1997 Coalition Summit Report
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Following is a report submitted by the Metropolitan Planning Council at the 1997 Coalition Summit on Education Funding Reform held at Governors State University on January 31, 1997.

MarySue Barrett, president of the Metropolitan Planning Council, congratulates participants for reaching consensus on several main points during the 1997 Coalition Summit at Governors State University

Quality education for Illinois children is in everyone's best interest. Quality education is central to our state's future economic success. Quality education is the foundation of strong communities.

To keep Illinois prosperous, foster economic growth and maintain a good quality of life, Illinois public officials, business leadership and communities must work together to make sure that our schools are providing students with a quality education. Only then will students be prepared for the workforce and able to make positive contributions to their communities as adults.

Yet, inequalities in the property tax base from one district to the next means many schools simply don't have enough resources to effectively deliver quality education. In too many Illinois communities, quality public education is a luxury rather than a standard. It is time for change. Illinois lawmakers must keep their promise to address school funding reform in 1997. Reform '97 was created to:

• Educate the public about issues and opportunities;

• Provide nonpartisan, objective study of options for positive change with regard to quality reforms, school funding and tax policy in Illinois; and

• Coordinate outreach and advocacy leading to comprehensive reform.

The way things are

Compared with other states, Illinois communities rely too heavily on property taxes to fund schools, with more than 60 percent of local property taxes going to schools.

The Illinois tax system has not kept pace with economic changes. For example, the size of the service sector has increased dramatically, and patterns of economic and income growth have changed. Yet, the Illinois tax base "mix" has not changed substantially since 1970, and does not reflect these realities. Other states have taken steps to correct this, and Illinois must move forward to maintain economic prominence.

Further, disparities in Illinois school funding are dramatic. For example, in metropolitan Chicago, the amount of money spent to educate an elementary school student ranges from $3,900 to more than $18,000 per year. These inequalities mean that some schools have money for creating advanced multi-media centers, while others are teaching out of 15-year-old textbooks.

Now is the time to act

The Governor's Commission on Education Funding for the State of Illinois -- also known as the Ikenberry Commission -- reported its findings to Governor Jim Edgar in March 1996, along with recommendations for reform. Central components include increasing the amount the state contributes to education, guaranteeing a foundation level -- or minimum funding level -- for all public schools across Illinois and providing substantial property tax relief.

The Commission's report was an important step in laying out the issues associated with school funding reform and potential solutions. Now it is time to come together on these issues and advocate for positive change.

Illinois leadership -- Republicans and Democrats alike -- are "on the record" as saying 1997 is the year for the Illinois General Assembly to act on school funding reform.

Reform '97, with leadership from the Metropolitan Planning Council, is an effort to mobilize individuals and groups representing business and civic interests, organized labor, public officials and community representatives to deliver the message to legislators that Illinois cannot afford to wait. Through outreach meetings and research, Reform '97 identified the following principles to guide Illinois reform:

• Provide substantial property tax relief and reduce the reliance on property taxes, particularly with regard to school funding.

• Ensure adequate funding for all Illinois schools and create a system that will improve achievement across communities and school districts. All schools -not just those with high property tax revenues -- must have the resources to deliver quality education.

• Provide incentives for regional cooperation to reduce fragmentation and competition among communities.

• Enhance economic competitiveness and improve the fiscal soundness of local governments.

Reform '97 places a high priority on quality and accountability in Illinois schools. Any school funding reform must be linked to clearer performance standards and greater accountability. If we change funding policies, we need to be assured that schoolchildren benefit.

In the weeks ahead, Reform '97 partners will continue public dialogue, and will analyze through computer modeling how various school funding and tax reform options would work if adopted in Illinois. The ultimate goal is to present a menu of reform options to legislators, so they can act now without further delay.

What you can do

If you care about the future of public schools in Illinois and of our state as a place to live and to do business, Reform '97 wants to hear from you.

By contacting us now, you will be kept up-to-date on issues that affect you, your schools and your community. As the spring legislative session progresses, you can get more involved in a number of ways -- for example, calling or writing to your legislator, hosting community meetings, or lending your name in support of school funding reform.

To get involved or for further information about Reform '97, call The Metropolitan Planning Council at 312/922-5616 or send an e-mail to meisenhauer@metoplanning.org/

(DRAFT January 23, 1997)

What People Are Saying about School Funding Reform

"We have too many schoolchildren in this state who, just because of where they happen to be born and live, are deprived of having a quality education."

Governor Jim Edgar
State of Illinois

"There is no doubt in my mind that Illinois needs to find a fairer way to fund its schools, and I anticipate that this issue will dominate the 1997 session of the General Assembly. "

State Sen. James "Pate" Philip, (A-Wood Dale)
Illinois Senate President

"Over the years I've found that when you discuss education, the participants...can make the discussion very complicated or they can make it very simple. I prefer to make it simple...Number one, funding reform."

State Rep. Michael J. Madigan, (D-Chicago)
Illinois House Speaker

"For years, Illinois property-tax payers have shouldered the burden...while Illinois ranks 47 percent [in the nation] in state support for education. For years, I have argued that we need to shift the burden from property-taxpayers."

Mayor Richard Daley
City of Chicago

"The current school aid formula is a complex, unworkable and unfair mess that penalizes responsible taxpayers."

State Sen. Marty Butler, (A-Mount Prospect)

"The focus [of school funding reform] needs to be how we assure a basic quality education to all Illinois students. I am by no means convinced that funding is distributed in a way that promotes equity."

State Rep. Mary Lou Cowlishaw, (R-Naperville)

Across Illinois, organizations and individuals are voicing support for reforming the way Illinois funds its public schools. A diverse group of business, civic, community, educational and governmental leaders share the belief that to stay competitive in the national and world marketplaces, Illinois must act now to reform education funding. The following organizations are leading the effort in Illinois to shed light on the issues, mobilize support for positive change and offer potential solutions.

American Association of Retired Persons, with more than 1.6 million Illinois members, issued a report entitled, "Striking a Balance: Evaluation of the Illinois Public Finance System," in October 1996. It called the property tax the "least fair" of Illinois' three major revenue sources, recommending that the burden for education funding shift from the property tax to the income and sales tax.

Chicago Urban League called for comprehensive change in tax and school funding in its 1995 report "Illinois School Funding: Solutions for Equity and Excellence." Urban League leadership is also reaching out to parents and educators to build awareness of the need for change.

The Civic Committee of the Commercial Club of Chicago addressed the school funding issues in its April 1996 report "Improving Education Quality and Funding in Illinois." The Civic Committee also advised the Governor's Commission on Education Funding, an advisory body that studied the school funding issue and produced an action plan for Illinois.

The Civic Federation, a watchdog on local tax and financial issues, has been a leader in the call for reforming Illinois' tax system. A central priority for the organization's 1997 agenda is state tax and education funding reform.

DuPage Mayors and Managers Conference evaluated the state tax system and, in 1994, recommended a comprehensive overhaul of the state's education system, including reform of education funding to help reduce the overreliance on local property taxes.

The Illinois Farm Bureau calls for ensuring quality education for all Illinois children by addressing accountability, adequacy and equity in its 1996 Policy Resolution. The Farm Bureau is also coordinating outreach to local school boards to get them to enlist their support for the Ikenberry Commission recommendations.

The Illinois School Funding Initiative (made up of the Illinois Association of School Administrators, Illinois Association of School Business Officials, Illinois Association of School Boards, Illinois Principals Association, Illinois Education Association, Illinois Federation of Teachers and Congress of Parents and Teachers), is an unprecedented effort to bring together schools, teachers' unions and parents to work together on advocating a specific education funding reform proposal.

League of Women Voters has made state tax and funding reform a priority and chairs Progress Illinois, a coalition of organizations and business leaders committed to broadening the base of support for tax reform.

Metropolitan Planning Council released its "Framework for Fiscal Policy" in April 1996 and organized an effort called Regional Futures in September 1996 to coordinate research, outreach and advocacy on comprehensive tax and education reform.

The Metropolitan Planning Council (MPC) is an independent, nonprofit group of business, civic and planning leaders working in the public interest. MPC's mission is to achieve policies that enhance the vitality and livability of the Chicago metropolitan region.

Established in 1934, MPC encourages cooperation among the region's leaders and other stakeholders, promotes open policy and planning decisions and advocates for implementation of its recommendations.

MPC mobilizes leadership around regional solutions to housing, transportation, land use and urban development issues. MPC also shares information with other policy and advocacy groups throughout the region and Illinois.

In early 1996, MPC decided to make school funding reform a priority. In April, MPC released its "Framework for Fiscal Policy" to facilitate the evaluation of tax reform proposals. The organization then organized "Regional Futures" to spearhead research, outreach and advocacy on comprehensive tax and education reform in Illinois.

Out of this came Reform '97, an effort that is bringing together a diverse coalition of business and civic leaders, education and fiscal policy experts and community representatives, with leadership from MPC. Reform '97 is a broad-based effort to educate and obtain feedback from stakeholders, analyze school funding and tax reform options and make recommendations for improving educational outcomes and promoting a more balanced tax framework.

As spring 1997 nears, Reform '97 will mobilize individuals and groups representing business and civic interests, organized labor, public officials and community representatives to deliver this message to the Illinois General Assembly: 1997 is the year for Illinois legislators to enact meaningful education reform.

Current disparities in school funding are dramatic. There is a large and growing gap in education spending per student within the Chicago area and across the state.

• Average total expenditures per student range from $3,992 to $18,212 in the Chicago metropolitan area. In Chicago, the average total expenditure per elementary school pupil is $6,456.

Illinois' tax system is outdated for today's service-based economy.

Over the last 20 years, the U.S. economy has become much more service-oriented and its manufacturing base has shrunk. As the size of the service sector has evolved, so have patterns of economic growth. Illinois has not adjusted its tax structure to accommodate these economic changes.

• As a percentage of gross domestic product, the service sector grew eight percent from 1974 to 1989, while the production of tangible goods declined five percent during the same period.

• The majority of state revenues in Illinois come from local property taxes, despite the fact that patterns of economic and income growth have changed. In 1994, Illinois local property taxes were 47 percent of total state revenues, while corporate and individual income taxes accounted for 26 percent of state tax revenues and general sales tax accounted for 19 percent. By contrast, property taxes in neighboring Wisconsin make up 31 percent of total revenues.

• According to the Illinois Tax Foundation, Illinois has the fourth highest property taxes among the nation's leading industrial states. Only New York, California and Texas are higher. Illinois has the highest property taxes in the Midwest, $4.5 billion more than Ohio which has the next highest, and $10.5 billion more than Kentucky, which has the lowest property taxes.

• State and local taxes combined per capita are five percent lower than the national average, while property taxes per capita are 20 percent higher than the national average.

• Approximately 60 percent of the nearly $12 billion in property taxes levied in Illinois in 1994 went to education funding.

• In 1995, Illinois schools received 32 percent of state revenues. Illinois is ranked 47 among all states in the percentage of state revenues that go to schools.

• Over the last 20 years, while total state revenues and total appropriations have increased, the percentage of education appropriations have decreased from 23 percent in 1976 to 15 percent in 1996.

• According to the U.S. Bureau of Labor Statistics, as the workplace becomes increasingly high-tech, the number of systems analysts needed by companies will rise 92 percent over the next 10 years, and the number of computer engineers will rise 90 percent.

• Illinois schools must be able to access the latest technology, in addition to providing top-notch general education, so that Illinois' workforce can compete in the global economy.

• Under the current system of monitoring school performance, there is no relationship between academic achievement and the amount of funds a school receives. Moreover, there is no system for rewarding schools that produce strong results, and no satisfactory system for intervening when schools consistently fail to meet standards.

• The Illinois State Board of Education received feedback from 10,000 educators, administrators, civic and business leaders on their draft report of standards for assessing student performance.

Today, disparities in municipal wealth threaten our state's economic vitality.

• As communities in the Chicago area lose their commercial tax base and their fiscal needs grow, these communities are becoming less attractive for commercial and residential development, and people are fleeing to other areas.

• At the same time, Chicago's suburbs are experiencing historically "urban" problems, like violent crime. In 1994, for example, 65 suburbs, including Oakbrook, Aurora, Fox Lake, Waukegan and Bloomingdale, all experienced the same amount of crimes per 100,000 people, as did the city of Chicago. This includes theft, murder, rape and other violent crimes.

• Disparities in local municipal wealth are magnified by the current tax structure and profusion of local governments competing for commercial development and tax base.

• Although the Chicago metropolitan region gained approximately 459,000 new jobs from 1980 to 1990, 80 percent of new job growth was limited to the northern and western suburbs. Some communities saw significant decreases in new job growth including Fox Lake and Franklin Park.

  Sources: "1996 Illinois Tax Climate," Illinois Tax Foundation; Bureau of Economic Analysis; "Fiscal Disparities Among Chicago Metropolitan-Area Municipalities and School Districts," The Institute of Government and Public Affairs, University of Illinois, "Occupational Outlook Handbook," 1996 U.S. Bureau of Labor Statistics; "Report of the Governor's Commission on Education Funding for the State of Illinois," 1996; "Mapping the Future," produced for Regional Conversations

These options are being modeled by school district and municipalities to demonstrate the variety of reforms being discussed on school funding and quality education. The options are designed to complement each other -- they are not mutually exclusive.

Option 1: Ikenberry Commission

$1.5 billion across-the-board roll back of local property taxes. Increase state aid by an additional $400 million and direct the aid towards school districts with significant numbers of poor students.

Option 2: Formula

Increase the amount of state revenues flowing into the current foundation aid formula to insure a foundation level of $4,225.

Option 3: Michigan Model

Eliminate the local property tax for schools and replace it with state financed system of a fixed amount of aid per pupil through state-wide property tax and increased state sales or income taxes.

Option 4: Modified Michigan

Option 3 modified to allow school districts through local referendum to add a local property tax on top of the state property tax applicable to residential property only, and modified to add a second state aid program targeted to school districts with high poverty.

Option 5: Growth Increment

Remove from the local property tax base a fraction of all new industrial and commercial property development to be taxed at a state-wide rate, the proceeds of which would be distributed to school districts and municipalities on a per pupil or per capita basis.

Option 6: Statewide Commercial and Industrial

Remove all commercial and industrial property from the local property tax base and tax it at a uniform state-wide rate. Distribute the proceeds to school districts on a per pupil basis and to municipalities on a per capita basis.

Option 7: Eliminate Cook County Classification

Eliminate classification of property in Cook County and impose an assessment ratio of one-third for all property throughout the state.

Option 8: Education Community Proposal

Revise general state aid formula by using $4,500 foundation level (adjusted by inflation) minus the local capacity to fund schools. Districts which receive more funds from current formula are held harmless.

The Illinois State Board of Education is currently working to create academic standards for students and professional standards for teachers, and to redesign teacher preparation, licensure and professional development in Illinois.

Option 1: Repeal State Mandates on Local School Districts

Repeal state mandates on local school districts, e.g. school holidays, and streamline others, to reduce the burden on local school districts.

Option 2: Performance Pay for Teachers

Develop a teacher evaluation mechanism and award bonuses to high performing teachers.

Options 3: Alternative Teacher Training & Certification

Provide alternative methods for teacher certification for individuals in non-traditional circumstances (career changers, retirees).

Option 4: Promote Consolidation of Dual Districts

Retain local control of schools by promoting consolidation of dual districts into unit districts through incentives, rather than mandates, to reduce inefficiencies and fragmentation.

Option 5: Modify the Illinois Goals Assessment Program (IGAP)

Give the IGAP core subject exams more frequently and add additional subjects to the core.

Option 6: School Personnel

1. Give school districts the authority to contract with third parties for services, such as janitorial and food service.

2. Change the remediation period required to dismiss an unsatisfactory teacher from 1 year to 45 days, as in Chicago.

Option 7: Teacher Tenure Reform the state tenure requirement.

Option 8: Vouchers

Develop a model project to provide vouchers to poor students in poor performing schools, to attend any school public or private. This measure is similar to those currently operating in Milwaukee and Cleveland.