Between FY 2022 and FY 2023, aggregate Personal Property Replacement Tax ("PPRT") revenue for all school districts increased by a record 76 percent. As things stand today, more record growth in PPRT revenue is projected for FY 2024. That revenue is a welcome addition to school district resources, however, if the projections for FY 2024 prove to be accurate, it will mean that collectively over the FY 2020 through FY 2024 sequence, the statewide Adequacy Gap under the Evidence Based Funding formula was reduced at a significantly faster rate because the local revenue increased at a faster rate over this time period compared to the increase in state-based revenue (new Tier funding).
CTBA’s most recent report highlights 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 big impacts on Illinois education policy.
After adjusting for inflation, state funding for Illinois colleges and universities has fallen by nearly 50% since 2000, while tuition has more than doubled, making 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. Despite growing evidence that a college degree is more important than ever for success in the labor market and in spite of recent funding increases, the report finds that, after inflation, Illinois’ General Fund support for Higher Education has declined significantly over the last two decades, and is 46 percent less now in real terms than in 2000. To help make up for that loss of General Fund support, the average annual student tuition and fee cost of attending a public four-year university in Illinois increased by 115 percent—after inflation—between 2000 and 2021. This Report both documents the positive impact gaining a college education has on everything from wages, economic development, and community health and wellbeing, to social mobility, and calls upon the Illinois General Assembly to invest adequate resources in higher education.
After six years of implementation, five of which included new year-over-year funding, Illinois’ school funding formula – the Evidence Based Funding for Student Success Act, or EBF – has worked towards its promise of closing Illinois’ drastic funding and achievement gaps between schools in property-rich and property-poor districts, as well as between schools in predominantly white communities and schools that serve predominantly students of color. The EBF accomplishes this by distributing new K-12 funding to those districts that are furthest away from having the resources to fund their respective “Adequacy Targets” – which is the amount the research indicates is required to provide the level of education the students they serve need to succeed academically.
The EBF replaced an old formula that was based on a one-size-fits-all “Foundation Level” of per-pupil funding that was both inadequate in amount and inequitable in distribution. Indeed, the state’s historic investment in K-12 has been so inadequate that local property tax revenue became the primary method of funding education. But after six years of the EBF, the formula has proven that it is working as intended to counter historic inequities by investing more at the state level each year, closing Adequacy Funding Gaps for students in every region of the state and of every race and ethnicity.
An Analysis of Pharmacy Benefit Managers' Impact on Medicaid Drug Pricing provides some insights into the question of how decision makers can best incorporate Pharmacy Benefit Managers ("PBMs") into the management of Medicaid and CHIP. The report summarizes how PBMs work in practice at the state level to contain retail prescription drug costs in Medicaid programs, and to the extent relevant, how the “Managed Care Organizations (“MCOs”) contract with various state governments to administer Medicaid and CHIP benefits and services. Additionally, the report provides a brief explanation of how the retail prices for prescription drugs are determined at the state level for Medicaid programs in the Managed Care/PBM setting —and how that differs from the traditional Fee-for-Services or FFS setting.
The report also provides a national snapshot of the PBM's impact on drug pricing nationally, and then delves into the impact of PBMs on prescription drug costs in Medicaid and CHIP programs for five states: Illinois, West Virginia, Louisiana, Missouri, and Florida. West Virginia and Missouri are examples of states that use a pharmacy benefit “carve out,” which means some or all Medicaid prescription drug benefits are not included in the state’s respective managed care contracts. Illinois, Florida, and Louisiana were selected as states that rely on a pharmacy benefit “carve in,” which means Medicaid prescription drug benefits are for the most part included in the applicable managed care contracts.
Volume VI of the Fully Funding the EBF series continues CTBA’s modeling of fully funding the EBF to 90% of Adequacy, which aligns more closely with the Illinois State Board of Education’s methodology. Volume VI uses the Enacted Fiscal Year 2023 General Fund Budget appropriations for the Evidence-Based Funding formula found in Volume V, but applies the ISBE EBF calculated shortfall for FY 2023 (released in August 2022), rather than a projected shortfall as provided in Volume V. The new release maintains the four scenarios found in the Fully Funding the EBF series Volume V.
Due to Illinois’ long-term, structural fiscal challenges, citizens of Illinois have grown accustomed to General Fund budgets that are focused on cutting, or limiting the cuts to, core services. Which is truly unfortunate, given that 95 percent of all General Fund expenditures on services go to the four core areas of Education, Healthcare, Human Services, and Public Safety. However this past April, the Illinois General assembly passed a General Fund budget for FY 2023 (the “FY 2023 Enacted GF Budget”) that was notably different from the vast majority of budgets passed into law over the last twenty-some odd years. That is because, rather than focus on cuts, the FY 2023 Enacted GF Budget calls for increasing year-to-year spending in every one of those four core service areas. This counters a trend of imposing real, inflation-adjusted cuts to all or most core services that goes all the way back to FY 2000. Moreover, the FY 2023 Enacted GF Budget—when considered in combination with the supplemental appropriations that were passed covering certain aspects of the FY 2022 Enacted General Fund Budget (the “FY 2022 Enacted GF Budget”)—includes a commitment to being fiscally responsible that is far more substantive than rhetorical. This also stands in stark contrast to most General Fund budgets enacted over the last two decades, which on the whole paid lip-service to being responsible—without implementing initiatives that strengthened Illinois’ fiscal system in any meaningful way.
Read the full report to learn more about the initiatives taken to offset economic challenges and decades of service cuts for Illinois.
Volume V of the Fully Funding the EBF series keeps adjustments to CTBA’s model to align more closely with the Illinois State Board of Education’s methodology and reporting but based on the Enacted Fiscal Year 2023 General Fund Budget appropriations for the Evidence-Based Funding formula. This change is made to the overall Adequacy Gap funding level (changes from 100% to 90% to accommodate for Federal funding). This change in methodology is applied in the same manner as it was for the four scenarios found in the Fully Funding the EBF series Volume V.
The FY 2023 Proposed General Fund Budget (the “FY 2023 GF Proposal”) makes one fact abundantly clear: spending on services is not driving the state’s fiscal problems. Big picture, Illinois’ ongoing disinvestment in General Fund services is harming communities across the state for one simple reason: over 95 percent of all such spending goes to the four, core areas of Education (including Early Childhood, K-12, and Higher Education), Healthcare, Human Services, and Public Safety. The FY 2023 GF Budget Proposal is a change of pace, reversing the trend of disinvesting in General Fund services by increasing spending for every single General Fund service category and making moves to get Illinois’ fiscal house in order.
The Earned Income Tax Credit, or “EITC,” rewards work and reduces poverty by targeting tax relief to low-income families with children. The EITC has become one of the more effective anti-poverty programs in the United States. The reason the federal EITC is so effective is because it is designed as a “refundable” tax credit. When a tax credit is “refundable,” the taxpayer who qualifies to receive it gets the full dollar value of the credit, even if that dollar value exceeds the income tax liability said taxpayer owes. The EITC effectively boosts the earnings of workers who qualify to receive it, thereby increasing their purchasing power and alleviating poverty. The Child Tax Credit (“CTC”) initially provided qualified taxpayers with a $400 per child nonrefundable credit and was intended to provide tax relief to middle-income families. In 2001, the CTC was made refundable, on a limited basis, with a maximum refundable benefit of $600. Its refundability feature also makes the CTC effective at making tax policy fairer, because like the EITC, the CTC functions to offset taxes other than income taxes—like sales, excise and property taxes—which place a disproportionate burden on lower income earners. Illinois currently does not have a CTC at the state level. In addition to alleviating poverty and stimulating the economy, the refundability feature of the EITC also creates a very effective, as well as administratively facile way to make tax burden fairer.
For two decades, Higher Education in Illinois has been left behind. Despite the evidence and relationship between educational attainment and economic viability, Higher Education in Illinois continues to be divested. CTBA has updated and improved its prior report, Illinois’ Two-Decade Disinvestment in Higher Education, with Illinois’ Continued Disinvestment in Higher Education. This updated report highlights that General Fund appropriation for Higher Education in Illinois has been less than it was in FY2000. While FY2022 appropriations are more than FY 2021, the COVID-19 pandemic has only exacerbated the state of Higher Education funding with Illinois still not providing enough to make Higher Education affordable for many students in Illinois. This means that public universities and community colleges must rely more heavily on tuition and fees. In fact, average in-state tuition at an Illinois four-year public university has increased 149 percent from FY 2000 to FY 2020.
In Illinois’ Continued Disinvestment in Higher Education, CTBA shines a new light on everything from economic impacts of General Fund appropriations for Higher Education in Illinois, the reliability of public institutions on tuition and fees, which disproportionately affects low-income students and students of color, and how the growing cost of college has contributed to a decrease in enrollment in our public colleges and universities, only to be made worse by the COVID-19 pandemic.