Cary School Board President Critiques New State Aid Bill

From Cary Grade School District 26 Board President Scott Coffey:

Critique of Senate Bill 1

As I see it, there are two main structural problems with SB-1.

First, its basic premise is that lower income districts should get more money and yet there is no recognition of how much is already being spent on a per pupil basis in some of these districts.

It fails to recognize the Law of Diminishing Returns.

That is, after a certain point of investment, the marginal return on that incremental investment approaches zero.

As an example, Chicago D-299 Instructional Spending per Pupil is $10,396 versus Cary D-26 of $5,494/pupil.

Given that Chicago is spending 90% more per pupil, just on instruction alone, does anyone believe that increasing that level any higher is going to yield positive results in Chicago?

The math holds true for almost all the big “winners” in this bill like: Waukegan, Elgin, Rockford, Cicero, Maywood, etc.

It does also create some winners downstate which is where the incremental funding truly would yield a favorable marginal return on investment.

For example, Decatur D-61 currently has an Instructional spending rate of only $5,147/Pupil.

Downstate districts like this are the ones that have felt the largest impact due to underfunding from the State.

So, given that the bulk of the incremental $350 million is allocated to districts where their Marginal Rate of Return on Investment has approached zero, one might conclude that the bulk of this money will yield virtually no favorable academic results.

Secondly, this new methodology sets up perfectly for the future to “redistribute the wealth” from the richer districts to the poorer districts.

If you’ll recall, the original SB-1 was written as a zero-sum game.

It took money from suburban districts and reallocated to the low-income districts.

By creating a lot of “Losers” in the collar counties, the bill went nowhere.

This revised bill sets up a need-based system that has a hold-harmless feature and then allocates an additional $350 million created by the tax increase.

It doesn’t create a long list of “Losers” like the old SB-1.

It creates a set of Tiers based on Funding Adequacy to funnel incremental dollars.

If you’re in Tier 1 or 2 you’ll receive an increase.

However, Tier 3 & 4 receive next to nothing.

I foresee this methodology being used in the future by the legislature to set up a tier structure to prorate funding.

In the past, when the State didn’t have the funds to make 100% of its General State Aid payments, it would prorate every district’s funding by 89%, for example.

The legislature’s only tool was to make every district suffer the pain at the same rate.

Now, under this new funding formula, its very easy to setup a tier structure to allocate cuts based on how a district’s Local Resources compare to its Adequacy Target.

Its easy to forecast that we’ll end up in exactly the same place as was projected under the original SB-1, with suburban districts as the “Losers” and low-income/downstate districts as the winners.


Comments

Cary School Board President Critiques New State Aid Bill — 25 Comments

  1. The same legislative body who bankrupted state through malfeasant pensions is now moving in on control of education funding moving it away from local control.

    When are people going to learn that government is the problem and not the solution to society’s ills including its monopoly over education.

    There is only one solution, private vouchers and paving way for competition.

    Would you rather have the best business and education minds figuring out education or the mindless legislatures downstate and public unions?

  2. “The same legislative body who bankrupted state through malfeasant pensions”

    “Malfeasant pensions” approved by the voters who were educated by the teachers who benefit the most from the funding bill.

  3. D-299 includes high school doesn’t it, and covers a much larger area.

    So wouldn’t you need to add D155, D26, D47, FRG, and PG to get a accurate area spending per pupil?

  4. Chicago Public Schools (CPS) is a unit district (preschool – high school) whereas Cary Elementary District 26 is an elementary district (preschool – 8th grade).

    High school districts have the highest costs, followed by unit districts, then elementary districts.

    So one could expect the City of Chicago SD 299 to have higher costs than Cary just because it’s a unit district, and because it has more students that come from low income families.

    The argument is even given the fact it’s a unit district and has more students receiving free and reduced fee lunches (a common measure of the number low income students in IL public schools), CPS still receives more than their fair share of state money allocated to public education.

    That’s of little surprise given that political power seems to be a common indicator of the flow of government money in Illinois.

    21% of the state’s population resides in Chicago as of the 2010 Census.

    40% of the state’s population resides in Cook County.

    52% of the Cook County population resides in Chicago.

    ++++++++++

    Mr. Coffey’s prediction is likely correct given that that while Governor Rauner’s amendatory veto proposal for SB 1 is an improvement over the bill as it stands for districts outside of Chicago, the long term desire of most education reform groups is to give a larger percentage of state funding to property tax poor school districts.

  5. Another indication the Democrat proposed SB 1 would favor Chicago is the House Speaker (Michael Madigan) and Senate President (John Cullerton) are both residents of Chicago.

  6. Nothing at State level will save a community from its own school district.

    “Spending relative to the means of the community”= property tax rate.

    When the property tax rate is maintained at double that of Chicago (as it is in Woodstock), it indicates that school district has no concern for the economic viability of its community.

    One can assume this philosophy exists in CPS as well, but CPS has another funding mechanism:
    Defaultable Debt issuance.

    Given this condition, one can project that if taxpayers within CPS district were ever forced to bear the actual fair share of funding CPS, their property values would be cut in half.

  7. I hate to tell you people this, but medicaid is a MUCH bigger problem than the teachers’ unions in bankrupting the state.

    When are you people going to catch on that big Pharma has ruined us all?

  8. Facts? No need to feel bad because you didn’t understand truth until just now. Pray for enlightenment, discernment and truth. You’d be surprised what God will show you!

  9. Here is a significant material difference between the extraction of household income by “Big Pharma” and “Governmentally Emforced Local Education Industry”:

    Big Pharma is selling a product for voluntary participation.
    Potential clients may choose lifestyle modifications or natural lifespan-vs.- technologically elongated lifespan.

    Governmentally Enforced Local Education Industry extracts fealty and economic obeisance from all population, whether owners or renters. There is nothing voluntary about it.

  10. Thanks for the investigative reporting Cal.

    Once again, far better coverage by a single man than the rotten NWH.

  11. Both are Education and Medicaid are big state budget items.

    Just about any state spending has some sort of connection to unions, including Medicaid and Education.

    A more difficult problem to solve than both is the pensions due to the pension sentence in the state constitution:

    “Membership in any pension or retirement system of the State,

    any unit of local government or school district,

    or any agency or instrumentality thereof,

    shall be an enforceable contractual relationship,

    the benefits of which shall not be diminished or impaired.”

    +++++++++

    Currently the 5 state pensions (TRS, SERS, SURS, GARS, JRS) have an $130B unfunded liability which results in an annual interest cost of $9B:

    Illinois Policy Institute

    Interest on Illinois’ Pension Debt is $9.1B Per Year

    by Michael Lucci

    March 6, 2017

    http://www.illinoispolicy.org/interest-on-illinois-pension-debt-is-9-1b-per-year

  12. Susan? You are wrong. There is no choice in the people that have to subsidize Medicaid. They are breaking our state apart. You DO have a choice to not send your children into government schools. You just don’t have a choice on keeping up your taxes to pay for their schooling scams.
    Federal Farmer? Big Pharma RUNS this country.

  13. Big Pharma is but one arm of central banks. Along with the Military industrial complex, education board, etc

  14. Anywhere one lives in McH County, the percentage of household income demanded for property taxes far exceeds that of withholding taxes.

    Medical insurance premiums are higher to subsidize, but one can choose to go without insurance and pay cash for medical goods and services.

    One can choose to be homeless I suppose.

    I stand by the belief that property taxes demanded and enforced by law are a much greater burden to McH C households than Medicaid subsidies.

    One can alter one’s life less radically to minimize the percentage impact of the latter than the former.

  15. AND we are back to square one. It all sucks. Nothing will ever happen to correct any of these inequities. We are grazing sheep awaiting the collapse – maybe then we can start over and learn from our pathetic history how to not get into this situation.

  16. Mr Coffee, would you enlighten us on the details of Dist 26 sale of Maplewood school?

    The NWH has the $2.5m it sold for but nothing on what it will be built there or what the districts intentions are for the $$$$.

    After making a new bus lot will the rest be used to abatement of our property taxes?

  17. Who’s on First?

    One’s share of the tax bite for everything is dependent on your personal income level and your property assessment in addition to what fee based government services you use and what products you purchase.

    My argument relative to State Tax dollars for education is that when we approved the lottery we expected that money to be used for the schools (instead the old bait and switch) and I sure did not expect to have to pay extra for Chicago Schools!!!

  18. Nob, The winning bidder’s package stated that Central One, LLC is looking to construct a commercial, multi-family and/or residential development on the property.

    The process will ultimately determine the final results.

    As to property taxes, every taxing body will see an increase in EAV due to new construction.

    Each governing body can determine whether to capture the new growth or not in their future operating levy adoptions.

    I would assume each taxing body’s financial position at the time the new growth comes on to the tax rolls would be a significant factor in whether to capture the new growth in the levy.

    For those taxing bodies with a separate debt service levy, like D-26, the new growth will reduce every taxpayer’s share of the future annual debt service levy resulting in savings.

    Assuming every taxing body ultimately captured the new growth in their levy once the project was completed, I would guess it would mean an extra $600K-$700K in annual property tax revenue to the community.

    I do not know how to calculate the impact of the incremental value-added coming from increased economic activity from the new residents in the form of sales tax, water usage fees, utility fees, etc.

    I hope that helps.

  19. Yes it did.

    Is a abatement in our future?

    Perhaps using the $2m instead to pay down debt now?

  20. Mr. Coffey,
    Your community benefited greatly from financial overhaul after threat of State takeover.
    According to:
    https://www.isbe.net/Documents/2017-School-District-Financial-Profile-Report%20.pdf#search=Restructuring%20financially

    Here are criteria ISBE uses in determining whether a school district qualifies for State financial oversight:

    Financial profile calculationsfor school districtsare determined using fivekey indicators:

    Fund Balance to Revenue Ratio

    Expenditure to Revenue Ratio

    Days Cash on Hand

    Percentage of Remaining
    Short-Term Borrowing Ability

    Percentage of Remaining Long-Term Borrowing Ability

    In Woodstock D200, the district receives a high financial profile score because it has long taxed over-aggressively, without regard for issues such as excess accumulation or deliberate over-taxation in Transportation Fund for the stated purpose of transferring excess monies into other rate-capped Funds.

    Furthermore, Woodstock D200 itself has maintained a property tax rate of over 2.5% of homes’ fair market values, while homes in Chicago pay TOTAL property taxes of less than that amount, and the national average TOTAL property tax rate is around half that amount.

    Furthermore Woodstock D200 has amassed debt far in excess of Illinois statutory maximum debt ratio; that is just considering the principal debt. When one adds in the accruing unpaid interest, the debt rises by over a third.

    Furthermore D200 now pays OPEB of around $half a million, and declined to state a projection for accruing OPEB obligations.

    Furthermore D200 has unfunded pension obligations exceeding $200 million.

    Furthermore D200 has 53 IMRF Employees compensated higher than $75,000 as reported Pursuant to Illinois Public Act 97‐0609. (D200 has about 6400 students. Huntley D158 has one-and-a-half times as many students, but only 12 employees on the IMRF highly compensated report.)

    Furthermore D200 maintains a special needs school courting tuition students–and charging them a tuition rate below the costs of hosting the students— at a deficit cost to D200 taxpayers, with 11 D200 students costing more than alternative placements and 59 out-of-district tuition students paying significantly less than actual cost of hosting these students.

    Furthermore D200 operates 4 school buildings at around half enrollment capacity, or worse.

    Finally the question:
    Is there any way to get the standards for ISBE/State financial surveillance revised to meet real-world situations such as D200 presents?
    This District will predictably fail at this expenditure rate, accruing these entitlement obligations, and with Woodstock’s property tax rate north of 4% stifling any hope of taxable development.
    But like with those deferred interest bonds, the Financial Profile will look rosy right up until the maturity date of reality setting in.

    Shouldn’t THESE metrics be included in Financial Profiles?…
    Debt as ratio of EAV
    Thorough debt disclosure including accruing/deferred interest (CABs)
    Property tax rate relative to Chicago, Illinois, America mean/median/mode
    OPEB obligations and projections 5-10 years out given known contractual entitlements
    Unfunded TRS and IMRF pension obligations in case of Illinois bankruptcy

  21. Mr Coffee, I went to Dist 26 website and saw the cost to relocate the 🚌.

    I know now why you didn’t mention and tax savings on the sale.

    Perhaps a Cheve lot and maintenance garage would be better than the typical BMW facility like most gov aways want?

    Lol

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