Blagojevich introduces an idea to increase education funding by $300 million
State funding panel recommends an increase in funding of $2.3 billion.
I’ve usually said this guy gets the political game very well, but I can imagine few instances where such a disconnect exists in that short of a time span.
No one can get to $2.3 Billion instantly so that isn’t very realistic, but the nature of the problem is pretty clear. Further, Rich Miller pointed towards Tom Cross’ effort to move any money increases from the foundation formula to categorical aid.
Categorical aid goes to all schools and covers nearly 38% of state spending. It goes to cover special populations and other services, but it isn’t adjusted for need as the state formula is, yet the state formula accounts for about 60% of state funding meaning the flow of resources under the categorical aid goes to places that have more capacity for self-funding of districts in a relative sense.
Moving that pot of money to categorical will only worsen the situation for older suburbs and rural areas. Overall, the money is a pittance to Chicago that has a $5 billion annual appropriation or an operating budget of $3.667 Billion with 1.7 billion of that being raised locally.
The structural problem is that the state expects most districts to raise its own money for schools. That works great for relatively wealthy suburbs with high property values in areas with high concentrations of students, but no matter how you look at it outstate it creates a real problem.
From the 2001 ISBE description of the issue
You see that Chicago had an Equalized Assessed Valuation of $34.5 billion compared to a downstate EAV of $47.2 billion with many of those districts and units being spread out and not able to have any gains from gains in efficiency through size. Certainly districts in Champaign or Normal do, but not the smaller rural districts. The capacity to tax oneself is nearly impossible in many of these small towns.
By underfunding the basic formula, everyone is leaving them out. Others can fund themselves through property taxes, but there just isn’t much to tax in many downstate communities. Categorical assistance doesn’t help as much because it doesn’t cover basic operating expenses and it isn’t distributed with a formula related to capacity of the District as the general formula does. Moving money to categorical hurts these rural and small town schools. By fully funding the formula, these schools get a decent base level of support.
This is why a tax swap is so often mentioned here and elswhere. By moving the money from local sources to a state level, it can more equitably be distributed and then local communities can decide if they want to pay more for extra services.
The basic problem is that it hurts suburban districts that are politically powerful so any deal is unlikely to work without a general tax increase that involves some sort of hold harmless function for them in terms of state funds. This hold harmless condition is why Blagojevich won’t touch it–there is no way to generate that much cash without a general increase in taxes meaning sales or income.
This sort of log roll also increases opposition from those who feel that well funded suburban districts aren’t very tight with the taxpayers money. To some degree that is true, but that is largely a local governance issue in which local people vote for the school boards and the local tax rates. While a hold harmless deal would take pressure off such districts, nothing now is really forcing them to be that tight with money either.
In the long run, some sort of swap will eventually occur. In the short term, Blagojevich’s approach of leaving the money in the general fund is the best solution.
ArchPundit