Comparing Tax Relief in 1974 State Aid To Education Law with This Year’s

Thanks to State Rep. Allen Skillicorn, McHenry County Blog shares a memo from the Legislative Research Unit comparing the real tax relief from the 1974 Resource Equalizer State Aid to Education law with the non-existent tax relief in this year’s legislation.

Such a let down from the “tax freeze” Governor Bruce Rauner ballyhooed.

The research is by Senior Research Associate Sarah E. Barlow.

1973 Law

The 1973 law added a property tax rollback provision to the school aid formula. Districts could choose to continue having their state aid calculated under the previous formula, or use the new formula–commonly called the resource equalizer state school aid formula. FN2

The resource equalizer formula guaranteed that each district that levied a property tax at the rate recommended in the School Code would get at least $1,260 per student annually for its educational program, as the sum of

(1) its property tax revenue plus

(2) state aid.

The state aid would be the difference between $1,260 per student and the district’s property tax revenue.

The $1,260 amount was the product of multiplying a ‘guaranteed’ tax base per student (explained below)by the recommended tax rate for that district type: FN3


What we above described as the ‘guaranteed’ tax base was not, of course, a guarantee that any district would actually have any particular amount of taxable property per student.

Rather, the formula guaranteed that if a district levied (and collected) at least the recommended tax rate for its education fund, it would get a total of at least $1,260 per student each year from its property tax revenue plus resource equalizer state aid.

School districts were required to reduce their combined tax rates over 4 years if those rates exceeded the recommended percentages (3% for unit, 1.95% for elementary, and 1.05% for high school districts).

The reduction in each year was to be one-fourth of the amount by which the district’s combined rate exceeded its limit. FN4

But a district could exceed the rate limits to finance innovative programs, research, or experimental programs if authorized by referendum or school board resolution.

In addition, districts whose local plus state revenue exceeded $1,260 per student before June 30, 1973 were not required to reduce their spending per student to $1,260. FN5

The provisions requiring reduction of tax rates that exceeded the recommended levels were repealed in 1976. FN6

2017 Law

P.A. 100-4657 addresses property tax reduction in at least three ways, described below.

More State Funding for Lower Taxes in the Formula

The funding formula enacted by P.A. 100-465 is different from the 1973 formula described above in two relevant ways:

(1) Under the new formula, an “adequacy target” is calculated for each district, seeking to represent the cost of educating its students based on factors specific to that district.8 The assumption behind the 1973 formula was that the same amount ($1,260) was adequate for educating every student.

(2) The new formula adds a district’s local capacity (the amount it is assumed to be able to raise in taxes toward its adequacy target) to the amount of state funding it receives, to calculate how close it is to its adequacy target. The formula allocates new state funding to districts that are farthest from their adequacy targets. FN9 Local capacity differs among districts because it takes into account actual tax receipts. Under the 1973 formula, a tax rate for each type of district was assumed.

The calculation of local capacity under the new formula appears to include an incentive for districts with high tax receipts to lower their tax rates.

A local capacity target is calculated for each district–basically the amount the district would ideally contribute toward its adequacy target, based on its equalized assessed value and a comparison of all districts in the state. FN10

For a district whose actual property tax receipts are below its local capacity target, the formula uses the local capacity target. In such a case, there will be a gap between the district’s actual receipts and the receipts the formula assumes that it gets, unless the district raises taxes to its target leve1.11

By contrast, if a district’s actual receipts are above its local capacity target, the formula uses an adjusted figure that is between the actual receipts and the target.

Thus, the district gets more state funding than it would if the formula used its actual receipts–but less than if it were taxing at the target level. (The adjustment is based on how far a district is from its adequacy target. So districts that tax at high rates, but are still far below adequacy, get the largest downward adjustment toward their target level, and thus more state funds.) FN12

Essentially, it appears that a district can maximize its state funding by taxing at its local capacity target.

The 1973 law addressed the goal of getting districts to tax at the recommended level by requiring them to do so-­ although the 1976 repeal of that requirement may have pre­vented it from taking effect fully.

State Grants to Reduce Taxes

Subject to appropriation, the Illinois State Board of Education (ISBE) is to make grants to eligible districts that reduce their property tax extensions. FN13

A district whose adjusted operating tax rate (the sum of the rates of property tax that it levies for all its funds, with some adjustments) is above a threshold rate calculated by ISBE will be eligible for a grant. FN14

The grants are to replace a portion of the amount of reduction in a district’s aggregate tax extension.

Reductions for purposes of calculating a grant are limited to 1% of a district’s equalized assessed value for a unit district; 0.69% for an elementary district; and 0.31% for a high school district.15

To determine a district’s grant amount, the amount by which the district agrees to reduce its property tax extension will be multiplied by the lesser of

(1) the amount by which its tax rate exceeds ISBE’s threshold rate or

(2) the “property tax multiplier” (1 minus the square root of the district’s “local capacity percentage”–basically, the percentage of its adequacy target that comes from local taxes). FN16

The property tax multiplier appears to have the effect of sending higher grants to districts with less local capacity.

For instance, under that provision in the formula, a district with 60% local capacity would get a grant of about 23% of its extension reduction, while a district with 10% local capacity would get 68%.

Thus, districts that tax at relatively high rates but still do not collect much in property taxes (typically due to low property values) will likely benefit the most from the grants.

The target for funding the grants is $50 million per year starting in fiscal year 2019.17

Referendum to Reduce Taxes

In any district whose current state funding, plus local tax collections, exceeds 110% of its adequacy target, 10% of the district’s registered voters can petition for a referendum at the next consolidated election, asking whether to reduce its school property tax extension for the next year.

Any such reduction cannot reduce the extension to less than 90% of the previous year’s extension; nor may a reduction cause the district’s percent of adequacy to fall below 110%.18 A majority of all votes cast on the proposition is required to pass it.

Once the proposition is submitted to voters, another one can­ not be submitted again at either of the next two consolidated elections.19

We hope this information is helpful. Please let us know if you need anything further.

Foot Notes

1. P.A. 78-215 (1973).
2. P.A. 78-215, amending Ill. Rev. Stat., ch. 122, sec. 18-8.
3. P.A. 78-215, amending Ill. Rev. Stat., ch. 122, sec. 18-8.
4. P.A. 78-215, amending Ill. Rev. Stat., ch. 122, sec. 18-8.
5. P.A. 78-215, amending Ill. Rev. Stat., ch. 122, sec. 18-8.
6. P.A. 79-6th S.S.-1 (1976), amending Ill. Rev. Stat., ch.
122, sec. 18-8.
7. P.A. 100-465 (2017), enacted by S.B. 1947 (Manar­ Lightford-Barickman-Rezin-N.Harris-Davis-Pritchard­ Currie-Bourne).
8. P.A. 100-465, adding 105 ILCS 5/18-8.15(a)(2)(A).
9. P.A. 100-465, adding 105 ILCS 5/18-8.15(a)(2)(B) to
(a) (2) (D).
10. P.A. 100-465, adding 105 ILCS 5/18-8.15(c)(2).
11. P.A. 100-465, adding 105 ILCS 5/18-8.15(c)(1).
12. P.A. 100-465, adding 105 ILCS 5/18-8.15(c)(1) and (c)(3); Funding Illinois’ Future, “Senate Bill 1: The Evidence­ Based Model for School Funding” (PowerPoint presentation, slide 12), downloaded Sept. 15, 2017 from Funding Illi­ nois’ Future Internet site; and “School Funding Commission Property Tax Working Group” (PowerPoint presentation,
slide 6, Jan. 3, 2017), downloaded from State Board of Ed­
ucation, Illinois School Funding Reform Commission Inter­
net site.
13. P.A. 100-465, adding 105 ILCS 5/2-3.170(b).
14. P.A. 100-465, adding 105 ILCS 5/2-3.170(c) and (e).
15. P.A. 100-465, adding 105 ILCS 5/2-3.170(h).
16. P.A. 100-465, adding 105 ILCS 5/2-3.170(a) (definition of
“property tax multiplier”) and (h).
17. P.A. 100-465, adding 105 ILCS 5/18-8.15(g)(9).
18. P.A. 100-465, adding 35 ILCS 200/18-206(a).
19. P.A. 100-465, adding 35 ILCS 200/18-206(c).


Comparing Tax Relief in 1974 State Aid To Education Law with This Year’s — 9 Comments

  1. Woodstock D200 tax rate is more than double the 1973 recommended rate.

    Rates are ratios, so there is no need for rates to grow with inflation.

    In Woodstock, because the obscenely high rate has devastated and continues to suppress home values, the rate/ratio is a self-feeding negative feedback loop.

  2. Helpful information.

    A report or presentation is necessary for the average person to understand.

    There is more to PA 100-465 than that property tax relief listed in that ILGA LRU brief.

    Stand for Children and other organizations have further explained the new education funding formula.


    Stand for Children

    Confused About New School Funding Reform Law?

    September 1, 2017

    by Jessica Handy

    – Stand for Children was a major proponent of the new law, working on it for years.


    Legislative History

    Governor Rauner signed Senate Bill 1947 (SB 1947) into law as Public Act 100-0465 (PA 100-0465) on August 31, 2017.

    Prior to SB 1947, the education funding reform bill was Senate Bill 1, which the Governor vetoed, the Senate overrode, but the House failed to override on August 28, 2017, so SB 1 died, and was replaced by SB 1947.


    SB 9147 / PA 100-0465 is an unfunded mandate.

    The new law calls for the state to provide more money for public education to local school districts.

    Even though the state does not have enough money to pay its current bills.

  3. Mark, in order to get any more money from the State, schools gave to provide info on 27 metrics of ‘adequacy’.

    Only schools not meeting ‘adequacy’ will receive more money (Tier 1 schools get 50% of funds, tier 2 get 49%, Tier 3 1%, Tier 4 nothin).

    Woodstock D200 can be described, in a classic case of wry British understatement, as ‘MORE than adequate’.

  4. My recent FOIA request was blown off:

    Request: Will you please make accessible, or direct me to where the public may find posted information in reference to the 27 Adequacy standards by which Illinois is to calculate future funding to your District?

    1. Full-day vs. half-day kindergarten. (Y or N)

    2. Number of (ratio) students to Core teachers grades K-3.
    Number of (ratio) students to Core teachers grades 4-5

    3. Number of (ratio) students to Core teachers grades 6-12

    4. Specialist teachers: ratio of specialist (non-core subjects) to core teachers in Elementary, Middle School, and High School.

    5. Instructional Facilitators (Coaches) ratio per enrollment (how many Coaches are employed per current enrollment)?

    6. Number of Core Tier 2 Intervention teachers: providing 1-1–1-5 group tutoring in core topics.

    7. Number of Substitute teachers per FT teachers in categories: core, elective, instructional coach, and tutor.

    8. Core guidance counselors and Nurses per each category: K-5, 6-12.
    9. Supervisory aides, non-licensed employees, for each category: elementary, middle school, and high


    10. Librarians per school, and library tech/aide totals.

    11. Principals and assistant principals per school.

    12. School site secretarial staff per: elementary school, middle school, and high school, and other district buildings and offices (transportation, administration, etc.) such that the total secretarial staff is reported.

    13. Gifted and talented financial expenditures per school year, and number of student enrollment accessing that expenditure.

    14. Professional development monetary incentives for teachers per contract year to induce collaborative work (improving conditions) over and above instructional coach incentives.

    15. Instructional materials (books workbooks, lab equipment etc.) monetary expenditure amount per school year.

    16. Assessment (financial expenditures) including: benchmark, progress monitoring, formative, diagnostic and others teachers need in addition to state accountability assessment data.

    17. Computer Tech and equipment expenditure per school, year, on: computers, servers, network equipment, copiers, printers, instructional software, security software, curriculum management, etc,

    18. Extra day and student activity stipends financial expenditure totals per school year in each category: elementary, middle school, high school.

    19. Maintenance and Operations expenditures per school year, including all purchased materials and (outsourced) services and salaries.

    20. Central office staffing, including costs of admin and classified personnel charged with managing instructional programs and business operations of district, including salaries, supplies and materials, telephone, software, computers, purchased services such as auditors, financial services legal, total cost per school year.

    21. Employee benefits including HEALTH, DENTAL, VISION insurance premiums paid for employees, as well as PENSION contributions paid for employees, relative to PAYROLL of affected staff/
    September 22, 2017
    S. Handelsman
    Page 2

    22. Tier 2 intervention teachers for challenged learners, as a ratio of Poverty Count and ESL enrollment (provide DHS poverty count separately) and as a ratio of ESL (provide ESL count separately). How many are attributed to Clay Academy?

    23. Additional Pupil support teachers for challenged learners such as social workers, as a ratio of DHS poverty count and ESL enrollment.
    How many are attributed to Clay Academy?

    24. Extended Day programs for challenged learners FTE teacher positions per DHS poverty and ESL enrollment?

    25. Summer school for challenged learners FTE teacher positions per DHS poverty and ESL enrollment?

    26. English learner students FTE teaching positions?

    27. Special education programs for moderate learning disabilities (high incidence/ low cost) number of positions relative to enrollment count in separate categories ELEMENTARY, MIDDLE SCHOOL, and HIGH SCHOOL : Special Ed Teachers (and related enrollment count per school category)
    Behavior Specialists (and enrollment count per school category)
    Related services (including speech pathologist, OT, PT, and social workers) (and enrollment count per school category) Psychologists (and enrollment count per school category)
    teachers aides (and enrollment count per school category)
    Next factor the public needs to review in Adequacy Ratings by Illinois is salary for each category full time (or equivalent adjusted salary) school employee:
    Teacher, Guidance Counselor, Social Worker, Psychologist, Librarian/media tech, Nurse, Principal, Asst.
    Principal, Secretaries, Clerical, non-in instructional assistants.
    Finally, will you please indicate the number of District employees whom you claim may not fit the descriptions above, their position classification and mean and median salaries, such that the total number of employees of D200 is accounted for fully.

    Response: District 200 has not yet received information from the State Board of Education regarding the funding calculations. You can reference the Illinois State Board of Education website at for updates.

  5. Now local taxpayers must
    IN ADDITION TO THE 8% out of 9% demanded now for TRS contributiuon plus the schools’ .58% contribution,
    now pay 38% of new teachers’ salary to TRS, RIGHT?

    ALSO, local taxpayers are on the hook for unfunded pension shortfalls FOR ANY REASON, right?
    Stock market crash, fraud by fund managers, whatever.

    In this case, Woodstock real estate is toxic, worth less than zero, because it carries inherent first priority lien of millions to fund public worker post retirement benefit.
    (NOTE that this is on top of the ENORMOUS OPEB obligations which are not understood or quantified by the school board in charge of this $100 +_ million annual budget.)

  6. When will you people learn.

    The sort of criminal overtaxation we have in IL is an income redistribution scheme to take from predominantly Whites and Asians and give it to “Minorities” … m\”minorities” which are actually the majority.

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