Illinois School Funding: Ensuring Equity and Adequacy for Student Success

1. IASPA 2018 Sara Groom Boucek Associate Director/General Counsel Illinois Association of School Administrators

2. Introduction • Politics • School Funding • Pension Reform • Laws of the 100th GA/Other Considerations • ESSA/Accountability

3. Politics

4. School Funding/Budget

5. SB1947 - THE EVIDENCE-BASED FUNDING FOR STUDENT SUCCESS ACT Ensuring equitable funding to help  all students succeed.

6. CORE VALUES WE SOUGHT IN FUNDING REFORM A school funding formula that… • Recognizes individual student needs • Accounts for differences in local resources • Closes funding gaps & keeps them closed • Provides a stable, sustainable system that gets all districts to adequacy over time. • Ensures no district loses state funding compared to prior fiscal year. • Ensures that all funding is based on the evidence of what actually drive student improvement and achievement. The new legislation meets these five requirements for an equitable funding system.

7. NEW FORMULA WILL INCREASE ADEQUACY OVER TIME WITH ADDITIONAL INVESTMENT SIMULATION OF $2 BILLION IN NEW FUNDING TODAY

8. ISBE IN PROCESS OF DETERMINING 2018 STATE PAYMENTS • The Illinois State Board of Education (ISBE) is in the process of verifying data elements needed to calculate school districts’ 2018 state payments under the EBM system enacted in SB1947. • Final calculations and Tier placements will be available in a few months. • Initial payments to school districts are the Base Funding Minimum (BFM) amounts, or hold harmless payments, which are equal to the expected final fiscal year 2017 distributions • Each district’s preliminary base-funding minimum amounts can be viewed at www.isbe.net/ebf2018 • Districts will receive payments on the 10th and 20th of each month from September through June in FY 2018 • In future years, the schedule will remain the same as General State Aid was previously distributed – 22 payments in total distributed August through June.

9. HOW DOES IL’S EVIDENCE-BASED FUNDING MODEL WORK?

10. THE MODEL IMPLEMENTED BY SB1947 ADEQUACY TARGETHow much does providing high quality education cost? 100% of Adequacy Target 2. PERCENT OF ADEQUACYHow well-funded is the district? • LOCAL CAPACITY • How much can the district contribute? • BASE FUNDING MINIMUM • How much does the state currently contribute? GAP TO ADEQUACY District 1 District 2 District 3 3. DISTRIBUTION FORMULAHow is new money from the state distributed?

11. STEP 1 Calculate Cost of 26 essential elements Enrollment = Greater of prior year average(collected Oct 1/Mar 1 & Dec 1 for pre-school special ed) or average of prior 3 years. Core Instructional Elements

12. STEP 1 Calculate Cost of 26 essential elements Additional Elements ISBE will calculate the Adequacy Target for every district and communicate that information annually.

13. The Effect Sizes Associated with Evidence Based Elements

14. STEP 2 Multiply FTE by Average Salaries for All Positions Annual Salary Adjustments • Annually ISBE will calculate average salaries using the Employment Information System (EIS) for all positions except clerical and instructional assistants. • Average salaries are weighted based on each districts enrollment in order to produce a more accurate value • For clerical and instructional assistants the baseline salary amounts will be multiplied by the Employment Cost Index.

15. STEP 3 Adjust salary-based elements for regional wage differences No Region Is Below 0.9 (this allows districts to be more competitive to recruit and retain highly qualified educators) DeKalb 1.06 Cook, Kane, Kendall, DuPage, Will 1.06 Understanding Comparable Wage Index (CWI): CWI compares the salaries of non-education employees with a bachelor’s degree across all counties of Illinois. Then compares those differences and computes an index for the state. I.e. The CWI for Cook County is 6% above the state average, and the CWI for McLean County is 10% below the state average. Grundy 1.06 Adams 0.75 0.9 McLean County 0.90 Sangamon 0.94 Johnson 0.79 0.9

16. BASE FUNDING MINIMUM ENSURES NO DISTRICT LOSES MONEY • FY18 Base Funding Minimum includes: • Prior year GSA (including Poverty Supplemental, Equity Grant and PTELL Adjustment) • For EBM Calculation, Poverty Supplemental is discounted by Preliminary % of Adequacy (i.e. $100,000 in supplement and a Prelim % of adequacy at 60% means that only $60,000 is recognized in the EBM calculation, but the district still receives the full $100,000 in Base Funding Minimum) • MCATs • Special Ed Personnel Reimbursement • Special Ed Funding for Children Requiring Special Education Services • Special Ed Summer School • Bilingual (English Learners) • FY19 Base Funding Minimum includes: • Prior year Base Funding Minimum plus prior year EBM distributions

17. The Local Capacity Target Provides Fairness In An Inequitable Property Tax System DISTRICT TAXING BELOW LCT DISTRICT TAXING ABOVE LCT 100% of Adequacy Target For districts collecting taxes below their LCT: • The formula uses their calculated LCT. • This clearly shows that districts are responsible for a portion of how inadequately funded they are – when they tax comparatively low. • If districts raise more revenue to reach their LCT, they do not lose any eligibility for state funding. LOCAL CAPACITY TARGET Real Receipts Gap to Adequacy Local Capacity used in model For districts taxing above their LCT: • Real receipts are adjusted downward towards their LCT based on the LCT%. • Even though they are more adequately funded, they will get more state funding. • Districts can also lower their taxes and be eligible for more state funding (see property tax relief fund)

18. Other Available Local Resources The only other local resource that is included in the EBM formula is CPPRT. The lag in CPPRT for this purpose is the same as the prior GSA formula. Note: With current reductions to PPRT Fund through the state budget, districts will have less local resources recognized in the formula. This will require more state resources for districts to reach their adequacy target.

19. DISTRICTS FURTHEST FROM ADEQUACY RECEIVE GREATEST SHARE OF NEW DOLLARS Districts are placed into Tiers based on whether they fall below a certain percent of adequacy. TIER 1 Includes the least well-funded districts in the state, which receive 50% of new dollars. The percent of adequacy below which districts are placed into Tier 1 is dynamic, and is defined when all Tier 1 dollars are spent. TIER 2 Includes all districts below 90% of adequacy (including Tier 1 districts). 49% of new dollars go to this group of inadequately funded districts proportionally. TIER 3 Districts between 90% and 100% of adequacy get a smaller proportion of their gap closed, and receive .9% of new funds. TIER 4 Districts above 100% of adequacy get a small increase in funding from the state each year, and receive 0.1% of new funds.

20. IN EVENT OF UNDER-APPROPRIATION, HIGH NEED DISTRICTS ARE PROTECTED FROM PRORATION • If the state does not appropriate enough to cover the cost of the Base Funding Minimum, then funds are first removed from the BFM of the most adequately funded districts (unlike proration in the past). • In this case, Tier 3 and 4 districts would first lose any evidence based dollars received in prior years • If that does not cover the value of the under-appropriation, then further reductions are on a per pupil basis for all districts.

21. THE MINIMUM FUNDING LEVEL CREATES REQUIREMENT FOR NEW STATE DOLLARS ABOVE BFM • Minimum Funding Level requires state to contribute at least $300M to the formula and at least another $50M to either the formula or tax relief. • If Minimum Funding Level is not reached, then new dollars appropriated above BFM will be focused on the least adequately funded districts. • The Minimum Funding Level is not a guarantee that no district will ever lose money. All districts, not just the least well-funded, need to advocate for the state to fully fund education each year as the budget is negotiated.

22. WHAT OTHER PROVISIONS WERE INCLUDED IN THE BILL?

23. Other Provisions • Property Tax Relief Fund A mechanism for high tax districts to receive grants to lower their property taxes. Districts apply for the grants. Districts above a certain threshold will be eligible for tax relief. The threshold will be determined by the amount appropriated and the amount that districts apply for (districts are limited to apply for a 1% percentage point drop in taxes each year). • Mandate Relief Allows a school board to determine the frequency of PE as long as it is a minimum of 3 days per 5-day week. Allows districts to exempt on a case-by-case basis 7th– 12th grade students who participate in sports. Allows districts to contract with a third party for Driver’s Education. Provides a “streamlined” process for mandate waivers.

24. Other Provisions • Minimum Funding Level The minimum amount of funds to be appropriated and maintain the allocations across all four Tiers is $350m. Up to $50m of that minimum may be applied to the Property Tax Relief Fund. If the Minimum Funding Level is not reached annually, Tier 1 allocation rate changes according to a formula and all resources are directed to Tier 1. • No More Individual Ed Fund Tax Rate Limit for PTELL Districts Eliminates the individual education fund tax rate limit for districts under PTELL as long as the aggregate limiting rate is not exceeded.

25. Other Provisions • Voter Initiated Referendum to Lower Levy Allows 10% of voters in districts above 110% of adequacy to petition for a referendum to reduce taxes for educational purposes up to 10%. Petition must be filed at least 6 months before the consolidated election. Referendum is only in odd number years at the consolidated election in April. May not be repeated until after two future consolidated elections (effectively once every 6 years). • Tax Credit/Scholarship Program Creates a 75% tax credit for individuals who contribute to a qualified not-for-profit organization. Scholarships are for students attending private schools and various bands of poverty impact the amount of award. Scholarship resources are given to the school and the school develops the scholarship program within the guidelines of the law. All partners opposed these provisions.

26. WHAT DATA AND TRANSPARENCY REQUIREMENTS DOES SB1947 HAVE?

27. ISBE DATA COMMUNICATION REQUIRMENTS TO DISTRICTS • School Report Card information: • Final % of Adequacy • Local Capacity Target (%) • Real Receipts (%) • Adequacy Target • With the costs and FTE for each of the 26 elements • Base Funding Minimum (not specifically mentioned in legislation, but required to confirm the items below) • Total state funds from Base Funding Minimum and new distribution that are allocated for: • Students with disabilities • Bilingual or EL services

28. ISBE DATA COMMUNICATION REQUIRMENTS TO DISTRICTS • Net State Contribution Target (the gap between the Adequacy Target and Final Resources calculated in the formula) • EBM Distribution payable in FY18 • Through the Tier in which each district is placed based on the formula in FY18.

29. DISTRICTS REPORTING REQUIREMENTS TO ISBE • Annual Spending Plan • Submitted by the end of September as part of the annual budget process • Identify how funds will be allocated for • Low Income • Special Education • English Learners (Note: Funds from the BFM and EBM distribution for these three areas must be expended for these functions) • How funds will contribute to student growth (ESSA) • How funds will contribute to ISBE education goals

30. HIGHLIGHTS OF NEW FORMULA • School funding tied to those evidence-based best practices the research shows enhance student achievement.    • Each school district is treated individually, with an Adequacy Target based on the needs of its student body. The greater the student need, the higher the Adequacy Target. • New dollars go to the neediest districts first—those furthest from their Adequacy Target.  This will close the gaps in funding that exist in our current system. • Chicago students receive parity to every other school district in the state by getting rid of Block Grants and reconciling pension payments. • No district loses money.No exceptions. The starting point is the amount of funding the district has this year.  All new state funding going forward is on top of what districts currently receive.  • Provides a long-term fix for our state’s worst-in-the-nation school funding formula.

31. Senate Bill 444 • SB 444 codifies what we believed was the intent of the drafters for Tier funding prior to bill passage • Without SB 444, local resources in Districts with enterprise zone abatements and PTELL EAV adjustments are artificially inflated because it looks like they have money that they don’t really have • ISBEunderstandingof the intent of the statute was that districts’ local resources should reflect what they actually get, not what it looks like they get • To ISBE, this is a matter of fair distribution of Tier money to Districts based on need, which is determined by local resources • Current language is not reflective of the models we ran when we modeled the statute prior to passage* * Special acknowledgment

32. Pension Reform

33. Pension Reform • Where are we? • Where have we been? • Where are we going? • What can we expect?

34. Pension 2017 • Beginning with the 2017-2018 contract year, SB 42 created a modified cost shift for those Tier 1 TRS members whose TRS creditable earnings exceed the governor’s salary (which is currently published as $177,412).   • For example, if a Tier 1 TRS member’s creditable earnings is $185,000, take the difference between $185,000 and $177,412, which equals $7,588. TRS will take $7,588 times the normal cost (which ranges between 12% and 8%, so for ease of computation, let us use 10%), so $7,588 x .10 = $758.10. The School District would receive a bill from TRS and be obligated to pay $758.10 to TRS on behalf of that Tier 1 member.

35. Pension Reform 2017

36. Laws of 100th GA

37. Laws of 100th GA • HB 3059 (P.A. 100-0147) • Daily Average Attendance By Grade Level • SB 81 (P.A. 100-0008) • Educator Licensure – CTE • HB 3689 (P.A. 100-014) • Racial Bias Training • HB 656 (P.A. 100-0340) • TRS Federal Fund Rate

38. Laws of 100th GA • HB 2369 (P.A. 100-0029) • Breastfeeding Area in Schools • HB 3215 (P.A. 100-0163) • Feminine Hygiene Products • HB 2442 (P.A. 100-0007) • College Entrance Exam Test Day • SB 757 (P.A. 100-0222) • Student Transcript

39. Teacher Shortage • Teacher Shortage • Issue Identification • Pipeline to Teacher Licensure • Recruitment/Retention • Preparation

40. Other Legislative/Political Issues • Fair Share/Supreme Court • #MeToo/Sexual Harassment/Investigations

41. ESSA Balanced Accountability Measure

42. Where did IBAM Originate? • Vision 20/20 – Accountability Subgroup • Illinois Quality Framework • IDAM – IBAM • Legislation – HB 2683

43. ESSA – Accountability • States must develop a system that will “meaningfully differentiate” schools • Exemplary • Commendable • Underperforming • Lowest Performing

44. ESSA – Statutory Indicators • K-8 Requirements - 75% • Proficiency on State Assessment • ELA – 19% (7.5%) • Math – 10% (7.5%) • Science -0% (5%) • Growth on State Assessment (50%) • English Language Proficiency (5%) • High School Requirements – 75% • Proficiency on State Assessment • ELA – 19% (7.5%) • Math – 10% (7.5%) • Science -0% (5%) • Graduation Rates – (50%) • English Language Proficiency (5%)

45. ESSA – “Other” Indicator • K-8 Other Indicators – 25% • Chronic Absenteeism (10%) • Student, Parent, Teacher and Administrator Voice (5%) • Fine Arts (0%) • Elementary/Middle School Readiness Indicator (5%) • P-2 Indicator (5%) • High School Other Indicators – 25% • Chronic Absenteeism (7.5%) • 9th Grade on Track (6.25%) • College and Career Readiness (6.25%) • Student, Parent, Teacher and Administrator Voice (5%) • Fine Arts (0%)

46. ESSA State Plan

47. IBAMC – Quality Framework • Quality Framework for Illinois School Districts • Standard I: Continuous Improvement • Standard II: Culture and Climate • Standard III: Shared Leadership • Standard IV: Governance, Management and Operation • Standard V: Educator and Employee Quality • Standard VI: Family and Community Engagement • Standard VII: Student and Learning Development • Passed IBAM and Recommended for Adoption by ISBE – August 30, 2016

48. IBAMC – Quality Framework Rubric • Rubric is in validation process/pilot

49. Contact Information • Sara Boucek, Associate Director/Legal Counsel • Email: sboucek@iasaedu.org • Mobile: 217.781.4877 • Work: 217.753.2213