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State funding of public schools: The poor get poorer

School district receipts by region, 1985-1986 school year
(dollars in millions)
Local taxes2$ 638$ 1,730$ 1,014$ 3,382
Other local60623313996
General state aid5664296991,694
Other state234172185591
Total receipts$ 1,705$ 3,020$ 2,324$ 7,049
Fall enrollment431,000671,000724,0001,826,000
Receipts per student$ 3,956$ 4,501$ 3,210$ 3,860
1. Suburban Cook, DuPage, Kane, Lake, McHenry and Will counties.
2. Includes corporate personal property replacement tax.
Source: Comptroller Roland W. Burris.

Times are tough in school districts that depend on state government for financing. Max E. Pierson, superintendent of Savanna Community Unit School District 300 in Carroll County, knows the problem and the inequities as well as anyone. Savanna spends about $2,700 a year to educate each of its students. That is about average for districts its size, but well below the $4,000 that some districts spend. "There's no way that you can convince me that a child in this district can receive the same quality or quantity of education as a district spending more than $4,000," Pierson says.

Savanna sits on the Mississippi River about 15 miles above Clinton, Iowa. The district has 935 students in kindergarten through the 12th grade and a property tax base of $20 million, or a little more than $20,000 behind each pupil. Of the school's $2.4 million annual budget, $1.6 million comes from the state.

Last year's unsuccessful tax hike fracas was particularly unkind to Savanna schools. When it came time to prepare a budget the district had a worst case scenario from Gov. James R. Thompson's office of a loss of $55,000 if taxes were not hiked. At the same time a legislative panel was suggesting changes that would bring $385,000 in new money to Savanna schools. The board took a middle ground, planning on $110,000 in new money. Instead, the governor's July budget cuts slashed Savanna's aid by $110,000, leaving the district $220,000 short. In March the school board asked voters for a one dollar increase in the education tax rate that would have pushed the total tax rate to $4.26 per $100 of assessed valuation and raised $200,000. The referendum was defeated by a two to one margin, the best that a tax increase referendum has ever done in Savanna. "I'm not sure a tax increase will ever pass, and that' s not fair to the kids," says Pierson.

Teachers, parents, students and athletes will feel the pain of the cuts made this year. For next year the district has laid off 11 of 66 teachers and closed a building. Charges for participation in high school athletics were hiked from $7.50 to $50 per sport. Class sizes will increase. Fourth and fifth grades, for example, that had 20 pupils this year will have 30 next year. "Who lost?" asks Pierson. "The kids lost. That's the bottom line."

Savanna's situation is not unique in Illinois. The Center for the Study of Educational Finance at Illinois State University (ISU) has been monitoring state school financing for nearly two decades. "Never, in that 20 year period of time, have affairs been as grim or as dismal as we are forced to report in this study," G. Alan Hickrod wrote in a December update in that series entitled Documenting a Disaster: Equity and Adequacy in Illinois School Finance, 1973 through 1988.

At first it might not appear that things should be so. Illinois spends relatively substantial amounts of money per pupil on its public schools. Research done by the National Education Association put per pupil revenues in Illinois fourth among neighboring and other large states in 1986-1987. At $4,708 per pupil it trailed New York ($6,680), Pennsylvania ($5,328) and Wisconsin ($4,906), but stood ahead of California, Michigan and the national average of $4,386.

Between fiscal years 1977 and 1988 total receipts for elementary and secondary education increased from $4.27 billion to $7.28 billion, or 70 percent. Adjusted for inflation, however, the total constant dollar receipts declined 14 percent over the period. But during the same period the enrollment in state elementary and secondary schools declined 430,000 students, or 19 percent. Because of the enrollment drop, spending in constant dollars increased when figured per pupil. On a per pupil basis, receipts in current dollars increased from $1,910 in fiscal 1977 to $4,052 in 1988, a 112 percent jump. In constant dollars, receipts per pupil rose from $2,990 to $3,200, or 7 percent.

May 1988 | Illinois Issues | 14

The ISU Documenting a Disaster study examined adequacy of state and local spending on education. It determined that Illinois schools have kept ahead of inflation between the 1973 and 1985 school years. But, compared with other states, Illinois per capita spending in constant dollars dropped from 15th in 1975 to 28th in 1980 to 34th in 1985. (Rankings per pupil would be higher.) The report cautions that the data have not been corrected for geographic cost of living differences that could moderate the drop, but probably not eliminate it entirely.

But the ISU center staff also computed a figure for elasticity, a measure of fiscal effort that compares increases in spending to increases in income. For the decade from 1975 to 1985 Illinois income increased 120 percent, while its spending on elementary and secondary education increased 74 percent. That gives it an elasticity measure of .614, well below the national average of .909. Depending on how the statistic is computed, Illinois has spent less of its increased income on schools than all but 12 or 7 of the other states and the District of Columbia.

Still, state spending is up in current and constant dollars, which is more than can be said for many government programs. But the figures belie another trend, away from state spending and toward higher spending from local taxes. Total receipts are up in current dollars from each level of government, and down inconstant dollars at each level. On a per pupil basis between 1977 and 1988 local receipts rose 24 percent and federal source money increased 12 percent in constant dollars. Those increases offset a decrease in state revenues for education which dropped 10 percent over the 12 years.

The increasing burden on local taxpayers and its implications for students from districts with less property tax resources is the "grim and dismal" picture of which Hickrod speaks. The center uses census data and statistical methods to measure equity, comparative spending between rich and poor districts. On the equity side Hickrod measured differences in spending between school districts. He found that those differences decreased from 1973 until 1977 or 1978, depending on whether the district operates elementary schools, high schools, or both (a unit district). Then the differences started to grow. He concludes that over time school districts are becoming more unequal in the amount of local revenue and general state aid.

That trend is true using two different variables for wealth. Compared to assessed value in a district, for elementary and high school districts spending is more a function of local wealth today than it was 16 years ago. For unit districts the same is true over the last 15-year period. Another measure of wealth is the income of residents of the district. Hickrod and company found the same pattern there. The higher the personal income in elementary and high school districts the more was spent on public education. "The pessimistic conclusion of some observers in Springfield that the state can never again reach the values it reached in 1976 or 1977 on these indexes is another deplorable possibility. But that is a counsel of despair and we refuse to adopt it, at least for the present," Hickrod writes.

State aid comes in several forms. Hickrod is worried about the $1.8 billion that will be distributed this year for support of regular programs through the general state aid formula that reflects how much a school district can raise in taxes. Poor districts get more (but not enough), while rich districts get little. The state will pay another $520 million to support categorical programs, things like special education, gifted programs and vocational education, in both poor and wealthy districts. And another $80 million will be spent to support reading, preschool and truancy prevention programs begun under the 1985 reform package in all districts.

"We need to find something in the nature of $400 million new dollars for education and we need to put it almost all into the general aid formula — not into categorical aid, and not into new 'reform' initiatives," the report concludes. That is about the least likely outcome of this spring's tax hike/education funding debate. Rep. Gene L. Hoffman (R-40, Elmhurst), an author of the original formula in 1973, says he now agrees with many of his colleagues that any new money should be put first into the reform proposals and next into the various categorical programs. The formula takes so much money that increased funding does not translate into improved programs, Hoffman says. Last year the Citizens Assembly on School Problems proposed $400 million in new funding through the formula, and still had 35 school districts that got less state aid than before revisions. But Hoffman does not disagree with Hickrod and calls Documenting a Disaster "accurate." And philosophically Hoffman says he is troubled by the equity question. But, putting the money into categorical programs will provide more money for relatively high wealth districts and make the programs easier to sell to some legislators.

Sen. Arthur L. Berman (D-2, Chicago) senses a growing realization of the need for more money for education. A survey done by the State Board of Education that reported that 59 percent of schools anticipated teacher layoffs for next school year proves, Berman says, that school finance is an issue statewide, not just in Chicago. Berman says hearings in late March helped advance "reform" of Chicago schools even though no solution was forthcoming. And, he says, the political climate for passing a needed tax hike is better than a year ago. Thompson is a year farther from the credibility problem raised by his second consecutive post-election tax increase and lawmakers need not fear primary elections, which for many were more meaningful contests than this fall's general election. Berman sees no change looming in the way Illinois divides up state money. Some, he says, will go to general state aid, some to reform programs and some to other categorical grants. There is no way to pass a program that does not do all three, he says. "I personally think all three have served an important purpose."

Hoffman, Berman and Hickrod all say a tax increase is needed to provide more money for schools. Hickrod is most concerned about the equity issue and notes that his previous reports have prompted no change in declining state support. "Maybe we are not getting the message across. Short of renting an airplane and trailing a banner that reads: WE ARE DOING A LOUSY JOB OF SCHOOL FINANCE IN ILLINOIS, we cannot think of much more that an academically-based research center can do," he writes. Perhaps he should rent a plane and head for Springfield. □

May 1988 | Illinois Issues | 15

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