From State Rep. Steve Reick:
Sometimes You Have To Hold Your Nose And Vote “Yes”
Posted on August 31, 2017 by Steve Reick
On Monday, the House finally passed an education funding bill.
The last time the legislature passed a funding bill was in 1997, and in those 20 years, the formula has been changed to the point where the original was barely recognizable.
I’ve written extensively about how and why the formula became so unworkable. [Links to Reicks five previous articles are below.]
- Education Funding Part I: A Crumbling Foundation
- Education Funding, Part II: The Big Sucking Sound from the Shores of Lake Michigan
- Education Part III: PTELL Giveth and PTELL Taketh Away
- Education Part IV: Poverty Grant and PTELL Subsidy, Why Do They Matter?
- Education Part V: Property Taxes, the Well Has Gone Dry
My feeling was that if we had gone back to what the formula was before it was changed in 2004, we’d have a funding mechanism that would be reasonably progressive and would meet the needs of most school districts.
However, the changes that were made to the formula took money from the General State Aid formula and moved it into the Poverty Grant and the PTELL Grant, which had the effect of concentrating funding into districts which had higher concentrations of poverty, primarily the Chicago Public Schools.
That left the rest of us to rely to a greater and greater extent upon property taxes to pay for education.
I could spend hours discussing what went on to get us where we ended up, but I think it’s more important to tell you why I ended up voting for a bill that contains many of the things I originally voted against.
As I mentioned above, I thought we could make funding more equitable by rolling back the changes that were made to the 1997 funding bill rather than impose a 27-step model that even Rube Goldberg would have envied.
That’s why I voted “no” in committee on H.B. 2808 (the original “evidence-based model” bill).
When the bill came back to the House as S.B. 1, which included a laundry list of sweeteners for the Chicago Public Schools, I was a “hell no”.
The Governor’s amendatory veto of the bill took out many of the Chicago sweeteners, and I came out in support of the veto, but hoped that further negotiations on the bill would progress to give us something better.
However, the Democrats in the House did what Democrats often do, which was to engage in political theater by taking the language of the amendatory veto, plug it into a shell bill (S.B. 1947) and rush it onto the floor for a vote.
So on August 16th, the Speaker called us all to Springfield to vote on this sham of a bill.
They had no intention of voting for it, and fully expected us to vote to uphold the veto.
However, our caucus stood firm and to the surprise of everyone, we all voted “Present”.
This had the effect of forcing the Speaker to back down and agree to further negotiations which led to the bill which the Governor is signing today.
While the bill still contains many of the things which I found objectionable in S.B. 1, it provides for things which would never have been enacted if we hadn’t forced the Democrats to the table. Among them:
The normal pension costs for the Chicago Public Schools was taken out of the education bill and put into the Pension Code, where it belongs;
The bill takes $50 million of newly appropriated money and provides property tax relief to districts in low-EAV/high levy districts. It’s the first step to what I hope will be a movement to cap property taxes statewide;
It provides mandate relief for school districts for P.E., driver’s education and gives a streamlined process by which school districts can seek relief from other unfunded mandates;
It authorizes the City of Chicago to raise its property tax levy to pay for teacher pensions. Given that the city is responsible for that train wreck, it’s only fair that they be made to fix it;
It creates a commission to examine our system of Tax Increment Financing (TIF) which will hopefully lead to a way for schools to share in the increased property wealth that comes from economic development;
The bill provides for a tax credit program whereby up to $100 million can be donated to provide scholarships to low-income children to go to private and parochial schools. People who donate can receive a credit equal to 75% of their donation off their state income taxes.
I’m not crazy about this.
Though I fully favor school choice, it should come from money appropriated by the General Assembly.
There are better ways to provide parents with the means to send their kids to the schools of their choice, not by blowing a $75 million hole in the budget.
I spoke about my concerns for the bill on the House floor. You can see my comments here:
This is Senate Bill 1947 (SB 1947) which was signed into law as Public Act 100-0465 (PA 100-0465) on Thursday August 31, 2017 by Republican Governor Bruce Rauner.
Its predecessor in the 100th General Assembly was Senate Bill 1 (SB 1), which the House failed to override Governor Rauner’s amendatory veto.
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In the name of transparency and accountability to taxpayers, the Illinois General Assembly should start posting video recordings of entire house sessions on YouTube.
Then if they want to extract clips and post those, fine.
Right now extracted clips get cherry picked and posted, as is above.
Right now the public has no way of knowing what was said in the House and Senate, unless one drives down to Springfield, or reads transcripts when they are made available.
That’s wrong.
Just as videotaping McHenry County Board meetings should be required, so should videotaping the House and Senate sessions in the state capitol.
@Mark:
I agree that there should be wider distribution of both committee meetings and floor debates.
There are ways to get timely access on BlueRoom Stream (https://livestream.com/blueroomstream), but it’s password protected and subscription only.
The House and Senate have live broadcasts on session days which are free (House: http://ilga.gov/houseaudvid.asp and Senate: http://ilga.gov/senateaudvid.asp).
You can get a DVD of archived sessions, but there’s a significant delay and a fee.
The clip posted here was recorded by our own House Republican staff.
When I post a video, it’ll be the entirety of my remarks, I don’t “cherry pick” my comments.
I know that’s not what you meant, but I wanted to make that point very plainly.
Never been very political but this stuff has got to stop.
Video taping all public meetings with access by the public should be a must.
Also a must, should be bills that have one goal in mind.
Not bills loaded with unrelated things, pork, special deals all in fine print.
That’s a travesty.
Here is more information about the education funding reform bill.
This from Republican State Representative Jeanne Ives (Wheaton office).
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Jeanne Ives, State Representative, 42nd District
The School Funding Bill Passed and the Result is…
CPS Got Bailed Out and We Made Promises We Can’t Keep
I voted NO – Here’s Why
August 30, 2017
http://www.jeanneives.org/2017/08/the-school-funding-bill-passed-and.html
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Education funding is very complex.
Media coverage is horrendous at explaining these issues, often focusing on the press release of the day and pressure from special interest groups.
By reading the Reick post including its links and the Ives post one can become more informed on the issues.
The education funding reform bill (SB 1947 / PA 100-0465) has unfunded mandates.
What will the tax eaters say in the future?
You promised me.
The tax eating machine is alive and well in Illinois.
@Mark:
The bill actually allows schools to get exemptions from unfunded mandates for PE and driver’s ed, and contains a provision allowing for an expedited process to apply for exemptions from others.
It’s not robust enough, but it’s a start.
I’d prefer to see all unfunded mandates be eliminated.
The new education law (SB 1947 / PA 100-0465) calls for increased revenue for education now and in the future.
What will be the source of revenue?
The state already has pensions that are calling for more revenue, and one of those pensions is for education (TRS).
It is helpful to remind the taxpayers about the scope of the pension problem, especially when passing legislation to hike revenue provided to education.
Hiked education revenue means more teachers and administrators and / or higher salaries for those teachers and administrators, which means hiked pensions.
That is a cost to “hold harmless” provision that is associated with this new education law (no district will lose state funding; ever district gets the same or more money).
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The following is an overview of the state pension problem.
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Commission on Government and Forecasting Accountability (COGFA)
November 2016
Special Pension Briefing
All Five Systems Combined
Projections Based on the Retirement System’s FY 2016 Actuarial Valuation ($ in Millions)
The unfunded liability (amount that should be in the pension fund, but is not) is projected to increase from $131,231.1 Billion in 2017 to a peak of $148,639.5 Billion in 2028.
Thus through 2028, the amount taxpayer IOU for state pensions is projected to increase, not decrease.
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At 7% interest, the annual interest accrued on the unfunded liability increases from $9,186.2 Billion in 2017 to a peak of $10,404.8 Billion in 2028.
Unknown to most taxpayers, there is annual interest accrued on an unfunded liability.
The reason is because the investment return on zero assets, is zero return.
Once again, the unfunded liability represents money that should be in the pension fund, but is not.
If the money was in the pension fund, it is projected to return an average of 7%.
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The “state contribution as a % of payroll” is projected to increase from 39.9% in 2017 to a peak of 48.5% in 2034, where it remains at through 2045 (at which point pensions are projected to be 90% funded and the chart stops).
That is the percent of an employee’s pay which the state contributes to the pension fund.
Thus for every $1 dollar that goes to paying a state employee in 2035 – 2045, the state will send another 48.5 cents to a pension fund.
As a comparison, the amount employers contribute for Social Security is 6.2%.
The amount employers contribute for 401K’s vary, but many contribute a few percentage points gratuitous and then match up to a certain percent, and the maximum employee 401K contribution is 15% up to a maximum of $18,000?
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From 2017 – 2045, at 7% interest, the total accrued annual interest on the annual unfunded liability is $252,152.7 Billion.
If pensions were fully funded, the accrued interest would be zero.
$252 Billion in interest just for state pensions.
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The bottom line is hiked costs for education will increase taxpayers cost for pensions.
Pensions are already very costly resulting in hiked taxes.
Lots of people believe taxes are already high enough or too high.
Time will tell if taxpayers continue to leave the state due to hiked taxes, and what the future tax hikes, other sources of revenue (Chicago casino, etc.) and service cuts will entail.
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Michael Madigan is very good at passing legislation.
He sucks at explaining the costs of that legislation to taxpayers.
He sucks at explaining the current financial condition of the state.
His patronage army excels at feeding this dysfunctional machine from which they benefit.
Phony Reick: Take a Hike!
He must be go!
A takeaway is an pension unfunded liability has a principal and interest component.
In that way and unfunded pension liability is similar to a mortgage, credit card, or loan.
The problem does not appear to be Steve Reick.
The problem seems to be an opaque out of control legislative system.
For instance, Governor Rauner attempted several reforms, and was not able to get any significant passed, because he was blocked repeatedly by the status quo.
Mr. Reick adds some transparency.
Don’t necessarily agree with his decision on this bill, but that is not a reason to throw him under the bus now.
Hopefully he will take this pension information and more completely and frequently inform his constituents of the pension problems they, and any children and grandchildren they may have, are facing.
That would anger the status quo very angry, and they would quite likely campaign even harder to defeat him in the next election.
The more transparency and the harder one fights, the more resistance that is brought by the patronage army.
And so the cycle dysfunctional continues.
But, the status quo can’t print money to get themselves out of this mess.
They can charge the taxpayer credit card for a very long time, play kick the can and hide and seek, but more and more people are catching on, and their actions are catching up to them, albeit slowly.
Poor, prominently black schools don’t deserve a chance —
This is the issue?
Illinois can’t pay retirees, don’t take it out on the unfortunate.