School aid reform: now or never

"It is the Gordian Knot of Illinois to say the least," says Sen. Jack Schaffer (R-32, Crystal Lake). The knot is construction of a formula for divvying up state school aid in a way that satisfies diverse needs and interests. No simple solution or bold stroke has yet emerged. A shortage of cash may dampen some would-be reformers' zeal. And reform is complicated because the state picks up less than half the tab for public education. However, individual school districts have their own ideas on where to start.

Maxey Bacchus, director of the Department of Operations Analysis and Planning for the Chicago Public Schools, would begin with more state money. He characterizes the state contribution to public schools as "almost shameful" and urges the state share be hiked from its current 42 percent to 51 percent of spending, a level he believes intended in the state Constitution. And Bacchus says Chicago and other districts without large property tax bases have been hurt by tampering with the formula over the last 14 years.

At the other end of Illinois, Cairo school superintendent Edward Armstrong tempers his request for more money with the acknowledgement that state aid, which provides three-quarters of the Cairo school budget, has been the salvation of his district. He would like to see some changes. Armstrong is troubled by the favoritism given high school districts under the current school aid formula and would like to see a change in the way poor students are counted. In 1979 census workers undercounted poor students in southern Illinois, an error he says cost Cairo $300,000 in state aid last year.

In one of the state's largest elementary districts, Crystal Lake Community Consolidated District 487, citizens and administrators will argue that more money should be provided for younger students. A Crystal Lake citizens group will urge legislators to eliminate a weighting factor that provides more aid for students in seventh and eighth grade than those in sixth grade and below. Ronald Miller, director of business for the K-8 district says Crystal Lake will not attack a still heavier weighting given high school students. The district gets about 30 percent of its money from the state.

Receiving even less money than Crystal Lake is Elmhurst District 205, which received only about 10 percent of its funding from the state. Superintendent Russell Thiems finds that level of funding unfair when he reviews costs imposed by the state on all districts. Elmhurst, he says, spent $20,000 to produce the school report card required by the 1985 education reform package. Thiems also finds local access to tax revenues unfair to districts like his which educate students in grades kindergarten through 12. The state permits all school districts to levy a 5 cent tax rate to raise operating cash. For Elmhurst, with all students in one system, that is a single 5-cent levy. If Elmhurst had separate elementary and high school districts, each would be able to levy a 5-cent tax, raising twice the money, he says.

"We want a formula as fair to Elmhurst and Crystal Lake as it is to Chicago and Cairo," says Schaffer, an author of the provision included in the 1985 education reform package that requires reexamination of the school aid formula this year. Schaffer says Republican senators and others wanted formula revision as part of the 1985 education reform package, but when they realized both could not be accomplished, they put off review of the formula to this post-election spring session. Termination of the current formula is set by law for August.

Educators, academics and legislators who have been scrambling to find a way to deal fairly with diverse school districts all agree that education reform is expensive. A generally accepted principle of Illinois school finance says no one must lose money in a formula revision. That means hold harmless provisions to prevent loss of funds to any district while new provisions will guarantee new funds to other districts. In effect there are no losers. Without much likelihood of new revenue in 1987, many now studying the issue privately acknowledge they are participating in an exercise in futility. They expect minimal tinkering with the formula or postponement of the issue. Douglas L. Whitley, president of the Taxpayers' Federation of Illinois, sees no prospect of substantial revision without a tax hike and little possibility of either. "I really believe the overall emphasis is for the status quo," he says.

But others, including State Superintendent of Education Ted Sanders, contend that a new formula can be passed. Sanders says he has found legislators interested in revising the formula and predicts serious discussion despite tight money. "Hopefully we'll either see a full finance reform package enacted this session to be effective immediately, or at least we'll see one which can be phased in over several years to bring us closer to our goals. I remain optimistic that this can and will be done," he says.

The two issues involved in education finance are adequacy and equity. The former measures whether sufficient state and local funds are available to support schools. The latter gauges fairness among districts with different economic or social characteristics.

The current formula is neither equitable or adequate, says G. Alan Hickrod, an Illinois State University professor and an acknowledged expert on the Illinois school aid formula. In fact the formula has been becoming less equitable and less adequate since 1977 as the state put relatively less money into the formula. Some characterize the four-year period following the passage of the current formula in 1973 as the golden age of school finance. The state share of public school financing climbed to nearly 50 percent but has since declined steadily, Hickrod says.

Supporting Hickrod's position is G. Alfred Hess Jr., executive director of the Chicago Panel on Public School Policy and Finance. A study by his organization pointed to a 29 percent decline between 1977 and 1983 in inflation adjusted state support per pupil, Hess says. Increases beginning in the 1983-1984 school year reversed that trend, but through the 1985-1986 school year adjusted state spending still stood 14 percent below peak levels.

With the state funding less than half the cost of public school education, quality of education becomes more dependent on the wealth of a particular school district, Hess says. In the Chicago metropolitan area, per pupil spending ranges from less than $2300 per pupil to more than $6,500. Hess says. "I think any of us who have looked at state schools have said that eduation was underfunded,'' he adds. Hess agrees with those who say the state must at least return to the 1977 level.

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Hickrod says the increase will have to be even greater. "If you're going to make a step toward adequacy or a step towards equity you have to be up above 51 percent, probably up to 60 percent," he says.

Without a tax hike Hickrod sees little prospect of major formula revision this year "Equity takes an awful lot of money ... Without tax reform I can't see big school finance reform." He thinks the state should concentrate on the adequacy side of the question and put what money is available into propping up the amount of tax money guaranteed districts.

An organization representing the large K-12 school districts in Illinois criticizes the formula, too. "Unfortunately, over the years we have used the current distributive formula as a political instrument to divide up the spoils and affect the power politics of deciding who gets what and how much," the Large Unit District Association states in a position paper. The association says too little time remains to adequately revise the formula this year and urges multiyear study. Nearly as harsh is Sen. Vince Demuzio (D-49, Carlinville), a member of the Elementary and Secondary Education Committee."The resource formula is obsolete. It's just a mechanism to distribute the money," Demuzio insists. He agrees that little is likely to happen with the formula this year and says that revenue shortfalls may prompt extension of the current formula for another year An assortment of committees have been at work studying revision of the formula, including those of Superintendent of Education Ted Sanders, the General Assembly and the Senate Republicans, but no proposal has yet emerged.

The current formula was passed in 1973. The state's finances were then relatively healthy. Federal revenue sharing had begun to flow into state and local government coffers and the state income tax was new. At the same time threat of court challenge prompted review: A California court had said school funding based on property tax wealth was illegal. The original 1973 formula allocated money one of two ways. Part of the formula was designed to equalize resources between school districts, providing more state aid to those less able to raise money through property taxes. A second factor rewarded districts with higher local tax rates, a method eliminated in 1980 to ease pressure on property taxes.

Currently school districts get aid one of three ways. About three-quarters use the "resource equalizer" formula, which this year guarantees school districts $2,067 per pupil in state and local revenues. The formula takes the number of students attending school and weights junior high school students more heavily than elementary and weights high school more heavily than either. It also considers the amount of property tax a district can raise locally. Another factor, weakened since 1973, provides extra money to districts with larger percentages of low income students.

One fifth of districts, too wealthy to qualify for the higher allocations of the resource equalizer, are classified as "alternate grant" districts. They receive between $269 and $145 in per pupil aid. And the l-in-20 very wealthiest districts are entitled to flat grants of $145 per pupil, guaranteeing that all districts get at least some aid.

Among the groups studying the issue is the Citizens Council on School problems. Rep. Gene Hoffman (R-40, Elmhurst) and Sen. Arthur Berman (D-40, Chicago) serve as cochairmen of the group which has been taking testimony across the state. Hoffman, who authored the original formula in 1973, and Berman, who played a key role in the 1985 reform package, both see the need for more money for children in the lower grades and for more money overall. Hoffman, standing alone at this point, says he will push for a half percent hike in the state income tax — from 2.5 percent to 3 percent — that would raise $500 million to $600 million. "I'm opting for the big bucks. I'm going to be working for a formula that adequately provides a great deal of equity," Hoffman says.

Berman sees little support for such a hike. "There's a lot that should be done but probably won't be done because of the financial posture of the state. To do anything meaningful would require substantial dollars, and they're not available," he says. Berman also thinks that before the state makes any changes in its general school aid formula, it should boost contributions to successful but underfunded programs — reading, truancy and early childhood education — contained in the reform package. They are funded by the state but not through its general school aid formula.

A formula revision that requires a huge tax increase earns little support in some quarters, particularly from Senate Republicans. In fact they are gearing up to study the issue and seek a solution to phase in a new formula without a large state tax increase. "Some people perceive that education has become a huge black hole for tax dollars," says Sen. Schaffer, chairman of a Senate Republican task force studying the formula. He says most Senate Republicans have a problem with a solution that includes $500 million or $600 million in new spending, and he thinks their support is needed to get any formula revision passed. The task force seeks to teach Senate Republicans how the school aid formula works. Part of that curriculum includes teaching senators how to read printouts and alert them to the "smaller piece of a bigger pie syndrome," Schaffer says. The Republicans tend to represent suburban districts where voters approve local tax increases to provide more money for schools. These districts tend to benefit the least from state aid.

Without any specific proposals under discussion, Schaffer worries that formula revision might be left until June when legislators could be presented with a "take-it-or-leave-it deal."

Whatever is done this year, says Senate veteran Berman, there will be new requests next year. "In the lexicon of school financing, the word 'enough' does not exist."

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