Eight years after implementation, including seven that included New Tier Funding, or new year-over-year funding, Illinois' funding formula for K-12 Education—the Evidence Based Funding for Student Success Act, or EBF—has worked towards its promise of closing the drastic funding gaps between school in property-rich and property-poor districts, as well as between schools in predominantly white communities and schools that serve predominantly Black and Latinx students.
Despite growing evidence that a college degree is more important than ever for success in the labor market, state funding for Illinois colleges and universities has fallen by 42 percent since FY 2000 in real, inflation-adjusted terms, while tuition has more than doubled. This rise in costs has made it increasingly difficult for students from low- and middle-income families generally, and Black and Latinx students specifically, to afford getting a higher education degree. This Report documents the positive impact gaining a college education has on everything from wages to economic development and social mobility. This Report also outlines a possible solution: The Adequate and Equitable Funding Formula for Public Universities, an adequacy-based funding approach that would prioritize new resources to the institutions and student populations that the data have shown need it the most, while still working towards achieving adequacy for all institutions.
Despite having one of the largest GDPs of any state in the nation, Illinois still utilizes an outdated, inefficient sales tax base that applies sales tax to only the purchase of goods and does not tax the purchase of the vast majority of services. This is problematic as the service economy makes up the majority of the state's GDP. Illinois also stands out amongst it's neighbors for it's narrow tax base—taxing only 29 service categories out of 176. By widening the sales tax base to include consumer services, Illinois could not only generate nearly $2 billion in revenue additionally each year, which could help fund much needed public services, but reduce tax inequity and add revenue stability over time.
On June 6, 2024, Governor Pritzker signed into law the General Fund budget for FY 2025 (the “FY 2025 Enacted GF Budget”). The FY 2025 GF Enacted Budget makes two things clear about the state’s finances. First, the General Fund continues to be in better fiscal condition than it historically has been over the last three decades. That’s the good news. Second, the state’s structural fiscal problems, which were partially redressed by revenue enhancements passed over the last three fiscal years, as well as somewhat masked by one-time federal financial assistance provided during the pandemic and the strong economic growth that followed, are re-emerging. The FY 2025 GF Enacted budget estimates revenue increases $2.7 billion above the FY 2024 Enacted budget, and current service appropriations in FY 2025 are scheduled to be $1.7 billion greater than in FY 2024.
“Understanding – and Resolving Illinois’ Pension Funding Challenges: Volume II”, an update of the state pension report, illustrates the current situation of Illinois' five pension systems as of the end of FY 2023. The report explains the history of the pension systems and how the state got to its current 45 percent funded ratio in the first place, creating a debt service schedule that is straining the state’s fiscal system, but also a way forward to re-amortize the pension debt and save taxpayers billions.
Volume X of the Fully Funding the EBF series continues CTBA’s modeling of fully funding the EBF to 90% of Adequacy. This continuation uses the shortfall from the ISBE EBF calculations for FY 2025 (released in August of 2024). The new release maintains the four scenarios, including the full funding model based on the current minimum increase of $300 million annually both with and without considering inflation, if the state were to up the funding to $500 million annually, as well as the annual amount to fund the EBF by FY 2027 as the statute requires.
On February 21, 2024, Governor Pritzker announced his proposed General Fund budget for FY 2025 (the “FY 2025 GF Budget Proposal”). The FY 2025 GF Budget Proposal makes two things clear about the state’s finances. First, the General Fund is the healthiest fiscal condition it has been in for decades. That’s the good news. Second, the state’s structural fiscal problems, which were somewhat masked by one-time federal financial assistance provided during the pandemic, as well as the strong economic growth that followed, are re-emerging. The FY 2025 GF Budget proposal projects revenue increases $777 million above FY 2024 dollars and $1.4 billion in current service appropriations above FY 2024 levels.
The aggregate Personal Property Replacement Tax ("PPRT") revenue for all school districts has had an unprecedented surge once again in FY 2024, following the notable increase in FY 2023, outlined in Volume II of this Report, "CPPRT and K-12 Education Funding in Illinois." Between FY 2022 and FY 2024, PPRT has hit a record increase of 255 percent. While that revenue is a welcome addition to school district resources, it is projected that it will decline back to its historical levels in the FY 2025 EBF calculations. This Report takes a look at how the Personal Property Replacement Tax is a relatively odd revenue source that allocates revenue to school districts in accordance with their respective collections of Personal Property Tax revenue in either 1976 or 1977 and how this revenue source has impacted Adequacy Gaps and therefore New Tier Funding across the state.
Volume IX of the Fully Funding the EBF series continues CTBA’s modeling of fully funding the EBF to 90% of Adequacy. Volume IX uses the proposed Fiscal Year 2025 General Fund Budget appropriations for the Evidence-Based Funding formula, but uses a projected shortfall based on the ISBE EBF calculated shortfall for FY 2024 (released in August of 2023). The new release maintains the four scenarios, including the full funding model based on an increase of $500 million annually using Scenario 2: Funding the EBF on a Fully Inflation-Adjusted Basis, By Making a Nominal Minimum Target Level Increase Annually.
CTBA's new report, "Understanding and Addressing Chicago's Pension Funding Crisis" details the true causes of Chicago’s pension funding problems, how state law made matters worse, recent attempts to address Chicago’s pension funding crisis, and presents CTBA’s proposal for responsibly re-amortizing the pension debt to generate roughly $11 billion in savings.