By: Ted Dabrowski and John Klingner
In 2017, Illinois passed an education funding law that recommends taxpayers put in at least $350 million in new money for education each year for the next ten years. Supporters of the law want to reach what they call the “adequate” amount of “evidence-based” funding for the entire state, which carries a total price tag as high as $7 billion.
Since then, education officials have dropped the pretense of wanting that money over time. State Board President Tony Smith wants the $7 billion in new money right now. The State Board of Education’s latest funding request calls for an 86 percent increase in state operating spending on education. With that request, the education budget totals more than $19 billion, which would consume more than 50 percent of the state’s current budget.
Such a large request has been deemed “symbolic” by some lawmakers, but it still reveals just how disconnected Illinois’ education officials are. ISBE’s funding request ignores the multiple realities facing Illinois and its residents.
For starters, even before the new funding law was passed, Illinois was already spending more on a per student basis than the entire Midwest. Illinois’ problem isn’t too little money. It’s that too much of it is tied up in pensions and administrative costs.
Second, fulfilling ISBE’s demand would cripple state finances. Illinois’ current budget is deeply in the hole, the state can’t pay its bills and the state’s credit rating is on the precipice of junk. More spending, on top of Illinois’ retirement debts, could trigger more downgrades.
Even if Pritzker tries to pay for new spending by hitting only the rich with a progressive income tax (which won’t work, here’s why), the fact remains that Illinoisans are overtaxed. And residents are fleeing the state in record numbers. Hiking taxes again to pay even more for a bloated education system will only accelerate outmigration.
Illinois education spending
In 2016, the last full year of available U.S. Census data, Illinois outspent all its neighbors on a per student basis. When all the local, state and federal dollars are added up, Illinois spent more than $14,000 per student on PreK-12 education. That’s 21 percent more than the national average, 24 percent more than Wisconsin spent and 44 percent more than Indiana.
Include the additional $7 billion ISBE wants and the spending differences between Illinois and its neighbors become even more stark. Illinois’ per student spending jumps to over $17,500* a year. That’s 53 percent more than what Wisconsin spends and 78 percent more than Indiana.
*Correction made Jan. 31, 2019. The original graphic overstated the projected per student spend under ISBE’s proposed budget. The amount has been corrected and is $17,557 per student. Numbers in the piece have been updated accordingly.
All that new spending is unlikely to improve educational outcomes, based on prior experience. Illinois’ new “evidence-based” funding system has failed everywhere else it’s been tried.
ISBE’s $7 billion would be impossible for the state’s budget to handle. The state is running a $1.2 billion deficit this year – which is the rosy scenario – and it has an additional $8 billion in unpaid bills piled up. So next year’s budget is destined to start deep in the red.
Add to that Gov. Pritzker’s promises to spend more on everything from higher education to healthcare to infrastructure, on top of the recent raises he granted to state workers, and Illinois’ 2020 budget will be on track for record spending and record deficits even before ISBE’s request.
Running deficits year after year has brought the state’s credit one notch from junk. More deficit spending, on top of Illinois’ retirement debts, could mean another downgrade. If that happens, Illinois would become the first state ever to receive a junk credit rating.
The consequences of that would be far reaching, and dire, for ordinary Illinoisans.
Illinoisans: overtaxed and heading out
Considering the promises Pritzker has made and Illinois politicians’ inability to even consider cost-saving reforms, all of that money needed to fill ISBE’s $7 billion demand would likely come from higher taxes.
The problem is Illinoisans are already overtaxed and are fleeing the state. Illinoisans just got hit with a permanent $5 billion income tax hike just two years ago. And Illinois’ property taxes, a majority of which go to pay for education, are the highest in the nation.
And for those who think a tax swap would fix the damaging impact property taxes have on Illinoisans’ wellbeing, simply shifting the taxes around does nothing when Illinoisans already face the 6th-highest state and local tax burden in the country.
Poll after poll shows that taxes are constantly driving people out of the state. Illinois has lost 1.5 million people to outmigration since 2000.
All those people leaving has contributed to Illinois’ loss of population. Illinois has actually shrunk five years in a row, a statistic only shared with Connecticut and West Virginia. Meanwhile, every one of Illinois’ neighbors has continued to gain people.
Spend what you already have, properly
There’s little point in increasing education spending if it drives up taxes to the point where many families are forced to leave. That would further damage the tax base, hurting the very effort to provide more funding for schools.
Instead of hitting up taxpayers for even more funds, Illinois officials should free the billions of dollars unnecessarily trapped in Illinois’ education bureaucracy and administrative bloat. Reforming pensions and consolidating duplicative school districts is a far better way to get money to the districts, and students, that need it.
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