School finance 101

Why schools are struggling to pay their bills


Liz DeCarlo

Another school year has begun, and with it comes budget woes for many Illinois school districts, which means cuts in programs and teaching positions at some schools. It's often hard to understand why schools are in such a crisis when homeowners are paying local districts more than ever in property taxes. To learn more, Chicago Parent turned to some local school-funding experts.

Q: Why are so many schools having trouble balancing their budgets?

A: "In Illinois, our school-funding situation is reliant on property taxes," says Vickie Mahrt, chair of the Coalition for School Funding Reform. "We're the most underfunded state. In most states, the state is responsible for a greater portion than in Illinois."

This means local school districts have to pull the majority of their funding from local property taxes-something that's a lot easier in wealthier suburbs than in low-income urban areas.

Other states use sales and income tax revenue to help fund education, says Bindu Batchu, campaign manager for A+ Illinois, a group that advocates for education funding change. "Illinois has huge disparities in funding [between school districts]." Some school districts receive $5,000 per pupil, while others spend more than $23,000 per pupil.

"We are one of the wealthiest states in the nation, but we're 49th in state support of education," Mahrt says. "We're leaving our education up to local communities, but they just can't do it. They just can't generate the money."

The state does provide some additional funding to lower-income school districts, says Toni Waggoner, senior budget analyst for the Illinois State Board of Education. "Districts with a lot of property taxes get less from the state," she says. "General state aid is an equalizing formula." But Waggoner admits that state funding doesn't close the spending gap between rich and poor school districts.

Q: If schools rely on taxes and schools are underfunded, why can't school districts just raise the taxes to the level they need?

A: Most school districts in the Chicago area fall under tax cap regulations, which were put in place in the early 1990s to address the concern that property taxes were going too high, Batchu says. Tax caps mean school districts can only increase funding from property taxes by 5 percent or the amount of the consumer price index, whichever is lower. Because the CPI has been so low the past few years, school districts have not been able to raise taxes enough to cover their expenses.

"The net effect [of the tax cap] is that it forced school districts into a situation where expenses are growing faster than the CPI," Batchu says. "Just to maintain existing levels of services requires more revenue because costs have gone up." So districts end up cutting staff and programs just to maintain the same budget.

Q: Recent statistics show many districts that were on the state's financial warning list several years ago are now balancing their budget. Does that mean things are improving financially?

A: "Not really. A couple years ago, 80 to 90 percent of districts were in a financial crisis," Mahrt says. "Most of these schools have cut 10 to 15 percent in their educational fund in the last two years-they've increased class sizes, cut programs, cut sports and music. So now we have [only] 40 to 45 percent of our districts in deficit, but there has been a cost. So you can't really compare the quality of our education now. We don't want to say our education quality is diminished, but you can't get the quality when you increase class sizes and cut programs."

Batchu agrees, noting that there were 3,400 fewer teachers in the state when data came out last year, as compared to the year before, as well as a 5 percent increase in elementary class size.

Q: How has the No Child Left Behind Act affected schools financially?

A: NCLB is one component of the problem because it requires schools to reach certain benchmarks or face financial sanctions, and those that don't have the resources to begin with are even worse off, says Batchu.

Q: What else is causing the ongoing budget problems in many school districts?

A: Part of the problem is that school boards are required to pass budgets before they have any information from the state on how much money they will receive that year, Waggoner says. "The districts are at a disadvantage because they're trying to set up a budget and they don't know what their revenue will be," she says. "Districts just have to go with their best guess and amend later because they don't have all the correct data."

Q: How can we fix Illinois' school-funding problems?

A: All three local experts agreed that Illinois has to stop relying so much on local property taxes and instead look to income tax and sales tax for revenue. But this would require an increase in income tax, something most politicians don't want to do before an election.

"I see education coming to the forefront in terms of the gubernatorial races," Batchu says. "We hope all the legislature and governor candidates put a focus on how we fund education in this state and address the overreliance on property taxes.

"We have a major opportunity right now for the legislature to make this a top priority," Batchu says. "Voters across Illinois are very supportive of how we fund education. We have a huge window of opportunity."

Q: What can parents do to help the schools?

A: "Parents need to stay involved in their school district and keep themselves up-to-date on funding for their schools," Waggoner says. "There are ways parents can do that. School report cards and school district financial data are all available. These are a snapshot and trend data of how a district is doing. It's important to look at trends and not just current information.

"Also, attend the school's budget meetings and read the local newspapers," Waggoner says. "Being active in the school's PTA or PTO can help. Some have supplemental financing that help schools with financing."

"Parents should make sure this is a point of conversation at PTA and school board meetings," Batchu says. "The most important thing is to make sure their fellow parents and community members are informed and engaged."

Fifth-largest population and personal income Twelfth-highest personal income per student Forty-seventh in state share of tax revenue for schools per $1,000 of income Forty-first in state and local spending for education per $1,000 in personal income Tenth in local share of tax revenue for schools per $1,000 in personal income Forty-seventh in the amount of funding the state provides for education Largest gap of all states in per-pupil education spending between the state's highest and lowest poverty districts-and the gap has been widening each year Source: "Condition of Public Education 2003," Illinois State Board of Education. Reprinted by permission from the A+ Illinois Web site,


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