Budget pressures could impact K-12 funding

[December 19, 2024]  By Peter Hancock

SPRINGFIELD – Public schools in Illinois have enjoyed several consecutive years of substantial increases in state funding, thanks largely to steady growth in state revenues and a new funding formula that lawmakers approved in 2018.

But whether that can continue into the upcoming fiscal year is an open question that state lawmakers will have to face when they return to the Statehouse in January.

With budget forecasters predicting flat revenue growth over the next year and continued demands for increased spending in other areas of the budget such as pension costs and health care, members of the Illinois State Board of Education were told Wednesday that they are now in a different fiscal environment.

“I do not envy anybody involved in that process because it won’t be a fun time,” Eric Noggle, revenue manager of the legislature’s Commission on Government Forecasting and Accountability, or COGFA, told the board.

COGFA is a nonpartisan agency that provides economic and budgetary analysis to the General Assembly. It operates independently of the Governor’s Office of Management and Budget, or GOMB, although the two agencies are often in agreement in their general findings and analysis.

In November, GOMB issued a report projecting a $3.2 billion deficit in the fiscal year that begins July 1, 2025. That was based on projections of essentially flat revenue growth of about $53.4 billion, and a 6% increase in spending due to statutorily required increases in things like pension contributions, Medicaid and state employee health care costs, and PreK-12 education.

In the current fiscal year, state spending on public schools totals just under $11 billion, or about 20% of the state’s $53 billion General Revenue Fund Budget.

Two factors are primarily responsible for the demand for increased state spending on schools. One is the 2018 funding formula, known as the Evidence-Based Funding model, that calls for annual increases of at least $350 million.

That law sets out a formula for determining what would be an “adequate” level of funding for each district based on factors such as total student enrollment, poverty rates, and the number of English language learners in the district. The adequacy target includes both state aid and money the district is able to raise on its own through local property taxes.

The law then directs that the new money each year be sent to districts that are furthest away from their adequacy target. The annual funding increases are supposed to continue until all districts reach at least 90% of their adequacy target.

But some advocates argue the state needs to increase its evidence-based funding by more than the minimum $350 million each year.

Illinois State Board of Education member James Anderson, left, listens to a presentation about budget challenges for PreK-12 education along with board members Laura Gonzalez and Patricia Nugent. (Capitol News Illinois photo by Peter Hancock)

“One thing that we know is that three out of four children in Illinois are still in underfunded districts. That’s more than 1 million students,” Jelani Saadiq, director of government relations for the advocacy group Advance Illinois, told the board during the public comment portion of its meeting Wednesday. “The latest school report card shows continued challenges with chronic absenteeism and lagging recovery in math. We need to set our schools up for success in addressing these challenges in the absence of federal stimulus funds by doubling down on our EBF investment moving forward.”

The other factor driving increases in public school spending is known as “mandatory categorical” spending, or MCAT, which includes such things as transportation costs, the state’s free breakfast and lunch program and the cost of educating children in foster care.

Andy Krupin, ISBE’s director of funding and disbursements, explained that the state often does not fully fund MCAT expenses and thus “prorates” the amount it reimburses districts for those expenses. The level of proration varies depending on how much the General Assembly appropriates in each category.

Based on the agency’s estimate of next year’s costs, Krupin said, the General Assembly would need to add another $142.2 million to its PreK-12 budget just to maintain the same level of proration as this year.

Combined with the $350 million increase called for under the EBF formula, that would be a total increase in PreK-12 spending of $492.2 million next year.

But ISBE has received requests for even more funding increases than that. During a series of public hearings on the budget in October, officials said, the agency heard numerous proposals adding up to about $2.2 billion in funding increase requests. Those included proposals for a $550 million increase in EBF funding and a $10 million increase in career and technical education funding, among other requests.

GOMB’s projection of a $3.2 billion deficit assumed a $444 million increase in school spending, as well as a $1.1 billion increase in health care expenses and a $437 million increase in pension contributions, among other increases.

State Superintendent of Education Tony Sanders is scheduled to submit his final budget proposal to the board for approval at the board’s Jan. 15 meeting. Pritzker is scheduled to deliver his budget address to the General Assembly Feb. 19.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.