School funding could be foundation for 'grand bargain' on tax policy

Prior to Republican Bruce Rauner's election, Democrats controlled both the General Assembly and governor's office. This led many to blame Springfield's failure to resolve long-term fiscal problems on the political inertia caused by one-party rule.

The theory was simple: Democrats didn't want to wear the jacket for passing the permanent tax increases Illinois needed to continue funding core services - like K-12 education, universities, and social services. So instead, they passed temporary tax increases, which kept the wheels from falling off state government while Dems controlled the whole shebang, but were designed to phase down right after the 2014 gubernatorial election.

According to the theory, if the Republicans gained control of the executive office, responsibility for governing would be shared between the parties, creating the impetus for the grand, bipartisan deal politically needed to raise taxes permanently.

Illinois' new era of bipartisan responsibility to govern began 16 months ago. For those keeping score at home, shared responsibility has so far produced zero tax policy reforms - and indeed zero state budgets. If anything, the rhetoric between our Republican governor and Democratic General Assembly has become ever more strident and snarky, leaving many to question whether a grand, bipartisan compromise is even possible.

As it turns out, one significant ray of hope exists - if the powers that be mean what they say publicly about K-12 education. Because, despite the toxic environment in Springfield, each of Gov. Rauner, Senate President John Cullerton, and House Speaker Michael Madigan, have placed a high priority on reforming Illinois' school funding formula. Assuming they're sincere - and I do - this can become the vehicle for creating a bipartisan grand bargain.

That's because the governor, Senate president, and House speaker are right: from a good-government standpoint, Illinois' existing school funding formula doesn't cut it. The existing formula is based on a "Foundation Level" for K-12, which is supposed to be the minimum per pupil spending level needed to cover the cost of educating children who aren't "at risk" of academic failure. The additional expense of educating "at risk" students - who have special needs, are low income or are English Language Learners, isn't included.

The current Foundation Level of $6,119 per child was first set seven years ago - and never increased since, even for inflation. Worse, it isn't even based on any actual costs of educating children - it merely represents a political judgment of what the state can afford, given its inadequate fiscal resources.

Not surprisingly, a school funding formula predicated on what insufficient state tax revenues can support rather than the actual cost of educating all kids, results in a woefully inadequate level of education funding.

In fact, Illinois' current Foundation Level is so inadequate it falls some $2,900 less, per child, than what's recommended by Illinois' nonpartisan, Education Funding Advisory Board (EFAB).

And it's not like hitting the EFAB target would buy a Cadillac education. Indeed, EFAB's recommendation would only purchase an education sufficient to get two-thirds of our non-at-risk children passing standardized tests.

Here's the eye-opener: It would require $5 billion more than what's currently spent to fund EFAB's recommendation - which doesn't even account for the cost of educating the remaining third of Illinois' non-at-risk kids, or any at-risk kids.

For low income kids, the bad news doesn't stop there. That's because Illinois' inadequate K-12 investment is also distributed inequitably. So much so that per-student funding in Illinois decreases as the concentration of low-income kids in a school increases.

The good news is the state's three top leaders have all committed to reforming Illinois' inadequate and inequitable school funding formula. The better news is there are evidence based, non-ideological approaches to implementing this reform that will create a system that's equitable in distribution and adequate in amount for all children - at-risk or not. What better basis could there be for reaching a bipartisan "grand bargain" on tax policy?

Ralph Martire, rmartire@ctbaonline.org, is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank.