School-funding pitch good for state, not just Chicago

Mayor Brandon Johnson of Chicago is pushing Springfield to fully fund the state’s school financing formula, the “Evidence-Based Funding for Student Success Act,” or EBF. Sure, Johnson’s main concern is getting additional state dollars to wipe out the $500 million deficit facing CPS. But fully funding the EBF would materially benefit the entire state, not just CPS. Here’s why.

First, the research shows that states which do the best job investing in public education realize greater personal income growth than other states. The reason for that is clear: a worker’s economic viability is more closely associated with educational attainment today than ever before. According to the Bureau of Labor Statistics, in 1979 workers with a college degree earned 38% more on average than high school grads. By 2022, that wage differential had ballooned to 85%.

This in turn means public schools have to provide an education of sufficient quality to allow students to develop the numeracy and literacy skills needed to graduate college. If students aren’t afforded the opportunity to develop those skills, they’ll be left behind economically after finishing high school. The good news is the EBF is designed to build the capacity of every public school to provide precisely the type of high quality education needed in the modern economy.

That’s because the EBF ties education funding to covering the cost of those research-based educational practices that have a statistically significant correlation to improving student achievement across the board — including everything from better test scores, to lower dropout and disciplinary rates, and greater college enrollment rates. The EBF even adjusts the cost of implementing these practices to account for the unique student demographics composition of each school district. So, when the EBF is fully funded, school resources will be both adequate in amount and equitably distributed.

Unfortunately, the EBF is underfunded by at least $2.6 billion, which means Illinois won’t realize improved academic outcomes for a while. That’s because the National Bureau of Economic Research has found that meaningful improvement in academic outcomes for children who typically attend underfunded schools — i.e., low-income students, minority students and English learners — occurs only after educational reforms are fully funded for all 12 years a student attends school. Which makes complete sense. A kid in ninth grade who has attended an underfunded school every year won’t magically make up for all the shortcomings in education he or she experienced if that student’s school finally gets adequately funded for grades 10-12.

Under current law, the state increases EBF formula funding by $300 million annually. At that rate, it will take at least nine years to eliminate the $2.6 billion funding shortfall, after adjusting for inflation. But it will actually take significantly longer. That’s because another revenue source which funds public education in Illinois, the Corporate Personal Property Replacement Tax or “CPPRT,” increased at historically high levels between FY 2020 and FY 2023, jumping by 212.5% or $3.088 billion. This revenue spike was due to a number of unique economic factors that manifested after the pandemic.

Because those economic factors no longer exist, the Illinois Department of Revenue projects that CPPRT revenue will decline, and revert to historic levels over the coming years. That revenue decline will worsen the EBF shortfall by $1.6 billion or 61.5%, increasing the funding gap from $2.6 billion to $4.2 billion. It also will push the date for fully funding the EBF out some 17 years. Which means another generation of Illinois children will receive an inadequate education. That makes no sense, given the heightened importance of a quality education to being competitive in the modern economy.

The main reason Illinois hasn’t fully funded the EBF is that the state lacks the fiscal wherewithal to do so, because Illinois’ tax policy is so flawed that historically revenue growth does not keep pace with cost growth. Bottom line: it’s imperative state lawmakers finally raise adequate revenue to fund core services like education fully — school kids are counting on it.

• Ralph Martire, rmartire@ctbaonline.org, is Executive Director of the Center for Tax and Budget Accountability, a fiscal policy think tank, and the Arthur Rubloff Professor of Public Policy at Roosevelt University.