Illinois School Funding Reform Commission – Working Group Notes
TOPIC: Property Taxes
DATE: 01/03/2017
Commission Members and Staff in Attendance
- Rep. Bourne
- Rep. Crespo
- Rep. W. Davis
- Rep. Mayfield
- Sen. McConchie
- Secretary Purvis
-
Colleen Atterbury
Jessica Basham
Mike Hoffmann
James O'Brien
Gerson Ramirez
Sara Shaw
Bob Stefanski
Stakeholder Groups Represented
- Advance Illinois
- AIRSS
- EDGE
- ED-RED
- IASB
- IASBO
- IFT
- Illinois Special Education Coalition
- HSDO
- LEND
- NPR Illinois
- SCOPE
Guiding Questions:
o How should we calculate available local resources?
o How should we calculate local effort?
o How should we treat actual vs assumed tax rates? What is the effect of using one or the other?
o How do we treat/protect high rate, low wealth districts?
o How do we treat PTELL and the PTELL adjustment in formula reform?
o What is the fiscal impact of freezing assessments within the realm of school finance?
o Providing we agree on reasonable adequacy and distribution models, how do we also address
Illinois’ current status as the worst in the country with regards to the percentage of education
funding provided from state?
o How are property taxes affected and used in the Evidence-Based Model?
o How should we approach adequacy level and local effort? How are they related to one another?
Meeting Notes:
o Understand how property taxes work in the evidence based model
o Mike Jacoby (IASBO) presents “School Funding Commission Property Tax Working Group.”
o IASBO’s framework in presentation:
o How well funded is the district with an ideal equalized local tax effort?
o How well funded is the district with the current tax effort (Real Revenues)?
o How can we discount current tax effort based on ideal local and % of adequacy and
promote tax relief?
o IASBO’s EBM overview
o Seeks an adequacy target
o Considers how well the district is funded
o Looks at the local capacity of the district
o District holds onto how much the state already contributes
o Compares all of those variables to see what the adequacy gap is
o How the EBM would calculate the Adequacy Level:
o Adequacy Level = Local Funding + Current State Funding
Adequacy Target
o In EBM the use of effort index would calculate how much a district can contribute
o 3-year average of EAV
Adequacy Target
o The local capacity target is an ideal effort that is actualized across the state
o In EBM model, districts with high capacity would likely be more proportionally
responsible for funding towards adequacy. The districts with lower capacity would
likely be more dependent on the state and less on local effort in order to reach that
capacity target.
 Point of clarification, no district would be expected to pay 90% their cost
o In EBM the adequacy target can be capped at 90%, assuming some federal funding
o The EBM model does not take into account transportation costs. The need to talk
more about transportation funding was understood and noted as a topic of
discussion for the following day’s larger commission meeting.
 Specific question raised on whether a district should be able to be funded at
90% and also receive transportation funding
o How to calculate local capacity
o In EBM, the Local Capacity Target (LCT) provides a target that represents the
amount each district should contribute locally
o Districts that tax at high rates get the biggest adjustment of real revenue towards
their LCT.
o Districts that are taxing below their local capacity target are still responsible for a
little more local effort. The goal is to get those districts at least to the minimum
level of local effort.
o Calculating Local Capacity begins with finding the Effort Index, then converting the
effort index into Local Capacity Target.
o Clarification that the EBM model does not require any district to increase or
decrease its taxes. The formula will just assume that the local effort would be met,
but does not require the district to pay that amount. Under the EBM it would be up
to the district whether or not to pay their full capacity.
 Some question of if there is a possibility of having a district that believes its
capacity rate given would be unfair. Under the EBM, theoretically it would
be fair because it is based on each district’s ability to pay.
 What happens if the district is capped but according to the model it has a
higher capacity to pay? The district would have to go to referendum to see if
the community members would vote to pay more or less.
o The EBM looks for the ideal capacity that the district should be responsible for
providing. It can be through what the district choses, property taxes, fees and other
sources.
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Likely that the only meaningful source of revenue is property taxes in this
context. However, it is understood that the EBM model is being studied
under current statute and not with the intent of changing it. If tax policy
were to change, the model would change accordingly.
Reporting a clear message to constituents
o There needs to be transparency in the framework and reporting on how the formula
works.
o There should be a clear message and breakdowns of the funding formula to the
public.
The state will not enforce spending caps
o Some districts would want to spend more money than their adequacy target, and
they have every right to
o Adequacy target may not be the same thing as a community’s definition of what
makes for an excellent education for their children
How does the property tax conversation change when using adequacy targets?
o Understanding that the state is picking up their role by adding additional dollars
may help.
Questions on the mechanics of finding the effort index for each district
o Normal distribution curves
Concern of how a property tax freeze will affect the funding formula
o Freezing property taxes would mean need for more state contribution.
If the legislator does not agree with the local capacity target and wants to increase or
decrease, the EBM can run the numbers on how that would impact the formula.
o Changing what the local capacity is for the district may mean more money is coming
from the state.
ISBE has the language to understand two bills that were proposed in 2016 that included
EBM models. Senator Lightford, Representative Davis, and Senator Barickman had bills that
included an EBM model.
o Understanding how bills would run is important to commissioners so they can see
how each one would impact districts.
o It is not anything developed in the Illinois School Funding Reform Commission.
o ISBE would share the updated language to the larger commission and working
groups.
o The language would help the commission understand where there is consensus.
Senator Dan McConchie will report to larger Commission on the Property Tax Working
Group.
The full commission meeting will include a report out on working groups, mandate reliefs
and how transportation works within the current system. The follow-ups will be cleared in
the larger commission meeting.