Why Is Illinois’s Governor Now Opposing His Own Commission’s Findings on School Spending? One Word: Pensions
Chicago’s schools have been facing a recurring problem every year, and this issue has continued well into the summer, even though it was not expected to. Last year, there was a consensus that the state’s funding formula for schools was insufficient and needed to be fixed. The plan was for the legislature to propose a solution, and the governor would agree.
However, things did not go as planned.
Instead, Governor Bruce Rauner criticized the new funding proposal by labeling it as a "bailout" for Chicago. He called for a special session this week and vetoed provisions that would have directed hundreds of millions of dollars to the country’s third-largest school district. Now, the bill is back to the legislature, and Speaker Michael Madigan, who is a rival of Rauner, must determine if he can gather enough support from House Republicans to overturn the veto.
In July, lawmakers managed to override Rauner’s veto and pass a budget after a 736-day deadlock.
There is very little time left to pass an education spending bill without disrupting the school year, which is scheduled to start later in August. Schools are supposed to receive their first payments from the state on August 10.
Just a year ago, it seemed like there was a rare opportunity for consensus.
Illinois has the largest gap in funding for high-poverty students, with them receiving 20 percent less state and local funds compared to other states, according to The Education Trust. To address this issue, Rauner formed a bipartisan panel, which included five of his own appointees, to find solutions.
"We have to win this," he said. "Education is the key to a better quality of life."
The panel concluded that Illinois needed to move away from relying heavily on property taxes and create a formula that would allocate more funds to high-poverty districts based on evidence. It also emphasized the need to protect current school budgets. To achieve this, the state would need to spend at least $3.5 billion over ten years.
These findings led to the development of SB1, the new funding bill which passed the legislature with very little support from Republicans. However, Rauner now opposes the bill for two reasons that are well-known to both Chicago and Springfield residents:
Pension Funding
The Chicago Public Schools (CPS) has a massive pension debt of $9 billion and is currently borrowing hundreds of millions of dollars at high interest rates to meet payment deadlines, given its poor credit rating.
Rauner refers to the $221 million allocated in SB1 for CPS pension relief as a "bailout." He argues that the district already receives an unfairly large share of state grant funding.
Rauner also vetoed a budget bill in December that would have provided $215 million to alleviate the burden on CPS. He blames the pension crisis on the lack of responsibility shown by Chicago leaders after a new education law came into effect in 1995, transferring control of schools to the mayor. For many years, the city made minimal or no contributions to the pension fund. As recently as 2001, the fund was in a good financial state.
However, Chicago is the only district that doesn’t have its pension payments covered by the state. Mayor Rahm Emanuel and other city officials argue that Chicago residents are being "double taxed" since they have to fund the pensions of the city’s teachers as well as contribute towards the pensions of teachers in the rest of the state. Additionally, the state is required to subsidize 20 percent of the non-CPS teacher pensions in the city, but it has only done this once. In recent years, it has only paid a small fraction of that amount.
The Block Grant
Block grants are one of the main ways in which the state funds Chicago, as well as all other districts in Illinois.
SB1 would allocate $250 million to Chicago based on a formula that is 20 years old and does not account for the significant decrease in the city’s school population, as Rauner points out. However, after a year, CPS block funding would be adjusted based on changes in student demographics.
"The governor’s actions only serve to promote his own cynical brand of politics," said Emanuel, who previously filed an unsuccessful lawsuit against Rauner for inadequate funding of education based on race. "It is high time for Gov. Rauner to stop using our children’s futures as a political bargaining chip and to start showing leadership. A child’s education should not be determined by their ZIP code or the governor’s political whims."
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