Here we go again, another game of “chicken” at the cost of Illinoisan children and teachers. Between July 26 to July 31, Governor Rauner and IL legislators are back in Springfield to focus on education reform due to a mandate in the state budget that requires Illinois to transition to an evidence-based school funding. What’s causing the delay? The inclusion of CPS teachers’ pensions in Senate Bill 1 (SB1).
Each side is blaming the other for delaying this issue to be resolved, claiming the other side is hurting the public more than themselves. The reality is that both the Republicans and Democrats are responsible for the panic that has reached every school district in the state.
Gov. Rauner said early Wednesday morning, “They’re sitting on the bill, they’re sitting on the poison pill for the pension bailout, and they wanna wait to create a crisis to pass that through on the backs of taxpayers, that’s not fair, to our children or to our working families.”
The part Rauner seems to forget to mention is that he has also threatened to veto the bill as soon as it is placed on his desk. Rahm Emanuel also urged Rauner to sign SB1 because he claimed to have agreed with 90% of the bill.
House Speaker Mike Madigan has been pressing the governor to stand with lawmakers and not issue an amendatory veto, at which point, a three-fifths majority would be necessary to overrule. Since Rauner wants to remove the pensions from the bill, it would drastically change the legislation, and Chicago Public Schools (CPS) stated, “As a result, this amendatory veto exceeds the power of the Governor under the State Constitution.”
Some legislators have announced their efforts to boycott the special sessions, such as State Representative Kelly Cassidy (D-14th) and State Representative Ann Williams (D-11th), who are both parents in the CPS district. Instead of joining the special sessions in Springfield, for what is a blatant abuse of taxpayer money, they are helping to repaint classrooms that had problems with old lead paint, at the Gale Community Academy in Chicago.
Senate President John Cullerton (D-6th) said that they wanted to slow down the process because of any chance that Rauner is hotheaded from the failing of his Turnaround Agenda during the state budget special sessions. The democrats feel like the governor will veto the bill out of emotion instead of logic. They want the CPS pensions to remain in SB1 because CPS is the only district that is responsible for the teachers’ pensions and pension liability. The democrats will not be sending SB1 to the governor’s desk until Monday.
Let’s look deeper into SB 1 Evidence-Based Funding for Student Success Act. It is a bipartisan bill that was approved by both chambers in the Illinois General Assembly on June 11, 2017. It is a researched-based funding plan that measures each school’s’ needs and appropriates the necessary amount of money to reach what they call an adequacy target (Diagram 1), a target that brings all schools to the same level for an equal opportunity for an equal education.
The Illinois education system has been broken for decades and it is now in last place when it comes to public schools receiving state funding contributions. Many public schools heavily rely on property taxes and since IL is one of the worst states dealing with income inequality, it is deeply reflected on which schools succeed and which ones suffer. In the image below (Diagram 2.), Illinois’ school districts are shown by a range of wealthy districts (in blue) and the lower income districts (orange/red). Some of the northern suburbs of Chicago are shockingly wealthy, and therefore would not receive much funding through SB1 because their poverty rate is below 5%. Southern Illinois has been hit the hardest when it comes to lack of state funding in their school districts.
The 860+ school districts will assess their individual targets to determine the amount of money needed per student. The CPS average adequacy target is still $15,400/per student. To determine the baseline, districts will take their local funding capacity plus the amount of funding it already receives from the state, the plan would increase funds over time.
To give an idea of how Chicago is suffering from wealth inequality, let’s look at Diagram 3 showing the Chicagoland area and why CPS is in desperate need of adequate funding. Like Diagram 2, wealthy districts are represented in blue and the higher poverty areas are represented in red. Gray depicts median household incomes.
Senate Bill 1 will bring CPS into the same system as everyone else. They are the only school district in the state that is responsible to pay for its own pensions, and this is due to the establishment of The Public School Teachers’ Pension and Retirement Fund of Chicago (CTPF) in 1895. In 1995, Illinois law was passed that would place responsibility with the Chicago Public Schools to fund 90% of the CTPF by 2045. For ten years, the Chicago Board of Education avoided payments and contributed zero to the pension fund, thus screwing their own teachers over. The $2 billion in pension tax revenue that was collected between 1995-2005 was spent elsewhere. Many of these teachers will walk away with a pension worth less than $20,000.
The Center for Tax and Budget Accountability (CTBA) describes SB1’s inclusion of CPS pensions:
“An analysis of how SB 1 actually distributes new education funding that was conducted by the Illinois State Board of Education (‘ISBE’) demonstrates that, far from constituting a CPS bailout, SB 1’s evidence-based education funding formula in reality treats all school districts in Illinois equitably and proportionally. First, consider SB 1’s treatment of CPS block grants: it eliminates them going forward. After SB 1 becomes law, CPS has to apply for claim reimbursements, just like every other district. However, to ensure CPS—again just like every other district—doesn’t lose any pre-existing funding, the dollar value of the current block grant gets included in CPS’ hold harmless. The dollar amount of a school district’s “hold harmless” under SB 1 is defined in that bill as the said district’s “Base Funding Minimum.” Not cutting funding CPS already receives is rational, given that CPS current level of funding is some $2.1 billion less than what the evidence shows is needed to educate its students. The goal after all is to move all districts forward towards adequacy.“
Since the rest of Illinois’s teachers are part of the Teacher’s Retirement System (TRS), the state makes payments to this system in unfunded liability and the pension costs. Some of the money comes from using tax dollars collected from districts all across IL, some are from investment returns, some from the state, and then the large portion from teacher contributions. Chicago residents end up paying for portions of suburban and downstate teacher pensions, according to CTBA, they estimated that about $230 million in individual income taxes collected in Chicago were used to make state contributions to the TRS.
It is paramount that CPS pensions stay on the bill, SB1 will provide about $220 million to CPS so that they can cover the costs of current teachers’ pension benefits. About $.86 of every dollar would go towards the 27 model criteria in SB1 and the remaining $.14 goes towards the legacy costs or the unfunded liability. It is important to note that this bill would apply to other districts if they were responsible for pension costs and liability.
In the next few days, we will be receiving updates as the special sessions continue through the weekend. Time is running out and the fall semester is about to begin, IL schools will need their funding by August 10 to ensure whether they’ll be able to stay open for the whole school year.
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