Illinois Senate sends 'historic' education funding bill to governor

[August 30, 2017]  CHICAGO, Aug 29 (Reuters) - A bipartisan bill to fund public education in Illinois and start the flow of $6.7 billion in state aid to its 852 school districts cleared its last legislative hurdle with Senate approval on Tuesday.

The 38-13 vote followed House approval of the measure on Monday. The bill now heads to Governor Bruce Rauner who has hailed it as historic education reform for primary and secondary public schools.

The bill ensures that no district would lose funding under the new formula aimed at reducing funding disparities among wealthy and poor districts, while providing an additional $450 million for the cash-strapped Chicago Public Schools (CPS).

The measure also creates a tax credit pilot program to fund $75 million annually for private school scholarships, which teachers unions derided as an effort to introduce school vouchers to Illinois.

"This is what compromise looks like - a bill that none of us likes at 100 percent," said Democratic State Senator Kimberly Lightford, during Senate debate on the legislation.

The Republican governor had used an amendatory veto to extensively rewrite a previous school funding formula bill passed by the Democratic-controlled legislature in May that he said unfairly bailed out CPS at the expense of all the other school districts. Without a method to distribute state aid, Illinois was prevented from sending state payments to schools as classes began for most this month.

Illinois Comptroller Susana Mendoza said her office is prepared to send an estimated $540 million in August payments to schools within days after the bill is signed into law.

Credit rating agencies had warned that districts that have slim reserves and are heavily dependent on state aid, including the junk-rated CPS, could face financial pressure and potential rating downgrades from an extended school funding impasse.

Under the bill, CPS, the nation's third-largest public school system, would receive a $111.5 million funding boost, as well as financial help for its teachers' retirement system through a higher state contribution of $221 million and a property tax hike. Unlike Illinois' other school districts, which participate in a statewide teachers pension fund heavily subsidized by the state, CPS has its own retirement system that gets minimal state financial support.

Moody's Investors Service put the district's B3 rating under review last month for a possible downgrade into the highly speculative Caa level, citing financial stress due to late or uncertain state funding. (Reporting by Karen Pierog; Editing by Andrew Hay and Matthew Lewis)

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