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 PolitiFact Illinois and the Better
Government Association, or BGA, have botched their fact-checking of Senate Bill
1, a bill that bails out Chicago Public Schools as part of a rewrite of
Illinois’ education funding formula.
The groups reject the idea that SB 1 is a CPS bailout, rating the claim “false,”
even though the bill is laden with clauses and funding that specifically benefit
the school district. Under SB 1, CPS receives funding that no other district in
the state gets.
SB 1 has garnered controversy as many, including Gov. Bruce Rauner, have said
the bailout is unfair to all the other districts in the state. In fact, Rauner
issued an amendatory veto of SB 1 on Aug. 1, stripping the Chicago bailout
provisions out of SB 1.
Politifact and BGA have simply misread the original bill or have ignored very
clear language that favors CPS. Either way, their fact-checking is flawed.
It’s a bailout
SB 1 prioritizes CPS in several ways. Taken together, these special items
constitute a bailout of the mismanaged district:
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CPS gets to keep $200 million
in block grant funding
The funding formula grandfathers in $200 million in funding for the unique
annual “block grant” CPS has received for 20 years – a grant no other
district in the state gets. CPS will continue to receive that extra $200
million in funding every year going forward. That amount is locked into the
district’s base funding amount under the new formula and protected by the
bill’s “hold harmless” provision.
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CPS can use its pension debt
to appear poorer, entitling the district to even more aid
SB 1 allows CPS to appear poorer than it actually is when applying for state
aid, granting the district even more funding. No other district gets to do
that.Currently, CPS contributes about $500 million annually to pay down its
unfunded pension liability. The new funding formula allows CPS to deduct
that $500 million from its local resources for education when it applies for
state aid. That makes CPS look poorer and helps ensure the district gets
more money from the state than it should.
CPS also will disproportionately benefit from these additional elements in SB 1:
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CPS can continue to hide
property wealth, entitling it to more state dollars
SB 1 allows Chicago to benefit from a set of rules that allow select school
districts to undervalue their property wealth so they look poorer than they
actually are.Districts whose revenues are affected by local property tax
caps (Property Tax Extension Limitation Law, or PTELL) and special economic
zones (tax increment financing, or TIF) are able to underreport their
available property wealth when applying for state aid under the new SB 1
formula, just as they can under the current formula.Chicago has a large
percentage of the state’s PTELL- and TIF-affected property, so it benefits
from this provision disproportionately. Again, this makes CPS look poorer
and helps ensure the district gets more money from the state than it should.
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CPS’ state funding will be
locked in despite its falling enrollment
Chicago will also be a major beneficiary of SB 1’s “hold
harmless” provision. This provision ensures that a district
cannot receive less in state aid funds than it did the previous
year. The provision protects a district’s state funding even if
it experiences changes in demographics, such as a drop in
student attendance that would have otherwise led to less state
funding.While many districts may be experiencing student
population loss, CPS is certainly in a major decline. The
district has lost more than 40,000 students since its peak in
2002. In 2016, the Chicago Tribune reported the district had
lost 11,000 students from the previous year.As Chicago’s
enrollment continues to drop, the “hold harmless” provision will
ensure the district gets more money than its enrollment says it
should.
In addition to all of the above, the
state will begin paying CPS’ normal pension costs going forward. SB
1 requires state taxpayers to give the district at least $215
million for CPS’ “normal” pension and health care costs – the
additional benefits Chicago teachers earn annually – every year
going forward. This puts the district on par with other districts
around the state.
On the whole, SB 1 favors CPS over every other district in the
state. That’s what makes it a bailout.
What PolitiFact and BGA get wrong
In their piece, PolitiFact and BGA ignore most of the carveouts CPS
gets under SB 1. They don’t mention CPS’ ability to deduct its
pension debt from its local resources. Or its ability to continue to
underreport its property wealth through PTELL and TIF.
And what they did highlight, they got wrong.
PolitiFact and BGA claim the block grant – the extra $200 million a
year the state grants Chicago – will be discontinued after 2018.
But that’s not true.
Under SB 1, CPS’ $200 million in extra block grant funding is folded
into the base funding guaranteed to the district under the new
formula. That base guarantee is protected by the bill’s “hold
harmless” provision, meaning the state can never give CPS less than
that amount.
So not only will CPS get at least $215 million in annual pension
dollars from the state every year going forward, but it will also
continue to receive the $200 million in block grant” funds that no
other district receives as well.
SB 1 gives CPS a bailout it doesn’t deserve
CPS’ financial woes are of its own making. Chicago officials have
spent 20 years mismanaging the district, skipping pension payments,
borrowing excessively and agreeing to unaffordable teacher
contracts.
Despite 20 years of failure, CPS has yet to learn from its mistakes.
District officials still refuse to consider enacting any structural
or financial reforms.
And why should they? Illinois lawmakers have a long history of
bailing out CPS at the expense of other districts. SB 1 is just the
latest example. State lawmakers are determined to bail out CPS with
state taxpayer dollars.
PolitiFact and BGA should get their facts straight. SB 1 is a CPS
bailout.
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