Old Idea Could Change School Funding Dollars

One of the biggest changes Gov. Bruce Rauner proposed in today's budget address is making local school districts bear the costs of teacher pensions. The idea has been kicked around by both parties for years, most recently in Rauner’s bipartisan, bicameral school funding reform commission.

Over a six-month span, between July 2016 and January 2017, the group met for about 100 hours. During one of the final meetings, the issue of teacher pensions was broached by Sen. Daniel Biss. Beth Purvis, who was then Rauner’s secretary of education and chair of the commission, ended the conversation within a matter of minutes, saying it was outside the scope of the group’s mission.

Since then, Rauner has had other opportunities to vet the idea. For example, last summer, while he was promising to veto the school funding reform bill, a group of lawmakers were tasked with negotiating a compromise. State Sen. Andy Manar (D-Bunker Hill), who sponsored that bill and participated in those negotiations, says pension cost shifts never came up.

After those negotiations fizzled and Rauner vetoed the bill, the top four legislative leaders took over negotiations. Did they consider a pension cost shift? There's no way to know for sure, as their discussions were conducted behind closed doors. They ultimately achieved compromise by adding a tax credit program for private school donors.

Sen. Jason Barickman (R-Bloomington), who led his party's school funding efforts, says education stakeholders have indicated openness to a pension cost shift over the years, and points to its inclusion in the school funding reform law as evidence of their endorsement. But Manar, who has spent years filing various versions of school funding reform, isn’t happy about this potential detour.

"The governor's commission said no, we negotiated the bill, Democrats and Republicans came together and agreed, the governor put his signature on the law, and here we are with a new radical proposal to change the bill that we all embraced,” he says. "This would literally rewrite the school funding reform law. And we haven't even seen a penny of that money hit a classroom in the state, and already the governor's saying let's rewrite the whole darn thing."

Because Chicago Public Schools have traditionally paid their own pensions, the new law incorporates normal pension costs into the calculation of each district's financial needs, called the “adequacy target.” A cost shift would require recalculating funding targets for all 850 districts, and could drastically change the amounts each district would get.

Although there’s no published models of how such a change would affect each district, Manar predicts that it would end up sending more state aid to wealthy districts, and less state aid to poor districts. That’s because wealthy districts tend to pay higher salaries to their teachers and administrators, and therefore have higher pension costs. Lower-income districts, on the other hand, tend to have lower salaries and higher teacher turnover rates, resulting in lower pension costs.

If those numbers are rolled into the formula, wealthy districts will “appear needier” and thus get more state aid, while poor districts will “appear wealthier,” and get less state aid.

Last week, lawmakers of both parties were complaining that sending out new state aid was taking too long. A pension cost-shift would likely further delay distribution of $350 million in new funding promised by the law Rauner signed, amid much fanfare, last summer.

The Illinois State Board of Education — the state agency implementing that bill — is in the final stages of verifying data necessary to line up all districts in specific adequacy order. Earlier today, at the board’s regular meeting, Superintendent Tony Smith said repeatedly that Feb. 21 is a crucial data deadline districts must meet for dollars to get distributed by the end of the school year.

Rauner wants institutions of higher education to make the same change. These cost shifts would be phased in over four years, in 25 percent increments.