1997 Coalition Summit Report
Back to Education Funding Main Page

Following is a report submitted by the Chicago Urban League at the 1997 Coalition Summit on Education Funding Reform held at Governors State University on January 31, 1997.

The Chicago Urban League has proposed a set of comprehensive reforms to the Illinois tax and education finance systems that would result in major long term improvements. If implemented, the new system would result in:

• Improved equity for school districts and for taxpayers by replacing widely variant local property taxes with a single statewide property tax for educational purposes.

• Adequate funding for Illinois schools by implementing a foundation level judged appropriate by two state commissions during the 1990s.

• Improvements to the Illinois income tax that would make it fairer for low-income taxpayers.

• Better responsiveness of the tax system to economic growth, thereby providing better long-term support for Illinois schools.

The Chicago Urban League plan includes the following major components:

• Guarantee every school district statewide a minimum $4,225 foundation per student, supplemented by additional funds for low income students (Chapter I). The Chapter I funds would be calculated using a system that would allocate greater amounts of funding per student to districts with higher concentrations of low-income students. The foundation level would be adjusted for inflation on an annual basis. A cost of living adjustment would be made based on the McMahon Index or a similar measure.

• Raise the current individual income tax rate from 3.0 percent to 4.75 percent and the corporate rate from 4.8 percent to 6.0 percent.

• Effectively graduate the state income tax by raising the individual deduction from $1,000 to $4,000 per person, and phasing out this deduction from full to 0 over the range of income from $50,000 to $100,000.

• Apply a state earned income tax credit equal to 20 percent of the federal credit.

• Replace most local property taxes for education purposes with a statewide property tax rate of $2.00 per $100.00 EAV. Revenues from the statewide property tax would be utilized by the state to fund General State Aid to districts (the foundation level). Districts would be allowed local option for the first year following implementation, and referendum in years thereafter to raise additional local revenues above the foundation level.

• Extend the state sales tax to services such as legal, bookkeeping/accounting, advertising and amusements, areas currently not subject to sales taxes.

If implemented, these reforms would result in property tax relief to most school districts statewide totaling $2.1 billion. Assuming all school districts opted to continue spending at least at current levels, the proposed reforms would yield approximately $850 million in new funds for education.

Questions or comments should be directed to:
James Lewis, 773.451.3591 or
Todd Rosenkranz, 773.451.3592