awarded annually, and this amount will not increase. If the full $75 million in credits is realized, this would cover less than 6,000 scholarships. This program would operate as a 5 year pilot program.
All K-12 Illinois students would be eligible to receive the scholarship, provided their household income is less than 300% of the federal poverty level (FPL) ($72,900 for a household of 4), or
400% FPL ($97,200 for a household of 4) if the student is a prior scholarship recipient.
However, priority for scholarships will be given to 4 groups of students: (i) those with a household income below 185% FPL (the threshold for reduced lunch assistance, or nearly $45,000 for a household of 4); (ii) those who reside within an academically failing district, or
“focus district;” (iii) prior scholarship recipients; and (iv) siblings of scholarship recipients. Focus districts are school districts that have at least one school that scores in the bottom 10% of
student assessments or has a graduation rate of less than 60%. The most recent information from ISBE identified 89 focus districts, including CPS.
The maximum amount of individual scholarships will be the lesser of the tuition and fees of the private school, or the statewide average operational per-pupil spending among public schools.
Students with disabilities, English learners, and gifted students will have higher thresholds, but still based on a statewide average. Scholarships would be distributed through scholarship granting organizations which are not-for-profit organizations approved by the Department of
ISBE will be responsible for identifying participating schools, which must be non-public schools located in Illinois and recognized by ISBE. All participating schools will be required to assess student performance using the state assessment test. ISBE will select an independent evaluator
to annually assess the academic performance of scholarship students.