School Funding Could Be New 'Hostage' in Budget Standoff

For nearly a year, Democrats have accused Gov. Bruce Rauner of holding the state budget hostage and demanding his Turnaround Agenda as ransom.

As the Illinois budget standoff of FY 2016 threatens to become the Illinois budget standoff of FY 2017, it's been Rauner who is accusing Democrats of hostage-taking.

The kidnap victim this time is K-12 education funding, and the big question at the moment is whether Senate Democrats will make school funding reform in FY '17 what the Turnaround Agenda was to Rauner in FY '16.

It all sounds confusing, but it's not that complicated.

State funding for K-12 education is distributed in July to school districts throughout the state. It's important to school districts that the money arrive on time because most can't open for the fall semester if they don't have it.

Last June, Rauner vetoed every budget bill sent to him by Democrats in the Legislature except one. He signed the bill authorizing elementary and secondary school funding. That meant that schools statewide could open on time.

Had Rauner vetoed that school budget, he and lawmakers of both parties would have faced severe backlash from angry parents when schools didn't open on time. As it was though, the school budget and a court decision that allowed state employees to be paid without a budget allowed state government to function fairly normally even as state spending went on out of control.

Absent widespread public protest, Rauner and the Democrats could allow the budget standoff to continue indefinitely, with Rauner saying he wouldn't come to bargaining table until Democrats passed his reforms and Democrats insisting that negotiation on reforms was not part of the budget process. Large-scale protests over hardships to state universities and social service providers didn't come until early this year.

Here's the catch this year: The system by which state education funding is shared among local school districts is seen unanimously as unfair. It's a problem that has festered for years in Springfield.

School districts located in communities with high property values can devote generous resources to funding their school districts. What they don't get in state funding, they make up themselves in property taxes. These taxes often are very high, but residents get excellent schools in return.

School districts in low-income communities, however, rely far more heavily on state funding. They simply don't have the property tax resources to tap. The result is the state provides most of their operating budgets and per-student spending in these districts is a fraction of that of high-income school districts. That's why it's so often said that the quality of a child's education in Illinois depends more than anything on his or her zip code.

Sen. Andy Manar, D-Bunker Hill, for three years has been working on a formula that more fairly shares state dollars. The Senate this week passed a bill based on his formula. But some wealthier school districts eventually (following a four-year phase-in) will lose a portion of their state funding under Manar's plan, and Chicago Public Schools will see an initial increase of $175 million in state money.

Some Republicans have called this a bailout of Chicago schools at the expense of suburban schools. Even some Democrats from suburban districts have complained that their constituents will have to shoulder even higher property taxes to make up for state funds they lose.

Rauner has said he wants a change in the funding formula that does not take money away from any school district. He want the General Assembly to do as it did last year: Send him a K-12 funding bill using the current formula. He's been barnstorming the state to visit schools and urge Democrats to not "hold students hostage" to force adoption of a reformed funding system.

Of course, it can be argued that Rauner himself took college students hostage for nearly all of the current fiscal year when he vetoed the entire higher education budget, including money for financial aid through the Monetary Award Program.

So as the May 31 budget deadline approaches, the big question is whether Democrats will send Rauner the "clean" bill he wants or use a school funding reform plan as leverage in budget talks.

That's what we're talking about on this week's "Only in Illinois."

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