A press release from Governor Bruce Rauner:

Governor Rauner’s Illinois School Funding Reform Commission Reaches Bipartisan Framework for School Funding Formula

CHICAGO – Governor Bruce Rauner’s Illinois School Funding Reform Commission today approved a framework that allows members of the General Assembly to create a new school funding formula.

“Illinois is another step closer to fixing our broken school funding system,” Governor Rauner said.

“I applaud the Commission members for putting politics aside to advance a bipartisan framework that can serve as an immediate roadmap for legislation.

“The framework ensures all public school children in Illinois receive equitable funding, no matter where they live.

“We look forward to working with members of the General Assembly to quickly resolve the outstanding issues identified in the report with the hope of enacting a bipartisan school funding reform package as soon as possible.”

The 25 commission members, comprised of five members from each party in each chamber and five members appointed by the Governor, met for over 75 hours in the last six months to reform the school funding formula.

The framework will better focus resources on the needs of the students and districts.

Through this framework, new funding will first go to schools who are farthest away from their adequacy targets, serving the most vulnerable students.

This measure will address inequity within districts, not just among districts, and also ensure all public school children, including those who attend charter schools, receive equitable treatment.

“This has been a robust, bipartisan and bicameral process,” said Illinois Secretary of Education Dr. Beth Purvis.

“I am incredibly thankful that these really dedicated members of the General Assembly and the Governor’s appointees were able to come and have substantive conversations in which children were at the center of the decision-making.”

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I think I have copied the guts of the report below:

Illinois School Funding Reform Commission

Report to the General Assembly and Governor Rauner

Introduction

The research surrounding Illinois’ disparity in school funding and student outcomes is alarming. While FY13 numbers show Illinois as 15th in the nation in average public school spending per pupil, there are only two states in the country with larger gaps between spending on the wealthiest versus the poorest school districts.

On average, the state’s school districts with the greatest number of low-income students receive 20% less funding than wealthier districts.

In addition, the most recent school report cards issued by the Illinois State Board of Education (ISBE) indicate that only one in three elementary school children performs on grade level in reading and math and that half of Illinois public high school graduates either do not go to college or need remediation upon enrollment.

In response to this crisis, on July 12th , 2016, Governor Bruce Rauner created the bipartisan, bicameral Illinois School Funding Reform Commission to provide a framework to the General Assembly for reforming the current school funding formula. The Governor’s action makes itclear that the current funding formula is not sustainable. Previously, the General Assembly also attempted to address this problem, including the passage of two bills by the Senate and a series of legislative and public hearings across the state.

The Commission consisted of both gubernatorial and legislative appointees. State Secretary of Education Dr. Beth Purvis was appointed by Governor Rauner to serve as a member and chairperson. Reverend James Meeks, Chairman of ISBE, and Dr. Tony Smith, Superintendent of ISBE, agreed to participate in meetings and to facilitate the Commission’s work.

At the heart of the Commission’s diverse representation was an implicit acknowledgment that no recent funding formula proposal has passed the Illinois General Assembly and made its way to the Governor’s desk for signature. In order for the General Assembly to pass comprehensive legislation aimed at meaningful, lasting reform, the proposal needed to be bipartisan, bicameral, and drafted with a deep understanding of the complicated landscape of school finance.

The Commission held its first meeting on Wednesday, August 3, 2016. All Commission meetings were open to the public, including the press, and all meeting minutes and materials were available on the Commission’s website. At this meeting, members of the Commission Baker, Farrie, Luhm, & Sciarra, National Report Card on School Funding, Education Law Center at Rutgers Graduate School of Education (March 2016).

agreed that their goal was to present to the General Assembly and the Governor recommendations for a new K-12 funding formula that would increase state support of education, better define adequate funding for education, and distribute funds in a more equitable manner. In the past, other commissions have also looked at this issue; this Commission, however, has paved a clear path for General Assembly members to operationalizethis framework into legislation to ensure all communities are supported in an effort to achieve adequate and equitable school funding.

The Commission held 18 large group meetings and 13 smaller working group meetings, and heard from numerous subject matter experts.

During the last month of the Commission, members worked with educational experts and advocates to create a framework that reflects its theory of change. This framework is the basis for a K-12 funding formula that will establish a unique funding target (“adequacy”) for each district that reflects the particular needs of children in that district and will lead to improved outcomes for students. The adequacy target will be based upon best practices as reflected in educational research and through consensus expert opinion. The distribution of state funds to districts will reflect the availability of local resources to meet or exceed the adequacy target, current district allocations, and student count. The funding formula will allocate additional resources as needed for children with disabilities, children who are English learners, children who live in families that are considered low-income, and children who live in areas of concentrated poverty.

Over the last two years, members of the General Assembly and Governor Rauner allocated record funding for Illinois schools; however, significantly more funds will be needed to ensure that every child in Illinois attends an adequately funded school. The Commissioners understand that fact and will recommend a funding formula in which those districts that are farthest away from their adequacy target will receive the greatest benefit from any formula change and additional resources until all districts have met their respective targets. At the same time, no per pupil funding level will change in such a way that the current quality of education in any Illinois school district would be diminished (i.e., a “hold harmless” provision). Additionally, individual Commissioners recommended legislative changes to ease property tax burdens.

It is necessary to face the challenges of adequate school funding head-on. The state currently spends about $11 billion on elementary and secondary education, including about $4 billion for current and legacy costs of teacher retirement. Without clearly identified new resources for the framework, the $11 billion in spending will continue to be inadequate and inequitable. In addition, the $4 billion in current pension expenditures do not contribute to any formula goals of adequacy and equity. Any transitions to a new formula also bring challenges: if a hold harmless provision is included, there will be little to no equity ever achieved within the existing $11 billion. If a hold harmless provision is not included, districts have little ability to plan and transition smoothly. It is unclear if a permanent versus temporary hold harmless should be recommended. The ability to dedicate additional resources to education funding is critical for the success of this Commission’s work.

Framework for a New Illinois School Funding Formula

In order for the Illinois school funding formula to meet the needs of all Illinois public school students adequately, regardless of geographic location or community wealth, the Commission agreed to the creation of a clearly defined individualized adequacy target for each school district based on the unique needs of its student population. These targets will be based on adequacy elements4

and calculated according to, at a minimum, student count, the number of students living in poverty as determined by the Department of Human Services, concentration of poverty, and the diverse learner population in each district. A regionalization factor will be applied to relevant inputs in order to account for varying costs in wages across the state. The percentage of state funds contributed towards meeting the district adequacy target will be determined proportionally by the amount of local available resources.

The Commission members agree that low-income children and those who live in areas of concentrated poverty require additional resources and attention to reach their academic potential. Three mechanisms have been discussed that could be used to increase funding to districts with high concentrations of poverty.

First, elements could provide increased funding for low-income students and students living in concentrated poverty.

Second, using enrollment instead of average daily attendance may increase funding to schools with large low-income student populations or populations of students in concentrated poverty. Third, the distribution formula could direct additional funds to districts based on poverty concentration. In addition, funding alone is unlikely to be sufficient to close the gap; new service delivery approaches will also be needed. ISBE is working to build a model in which the separate and cumulative effect of
these factors can be assessed so as to best ensure that this point of consensus is reflected accurately in the data.

Elements will be written into statute; however, it is important to the members of the Commission that there be flexibility in their implementation so that districts can implement strategies that will lead to the best academic and socio-emotional outcomes for their students. Within three years of the initial implementation, ISBE should suggest changes, if warranted. At the time of writing this report, the amount of additional state money needed for all districts in Illinois to be at or above their adequacy target is estimated to be a minimum of $3.5 billion over the next decade. It should be noted that this figure makes several assumptions and will fluctuate over time as adequacy targets and local capacity change. In fact, for the state to take an increasingly larger share of responsibility for education funding (e.g., 51%), this figure is projected to rise by at least $2.5 billion. However, how the rate at which we achieve that goal has not been decided. Furthermore, this figure does not account for additional capitalneeds of the districts.

The statute will create a Commission for the Oversight and Implementation of the School Funding Formula5 made up of General Assembly members and appointees by the Governor’s Office and ISBE. This panel will recommend to the General Assembly any implementation updates, based on available data, emerging best practices, and cost-of-living adjustments.

Insofar as the panel sees fit to provide recommendations for legislative changes to improve the formula and its implementation, those recommendations shall be included in its report as well.

Upon establishment of the new review panel, the Illinois Education Funding Advisory Board (EFAB) will sunset.

From FY10 through FY16, the General State Aid (GSA) portion of the school funding formula was
prorated.

To protect the per pupil current funding level for each district in any formula transition, the hold harmless will be calculated on a per pupil basis using a three-year average of student count. The use of enrollment versus average daily attendance (ADA) should be revisited by the Commission for the Oversight and Implementation of the School Funding Formula as accurate and reliable data become available and upon analysis of the impact of the new formula.

There is consensus among Commissioners that the previous method of proration was particularly detrimental to poorer districts, as they are more heavily reliant on state resources.

Going forward, any future decreases in state funds for K-12 education should be addressed using a different method. Children who attend schools with the largest gap between their adequacy target and current funding levels should see reductions in state funding only after districts at or above their adequacy targets lose funding. The Commission has not yet determined how to best operationalize those funding cuts. ISBE must model specific scenarios to ensure that the final bill language reflects the intent of the Commission and protects our most vulnerable students.

Illinois has one of the widest inequities in school funding in the nation. To increase equity in the funding of Illinois Schools, the Commission agrees that, as money is added to the integrated formula, it will be distributed first to those districts farthest from adequacy.

As part of defining that distance from adequacy, the distribution model should take into account local contributions to school funding.

Specifically, there is consensus that by establishing a “local capacity target” reflecting each district’s local wealth, taxpayers will better understand the relationship between their local contribution and the district’s ability to meet its adequacy target.

The distribution model must include consideration of local wealth with special consideration for districts with low EAV and high taxes that, despite their effort, are still not adequately funded.

Many Commissioners stated their desire that a new funding formula would lead to eventual tax relief for districts with high property taxes, with the expectation that the issue would be addressed.

The Commission has not yet determined how to best operationalize the local capacity target. ISBE must model specific scenarios to ensure that the final bill language reflects the intent of the Commission.

Both the normal cost of pensions and statewide pension liabilities affect the ability of the state to make strides towards adequate school funding. As reported by multiple expert presenters to the Commission, differences in salaries across the 852 school districts create further inequity via disparities in pension contributions. Compounding that issue, CPS is the only school district in the state responsible for the employer’s share of the pension costs.

Commission members spent multiple meetings discussing the needs of diverse and special populations. Among their conclusions was to leave the early childhood funding line item out of the integrated formula.

Additional funds are required to meet the needs of English learners (ELs) and will be included in the elements of the integrated formula.

These funds may not be used for any other purpose apart from fulfilling EL needs. Funding for
technical assistance, professional development, and other support to school districts and educators for services concerning ELs should be maintained as part of the funding allocated for the Illinois EL student population.

Meeting the needs of students with disabilities in accordance with the Illinois School Code and the Individuals with Disabilities Education Act is a priority of all Commission Members.

The Transitional Bilingual Education Administrative Rules: https://www.isbe.net/Documents/228ARK.pdf; as addressed in SB 231 funding of the majority of special education services will be incorporated into the elements of the integrated formula with similar protections as EL funds to ensure that special education dollars are used to provide the appropriate services, in accordance with each child’s Individualized Educational Program.

The Commission acknowledged the specific needs of disconnected youth, specifically those children who have dropped out of school. Consensus was reached to maintain current funding structures and line items for programs for disconnected youth. It was recommended that the Commission for the Oversight and Implementation of the School Funding Formula determine through future discussions whether to address the needs of disconnected youth through the integrated funding model.

Proration and delayed transportation payments have caused significant distress to school districts, especially rural districts. Consensus was reached to leave the transportation funding line item out of the integrated formula and maintain it as a categorical reimbursement. ISBE and the Illinois Department of Transportation will work collaboratively to identify opportunities to ease transportation mandates and increase collaboration while continuing to prioritize student safety.

Current statutes allow school districts to spend less money on public school children who attend district-authorized public charter schools than on children who attend traditional district-run public schools. Given that the majority of children who attend charter schools qualify for free/reduced-price lunch, this may result in inequitable treatment. Consensus was reached that district-authorized charter schools should receive adequate funding that is equitable to the funds allocated to district-managed public schools on a per pupil basis.

The sheer number of school districts in Illinois makes for system inefficiencies and contributes to the inequity within the state. Existing consolidation incentives and initiatives have been underfunded and have often focused on rural school districts rather than consolidating dual school districts into single unit districts. Commissioners agree that consolidation in certain areas of the state is important but that the solution to this problem should not be reached through funding formula reform.

Increasing school funding will not result in improved outcomes for students unless a district and school strategically plan for use of those funds, drawing upon best practices and local context, and then execute all aspects of their educational plan with fidelity. In exchange for local control, districts must be transparent in how funds are being spent and whether or not increased school funding results in increased student growth and higher proficiency rates for students from kindergarten through college and career readiness.

The Commissioners agreed to a spending transparency report that communicates federal, state, and local spending in a way that is understandable to the average person to be included on the Illinois State Report Card. Such a report should give details of both district-and school-level spending, including for the purposes of examining intra-district equity. In addition, the state accountability system recommended through ESSA will be used to determine whether or not increased funding leads to improved student outcomes, specifically in terms of students’ academic growth. A mechanism will be included in the law to require ISBE to investigate any district that is receiving increased investment with no improvement or a decline in outcomes. Depending on the results of the inquiry, the State Board may intervene and support the district.

Outstanding Issues Requiring Resolution

Mandate Relief

Currently, Illinois school districts are required to adhere to over 100 “unfunded mandates” that have each been approved by general assemblies and governors. These mandates have varying costs but overall reduce available dollars, increase bureaucracy, and decrease flexibility for teachers and administrators. It is important to note that some of the management tools under consideration already exist at CPS, but no other school district has those tools available.

Several Commission members requested “mandate relief” in the scheduling of physical education classes; the use of licensed drivers’ education instructors and programs; the right to use third party contractors for non-instructional services; the right to exercise greater management flexibility; and the right to allow up to 40% of any general education class to include children with disabilities, as is allowed by federal law. These Commission members argued that, by allowing districts freedom to determine such issues at a local level, schools can better meet the needs of students, as for example through scheduling changes. In addition, they argue that, for districts already operating at or above their adequacy target, mandate relief may become the only local benefit, thus garnering bill support. Other Commission members requested further information regarding the actual savings that could be achieved through these changes, as well as an explanation as to how these changes could improve student outcomes.

Location of Educational Services for Students with Disabilities

Regarding special education line items and/or integration into a new formula, ISBE staff will work collaboratively with the members of the General Assembly to determine how to ensure, through possible changes to the School Code and/or the funding formula, that funding does notinfluence whether students are placed in private or public special education settings. These discussions will include meeting the needs of medically fragile students. The recommendations of this group will be forwarded to and reviewed by the Commission for the Oversight and Implementation of the School Funding Formula.

Chicago Public Schools (CPS) Block Grant

As discussed in the Commission, CPS currently receives additional funds through the special education, special education transportation, transportation, and other line item budget allocations via block grants. Audits indicate that CPS is spending these funds for these purposes. They would receive a lesser amount, however, if they applied for reimbursement of those claims.12 In this respect, CPS is unlike any other district, including those serving a higher percentage of low-income and minority students.

Private School Tax Credits

Approximately 12% of Illinois children attend non-public schools. Governor Rauner and some members of the Commission support the availability of school choice tax credits for individuals or corporations donating money to fund scholarships for low-income students, as long as those schools are nonprofit and the accepting school publishes accountability data equivalent to what is required for public schools.

Closing Statement

Education reform must be a top priority for the State of Illinois. The Commission would like to  acknowledge the outside experts and advocacy groups that have given generously of their time and expertise to aid in the Commission’s efforts. The Illinois State Board of Education has also provided tremendous resources and expertise. Without these groups, Commission work would not have been possible.

The funding formula in Illinois has been broken for far too long. While this Commission was given an aggressive timeline, it worked tirelessly over the past five months to achieve what any other funding commissions have not: a comprehensive framework that aims to adequately and equitably fund our schools while prioritizing the needs of individual students.

The Commission also acknowledged the need for additional revenue to do so. It is the Commission’s hope that this framework is the basis for comprehensive, bipartisan, bicameral education funding legislation that will ensure that all students in Illinois have the same opportunity for a high-quality education. We urge the Governor and the General Assembly to work quickly to resolve all outstanding issues needing resolution through legislative negotiations so that a new funding formula can be in place for Fiscal Year 2018.