STATE OF THE STATE

Now that the state's political leaders have agreed on the toughest issue of school finance reform in Illinois — that schools need roughly half a billion dollars in new spending — it is time to get down to the details.

But first, like the person who inadvertantly tossed out the tax refund check along with the junk mail from credit card companies and oil change franchises, state leaders need to rummage through the legislative garbage can to retrieve the report of the Ikenberry Commission on school finance reform.

It offers the best hope and most sensible approach for fair, reasonable, bold and long-lasting reform of Illinois' archaic and chaotic system (one sniggers to call it a system) of financing public education.

Gov. Jim Edgar endorsed the plan recommended after 10 months of study by the task force which he appointed and which Stanley Ikenberry, former president of the University of Illinois, chaired. It proposed a plan that would cost about $400 million in new taxes to support public schools and urged that voters have a chance to constitutionally mandate the legislature to fund half of school expenses from the state treasury.

Unfortunately, despite its embrace by their own governor, Republican leaders of the legislature scrapped the commission's report faster than you can say "tax increase." In its place, House Speaker Lee Daniels has proposed his own school funding plan, laughably named "Quality First," which would add $500 million to state appropriations for elementary and secondary schools next year.

Daniels' approach would serve no principle of public policy save, perhaps, that which dictates: To the victor go the spoils. Wealthy suburbanites run the government these days, and it is wealthy suburban school districts that stand to profit most handsomely from the speaker's plan.

The Ikenberry Commission's report, on the other hand, embodies a number of sound educational and economic principles that would bring long overdue reforms to the way we think about schools and the way we pay for them.

The first principle is that the resources available to schools should be adequate to the task, something of a revolutionary notion for Illinois.

Up to now, state dollars for education have been allocated using the Lunch Allowance financial model. It was this economic model I employed to fund my son's noontime meals when he was in high school. Every Monday morning I gave him his allowance for lunch — $ 10 a week — and it was up to him to make it last, supplement it, or (come Thursday or Friday) settle for peanut butter and jelly. His spending was based not on the cost of a nutritious lunch, but on the amount I felt I could afford to give him each week.

That's what the legislature does each year. It appropriates to schools what it believes the state can afford, then lets them stretch it through a school year, find additional money elsewhere (technically known as property taxes) or settle for a PB and J level of education.

The Ikenberry Commission turned the Lunch Allowance approach upside down, substituting what might be called the Nutritious Lunch model. It first asks what an adequate education costs; then it suggests the state pick up at least half the tab.

How much does an adequate education cost? $4,225 per student.

That is the figure the Ikenberry Commission arrived at for this school year after a complex financial analysis of a sampling of "efficient" school districts — those with the enviable reputation of combining high performance (on student achievement tests) with low spending (compared to statewide averages). Under the commission's plan, the Nutritious Lunch methodology (probably under a different name) would be written into law as the basis for calculating the cost of an adequate education, what the commission calls a "foundation" level of state and local dollars guaranteed to each school district for each student. Under the current Lunch Allowance method, this year's foundation level is $2,949.

The commission's foundation level would be a mixture of state and local money, just as it is today, but in vastly different configurations. First, the commission proposes that each school district (except for a small fraction located in areas of extraordinary property wealth) receive a large state-funded, per-student flat grant ($2,000 is the figure contained in its report).

6 ¦ May 1996 Illinois Issues

This alone would be a remarkable change in school finance. "By injecting sizeable levels of state funding into all school districts," says the commission's report, "significant reductions in local property taxes could be largely replaced by state funding."

Also, the commission notes that state resources would become a meaningful part of most every school district's long-term funding base, thus "giving all school districts ownership of the system." This, too, would be a significant change, minimizing the political infighting and back-stabbing that has characterized the public school lobby and enabled lawmakers to escape responsibility for adequately funding a system of public education.

Next, in districts of high property wealth, local property tax revenue would make up the difference between the flat grant and the foundation level. Districts with low property wealth would receive state "equalization" grants that would be added to the flat grant and whatever local tax revenue they could generate to reach the foundation level. Finally, districts with high concentrations of poverty would also receive state grants to compensate for the added expense of teaching low-income students.

The second principle governing the commission's proposal is fairness, an equally foreign concept in the annals of Illinois' school finance.

Presently, the adequacy of resources often is a function of geography. Students lucky to live in a school district with high property wealth typically have far greater resources available than those from areas of relative poverty; across the state, property wealth per student ranges from $5,000 to $1.2 million. Yet, notes the commission's report, "Even when excluding the extremes, high property wealth school districts can raise between 12 and 15 times the property tax revenues per student of their property poor counterparts."

That's not fair, either to students or to taxpayers who have to pay higher tax rates to make up for lower property wealth.

Moreover, the commission complained that Illinois relies too much on property taxes to fund schools — 70 percent of school revenues overall, as high as 95 percent in some districts. It recommends that the state fund half of all education expenses and reduce property taxes "in the aggregate" by 25 percent. School tax rates would be rolled back to a "threshold" rate needed to qualify for full state aid, and statewide property tax caps would be instituted for local educational revenues; the caps could be exceeded only with voter approval.

Another aspect of the fairness question demonstrates that the commission was undaunted by sacred cows, which may not prove wise politically but is certainly novel governmentally.

Currently, there is little relationship between how education is funded and academic achievement.

Many communities have "dual" education systems, one district for elementary students, another for secondary. High school districts have historically enjoyed a significant advantage in their access to state and local dollars — they have greater taxing authority than elementary districts, and the way the state counts students favors high schools in allocating state aid.

The commission proposes to end those disparities, built on the dubious belief that it costs more to educate high school students. "Current research and trends," notes the commission report, "suggest it may be more effective to invest more heavily in early grades."

The third principle that guides the Ikenberry Commission reforms is accountability. In the most dramatic departure from the status quo, the commission recommended that schools actually demonstrate they are giving taxpayers their money's worth.

"Currently," the commission report states, "there is little relationship between how education is funded and academic achievement. No system exists for rewarding schools that demonstrate improved results, and a satisfactory system has yet to be implemented to intervene in schools that consistently fail to meet standards." The commission recommends that school districts be held accountable for the tax dollars they spend. The Daniels approach is mostly designed to throw more money at schools in hopes some of it lands near students.

The basic building block of school finance reform under the commission plan — the foundation level — links resources with performance by calibrating the funding formula to the spending level of schools with a record of strong student achievement, those in the top 25 percent of statewide achievement tests.

Also, the commission urges that the state strengthen its system of measuring school performance, which it calls structurally sound but poorly enforced. It proposes developing specific academic standards for what students should know as a consequence of their schooling, rewarding schools that show progress and penalizing those that don't.

"Schools that fail to meet a minimum level of performance, or otherwise fail to show improvement, must be placed on an academic watch list and provided technical support," the commission report says. Continued failure, it added, "should result in sanctions from the state, including the possible dissolution of local schools and school boards. These sanctions should be enforced on those adults responsible for education and provide improved opportunities for students."

There are a lot of blanks to be filled in, a lot of details to be worked out. But the Ikenberry Commission has sound principles on which to build a fairer, more adequate and more accountable system of school funding.

So state leaders now need to get on with it, recognizing that when it comes to paying for schools there is no free lunch.

Illinois Issues May 1996 ¦ 7