Mon Dec 1, 2008 at 1:10 PMBy: Rod Estvan on calls for funding reform Monday Morning News, Part 2 I think it is a wonderful thing that groups of suburban and Chicago students have come together to form the Illinois Council of Students to fight for basic funding equity in Illinois schools. I also think that the Save Our Schools Now group sponsored by Senator Meeks is a very well meaning group with laudatory goals. But we are entering a completely new phase in our nation’s cyclical fiscal decline and that phase is marked by a dramatic decline in governmental revenues at the State and school district levels.

Ralph Martire the executive director of the Center for Tax and Budget Accountability (CTBA) has been discussing what he calls the structural crisis of funding for state and local governments for at least three years now. Among the many studies done by the CTBA are ones depicting the economic decline of the Illinois workforce and the declining median wage in our state. Overall everyone knowledgeable about this situation is calling for some type of income tax increase, but if the long term structural funding crisis in our state was distressing it has gotten much worse as of late.

On November 19 an obscure legislatively controlled body called the Illinois Commission on Government Forecasting and Accountability (CGFA) issued an updated FY09 revenue estimate report. This report states on page 28 the following:

“The FY 2009 budget was based upon revenues of $30.451 billion. As shown in the accompanying table, CGFA’s estimate of $29.109 billion is $1.342 billion less than those budgeted figures. In recent weeks, the Department of Revenue has indicated that receipts from income and sales taxes could fall $800 million to $1 billion short of budgeted amounts. CGFA’s latest estimate falls within that framework, as net personal, net corporate, and sales taxes comprise $828 million of the expected revenue shortfall. However, in addition to those items:

Interest income, due to much lower rates of return as well as investable balances is expected to continue to free fall and end the year $105 million under budgeted projections.

Riverboat transfers continue to suffer significant losses and should end the year approximately $177 million below budget estimates.

The sale of the tenth license was hoped to bring in $575 million, however, the current highest bid was $140 million less than that amount. While the bidding process is still ongoing, it would appear unlikely that the budgeted figure will be reached.

Other transfers will fall $124 million shy of budgeted amounts. All told, when the falloff in the most closely tied economic sources are combined with expected shortfalls in the other above lines, the total revenue shortfall climbs to $1.342 billion. Unfortunately, as recent history has taught us, improvement will not occur overnight, in fact, the effect of this recession will be felt for some time—with the worst perhaps to come in FY 2010.”

It appears inevitable that the state will not be able to increase what is called the General Student Aid formula for the next school year and may have to cut aid to CPS. Because of the Chicago Teachers Union Contract with its schedule of pay raises, the CPS pension fund obligations, outstanding debt, various administrative cost factors often discussed by George and others the school district will have to make cuts. If the state income tax is increased by either one or two percent it is unclear what the revenue realized by school districts will be given the increase in unemployment and decline in taxable income in our state. Given the reality of the recession, politically, right now income taxes increases will face significant opposition.

This leaves CPS and other school districts with the option of raising property taxes, but this is problematic given the fact that there has been a dramatic decline in housing values and even big projects like Trump Tower are in trouble, Trump is now very close to defaulting on $640 million construction loan made by a group of more than a dozen lenders led by Deutsche Bank AG further driving down values in downtown Chicago.

The CTU, Senator Meeks, groups like the Illinois Council of Students, not for profits involved in education reform at this time need to look very seriously at democratic decision making in relation to the budget cuts that are very likely to be coming. The grand scheme for education funding reform in our state is important, but of greater immediate importance will be how the likely cuts will be administered by CPS. Will Renaissance 2010 schools and programs be made immune from cuts, will the CPS consulting budgets be immune from cuts, will selective flagship schools be equally cut, will all busing services for optional programs be cut, will cuts again fall disproportionally on services for students with disabilities? These and numerous other questions need to be addressed by a wide spectrum of those involved in education. I can assure readers of this blog of one thing, Pedro Martinez is even now developing various doomsday fiscal plans for the school district. They are being developed behind closed doors and we need to open those doors before it is too late.

Rod Estvan
Access Living

Mon Dec 1, 2008 at 6:39 PMBy: xian Monday Morning News, Part 2 Or how about the board and city open up there massive coffers and grab the billions in educational dollars sitting in TIFs, the Capital Projects fund, the surplus and their phantom "other costs" line items? How about they actually provide the same funding opportunities for students attending the neighborhood schools instead of the current educational apartheid Rod references in his post?

I believe there is a crisis, but there's always some excuse why the charters and turnarounds deserve the needed resources and everyone else gets the scraps...