State Spending

Given what the evidence says about the role education plays in building both an individual’s and a state’s economic competitiveness, the questions for policymakers become: Can the value of adequately investing in K-12 education be quantified? Is it possible to identify how making appropriate investments in specific, evidenced based educational practices today, can generate quantifiable economic and other benefits to society tomorrow? The answers, as it turns out, are yes and yes. There are numerous metrics available that allow decision makers to measure the economic value of both investing adequately in public education overall, as well as the value proposition associated with investing appropriately in various specific, evidence based educational practices.

Using previous studies as a baseline, CTBA calculated the economic impact of improving graduation rates, boosting student preparation for college, and increasing the number of college graduates in Illinois. If the state were able to increase the high school graduation rate to 90 percent, the additional high school graduates would earn an additional $111.6 million in annual wages. At the same time, if Illinois were to increase the percentage of people who have a college degree from its current rate of 30.6 percent, to the rate of Massachusetts which is currently at 38.2 percent, those new college graduates would earn $219 million more in wages annually. If Illinois were to increase high school and college graduation rates as aforesaid, the state would add 15,500 new college graduates annually, who would earn an aggregate of $26.6 billion more over their lifetimes than if they were to only graduate high school. These new graduates would increase tax revenue in Illinois by $118 million annually.

To address both its inadequate and inequitable approach to school funding, Illinois should move to a funding system based on the Evidenced Based Model. Designed to identify the level of funding needed to deliver an adequate education to every student in a state and sensitive to each child’s needs, the Evidenced Based Model ensures that the distribution of education funding is equitable, and accounts for the cost of overcoming “at risk” factors.

The Evidenced Based Model determines per-pupil expenditures by identifying how much research-based “best practices” cost, given a state’s overall and regional labor market and other cost factors. Finally, the Evidenced Based Model identifies and costs-out those educational practices which the research shows to boost student achievement.

PowerPoint presented by Ralph Martire at the Senate Revenue Hearing.

Recent projections show that the state of Illinois will run a deficit ranging from $7.59 to $7.96 billion in Fiscal Year (FY) 2014. This is, however, nothing new. According to the Comptroller’s Office, the state has run a deficit in its General Fund every year since at least FY1991. This creates genuine cause for concern, since over $9 out of every $10 spent through the General Fund goes to four core service areas: education (35 percent), healthcare (29 percent), human services (20 percent), and public safety (6 percent).

Given that the state’s General Fund deficits have been sustained over such a long period of time, many believe that spending on those core services in Illinois must be exceedingly high, and hence a major reason why the state experiences recurring budget shortfalls. The data on spending, however, paint a very different picture. When considered over the long-term, it is clear that General Fund spending on services in Illinois is actually declining in real terms after adjusting for inflation. 

Reducing spending in real terms over time could be an appropriate path to follow if service spending in the state was exceptionally high or overly generous compared to service spending in other states. However, under any objective evaluation, Illinois ranks near the bottom nationally in its spending on core services, which means that reducing investments in real terms over time is not an appropriate way to deal with the state’s deficits. 

This Issue Brief compares Illinois’ General Fund (GF) spending on services to other states using three metrics: (i) per capita; (ii) as share of state Gross Domestic Product (GDP); and (iii) number of state employees per 1,000 residents. Under each metric, Illinois ranks as one of the lowest spending states in the nation.  

There are four primary approaches to funding K-12 public education. These range from full state funding to flat grants. Illinois has selected a modified Foundation Level approach as its primary basis for school funding. The Illinois Foundation Level system has two distinct steps. First, a minimum guaranteed amount of funding per student that should be available to all schools – literally, the “Foundation Level”–is identified. Second, the Illinois State Board of Education then uses a formula (the General State Aid formula or “GSA”) to determine how much of the Foundation Level will be covered by the state, leaving the remainder to be covered by local property tax resources. The vast majority of school districts in Illinois have their state education funding determined under the preceding “Foundation Formula” approach.

A small percentage of Illinois school districts in affluent communities make such significant contributions to per pupil spending that they would receive no funding from the state under the GSA Foundation Level formula. In this case, state contributions to local spending are based on either the “Alternative Formula” or “Flat Grant Formula.” The policy concept behind using Alternative and Flat grants in such cases is that the state should be contributing to the education of every child, even in those instances where local resources provide more funds than the Foundation Level minimum. 

This Brief provides an overview on how K-12 public education is funded in Illinois.

This Fact Sheet provides information on how public education is funded in Illinois.

A presentation on the Illinois economy, and how it relates to education funding.

Information on education funding litigation in Illinois.

Providing a quality public education to  is essential. It also is expensive. The way Illinois currently funds education guarantees that many school districts will not have the financial wherewithal to fund and deliver a quality education. The reason for this is simple. Illinois is over-reliant on property taxes as a revenue source for funding education. This Fact Sheet provides information on how Illinois could reform its fiscal system to provide equitable education funding.

An overview of education funding history in Illinois.