May 11, 2005
NEW
SCHOOL FUNDING BILL PROPOSED
The Senate sponsors of the two
most prominent school funding bills have gotten together and have proposed a
new agreed bill. Senator James Meeks (I-Chicago), sponsor of SB 750, and
Senator Rick
Winkel (R-Champaign), sponsor of SB 1484, together presented the proposal to the Senate Select Committee on Education Funding Reform Tuesday.
The initiative would provide more money to both elementary and secondary, and higher education, but would not provide non-discretionary funds for other parts of the State budget. However, new provisions would limit a school district’s access to local property tax funds.
The proposal has been filed as an amendment to SB 750 (Senate Amendment 5), SB 1484 (Senate Amendment 3), HB 755 (Senate Amendment 1), and SB 2 (Senate Amendment 1). Currently, SB 750 and SB 1484 are “shell bills”: they are on the Senate floor, contain no substantive language, but are in a posture to accept an amendment. All of these amendments currently sit in the Senate Rules Committee. The Senate Rules Committee would have to approve the amendments then send them to a substantive committee for debate – probably either the Education Committee or the Revenue Committee.
The proposal, generally, is a hybrid between SB 750 and SB 1484. The bill:
- increases the State income tax rates for individuals from 3% to 5% and for corporations from 4.8% to 8% (this is estimated to generate $5.8 billion)
- raises the foundation level in the school funding formula to $6,100 per pupil (currently the foundation level is $4,964). This amount would grow annually by the lesser of CPI or 3.5%.
- increases funding for special education and other mandated categorical grants by $120 million
- establishes a property tax abatement equal to 30% of the dollar amount for K-12 school property taxes from 2001 (paid in 2002) (estimated to be $3 billion)
- provides $370 million to higher education (75% to universities; 25% for community colleges)
- provides $190 million to counties and municipalities through the Local Government Distributive Fund (this is, generally, the same formula – 10% of income tax receipts – that is in current law)
The bill, however, does include new provisions not part of either SB 1484 or SB 750. The bill:
- restricts access to local property taxes by school districts. To access additional property tax revenues, school districts could only do so by front door referendum, with 60% of the electors voting on the proposition voting in the affirmative. This would apply to the following funds/levies: special education, education, transportation, operations and maintenance, working cash, and bond issues.
- increases the Earned Income Tax Credit fourfold (from 4% to 20%) – estimated at $200 million
- creates a new renter’s tax credit – estimated at $150 million
- doubles the eligible amounts of the income tax credit for payment of tuition to a private or parochial school from a $500 maximum to a $1,000 maximum – estimated at $65 million
- creates the Education Assistance Fund Board to review foundation level increases bi-annually
This new version of the school funding/tax policy proposal was inevitable. Though much work went into the original SB 750 legislation, it had trouble getting momentum in the Capitol because of controversial revenue sources, a large amount of “non-discretionary spending” for the State of Illinois, and taxpayer fears of “property tax creep”. Therefore, the bill sponsors have removed the sales tax and retirement tax provisions, have narrowed the scope of the bill to education funding only, and have added the property tax limitations.
Since the original bill sponsors of SB 750 have presented
this new proposal, it is evident that lawmakers will now be working off of this
proposal – not the original HB 750/SB 750 from the last two years. That is why
the Alliance organizations, anticipating this development, each adopted
positions to “support the concepts” contained in the earlier versions of SB 750
and not give carte blanche support to the legislation. The
|
HB750/SB 750 (original) |
SB 1484 |
New Proposal |
|
Raises the income tax rate to 5% for individuals and 8% for corporations |
Raises the income tax rate to 5% for individuals and 8% for corporations |
Raises the income tax rate to 5% for individuals and 8% for corporations |
|
Taxes retirement income |
Does not tax retirement income |
Does not tax retirement income |
|
Expands sales tax to services |
Does not expand sales tax to services |
Does not expand sales tax to services |
|
Eliminates a number of corporate tax credits |
Does not eliminate corporate tax credits |
Does not eliminate corporate tax credits |
|
Total new taxes = $7.25 billion |
Total new taxes = $5.8 billion |
Total new taxes = $5.8 billion |
|
Total property tax relief = $2.4 billion (generally, 25% of school property taxes) |
Total property tax relief = $3.5 billion |
Total property tax relief = $3 billion (generally, 30% of school property taxes) |
|
Increases the per pupil foundation level in the school funding formula to $5,952 |
Increases the per pupil foundation level in the school funding formula to $5,964 |
Increases the per pupil foundation level in the school funding formula to $6,100 |
|
Does not provide funding for higher education |
Provides $500 million for higher education |
Provides $370 million for higher education |
|
Provides $2 billion for other State spending (structural deficit) |
Does not provide funding for other State spending |
Does not provide funding for other State spending |
|
HB750/SB 750 (original) |
SB 1484 |
New Proposal |
|
Provides $900 million in tax credits for low income taxpayers |
Does not provide tax credits for low income taxpayers |
Provides $200 million for low income taxpayers by quadrupling
the Earned Income Tax Credit |
|
Does not provide additional funding for mandated categorical grants |
Does not provide additional funding for mandated categorical grants |
Provides additional funding for mandated categorical
grants |
|
Does not increase the eligible amount for the income tax credit for
private school tuition |
Does not increase the eligible amount for the income tax credit for
private school tuition |
Does increase the eligible amount for the income tax
credit for private school tuition |
|
Does not change requirements for accessing local property tax funds
by school districts |
Does not change requirements for accessing local property tax funds
by school districts |
Does change requirements for accessing local
property tax funds by school districts. Need 60% affirmative vote by front
door referendum in special education, education, transportation, operations
and maintenance, working cash, and bond funds. |
BILL ACTION THIS WEEK
SB 383 (Link, D-Vernon Hills) requires
the ISBE to adopt rules for the documentation of school plan reviews and
inspections of school facilities and to convene a task force for the purpose of
reviewing these documents and making recommendations regarding training and
accreditation of individuals performing reviews or inspections. The bill was
approved by the House Elementary and Secondary Education Committee and was
sent to the House floor for consideration.
SB
574 (del Valle, D-Chicago) creates the College and Career Success for All Students Act to
require a teacher of an Advanced Placement course to obtain appropriate
training and to requires the ISBE to establish training guidelines for teachers
of Advanced Placement courses. The bill was approved by the House
Elementary and Secondary Education Committee and was sent to the House.
SB 575 (del Valle) increases high school graduation requirements as proposed by the Governor. The bill was approved by the House Elementary and Secondary Education Committee and was sent to the House floor for consideration.
HB 2002 (Dugan, D-Kankakee) includes failing to disclose relevant information on an application for employment as a teacher regarding arrest or conviction of a sexual offense as a reason to have a teacher’s certificate suspended. The bill was approved by the House Elementary and Secondary Education Committee and was sent to the House floor for consideration.
Bill Text/Status: Illinois General Assembly www.ilga.gov