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Rauner signs school funding bill into law, but taxpayers will be on the hook




SPRINGFIELD – Thursday, Governor Rauner signed into law a school funding bill that promises Chicago Public Schools $250 million every year from now on to partially bail out the system's teacher pension mess – and you, Illinois taxpayers, have nothing to say about it.  You also have nothing to say about any negotiations CPS makes with their system employees.

In other words Illinois taxpayers, once again, just shut up and get ready to pay yet another hike in income taxes.

But, Governor Rauner and the tax hike-lovin' Republicans that voted with the Dems to pass the deal into law boast that it's all worth it, because the school funding bill includes the first step to growing Illinois' school choice with tax credit scholarships. 

The bill and the confusion surrounding it is so haphazard and involved that most Illinoisans are just happy to have the conflict between political factions over school funding off the newswire. But know this: Mayor Rahm Emanuel is very happy with what the bill will do to keep his city's school system on life support for another year – but it's only a short term gratification. They are pressing for another fix – because the CPS needs more.

One voice in opposition to the final bill was GOP State Rep Jeanne Ives of Wheaton, who published on her website a 3000-word position paper as to why the bill Republicans and Democrats are celebrating will ultimately dump yet more grief and demand on Illinois taxpayers. 

"In typical Illinois fashion, Mike Madigan and Mayor Rahm Emanuel got everything they wanted in the new school funding bill – and more," Ives writes. "Madigan got more dollars for the unions, he got the pretense of ending the long debate over education equity funding (this bill won’t end the debate), and most importantly he got to use suburban tax money to bail out CPS."

What more could CPS ask for?  Here's just one segment of Ives' information published HERE in its entirety: 

The Bill Bails Out Chicago Public Schools – Tax Increase will be Required

  • The formula requires $350 million more EACH year to work as planned.  The advocates plan on spending up to $6 billion more in the next 10 years on this one grant line.  That is double the amount we spent last year.
  • The budget bill passed for this year is already projected to be short $1-2 billion.  They also short changed the retirement systems by $700 million in the budget bill. Our budget is precarious and there is still $15 billion in unpaid bills.  Funding this bill would require a Tax Increase.
  • CPS keeps $250 million block grant – a grant no other district receives.
  • State taxpayers will pay Chicago Teacher Pension normal cost – first year amount is $221million. This amount will increase each year for the foreseeable future and is determined by their local pension fund – not the state. Chicago teachers only pay 2% of salary toward their multi-million dollar pensions. 
  • State taxpayers will pay for CPS legacy pension costs forever. This is the most problematic provision outside of the junk science behind the evidenced based formula itself.  Chicago Teachers Pension Fund has defunded the account with the help of state legislators for the last 17 years.
  • In 2000, the fund was near 100% funded, now it is 52% funded
  • For the last 17 years it has never paid the full actuarial amount needed, and in 13 of the last 17 years it paid in almost nothing towards pensions
  • Last year it lost $28 million in investments alone, it had investment expenses of $35.8 million and made only  $7.8 million
  • The bill allows Chicago to appear less wealthy because they can deduct legacy pension costs from their local wealth calculation which means they are eligible for greater state support.  By simply adjusting their actuarial assumptions, they can continue to game the formula to remain in the neediest tier of schools
  • The legacy pension cost this year for Chicago is $505 million – that translates into a$40 million additional state payment via the formula
  • If there is not enough money to fund the formula, a different distribution formula is in place and only the “neediest” districts are eligible for any new money – so many districts will see no increase in funding from the state
  • For most districts there is not property tax relief.  32 districts may receive preferential access to $50 million pool of money to buy down their property tax burden.  This is discriminatory to all other districts.
  • This bills assumes high operating tax rates will remain in most school districts and those districts with already higher rates are penalized in the formula for those rates while other districts that have not taxed at the same high rates to pay for their local schools are rewarded in the formula.
  • Superintendents liked the formula because they have been promised the same level of state support they received in FY17 in perpetuity – that’s regardless if property wealth increases or student enrollment declines.  Chicago lost 20,000 students in last two years and has $10 billion in new projects coming, but it won’t matter – they get the same amount of base funding minimum on top of the extra described above.  Cairo is set to lose half their students and they will get the same level of state support.  
  • For Tier 3 and 4 districts, they are only eligible for 1% of any new money going forward because it is assumed they have sufficient property wealth to fund their own schools.  All the schools I represent are in Tier 3 or 4. Their base funding minimum amount will erode over time as it is not inflation adjusted.
  • The funding formula – for new money though– has built in cost escalators for annual salary enhancements and adult education. 

And by the way, Rep. Ives writes, she's 100% behind moving real school choice forward in Illinois. She alone sponsored a school choice measure in the Illinois House last session, and she was ridiculed in committee as not caring about poor kids – although that's exactly who would have benefitted from her measure.

So how did your lawmakers vote on the school funding so-called "compromise" SB 1947? 

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