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Fact check: Does Chicago Public Schools receive $500 million less than their enrollment dictates?

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June 16, 2017
By Sara Reynolds

Chicago Public Schools (CPS) has sought $215 million in state funding to close recent budget deficits. Governor Bruce Rauner has conditioned that any additional funding on a budget deal in the legislature includes changes to the Illinois public pension system. CPS chief executive Forrest Claypool claimed, "Gov. Rauner continues to fund schools in the predominately white portion of Illinois while providing CPS students, who are 90 percent of color, with $500 million less than their enrollment dictates."[1]

Does CPS receive $500 million less than their enrollment dictates?

No. State funding for local school districts in Illinois is not based on enrollment per se. Even so, CPS received more state education funding per student in fiscal year (FY) 2016 than the median for all other districts in the state. CPS can be said to have received less state funding than other districts only if state contributions to teacher pension systems are counted, but that is because CPS funds teacher pensions differently than other districts in the state.[2][3][4][5]

Background

Earlier this year, five families and the Chicago Board of Education sued the state alleging that state public education and teacher pension funding systems violate the Illinois Civil Rights Act of 2003. Under the act, the state may not "utilize criteria or methods of administration that have the effect of subjecting individuals to discrimination because of their race, color [or] national origin…"[6] On April 28, Cook County Judge Franklin Valderrama dismissed the lawsuit, but CPS filed an amended complaint on May 19.[7] The amended complaint reiterates CPS' allegation that the state’s education funding is discriminatory.[8]

In December, Gov. Rauner vetoed a bill that would have provided CPS an additional $215 million for its teacher pension fund, stating that funding for CPS pensions must be tied to changes in pension systems "across the state" and an end to Illinois' budget impasse that has existed since June 2015.[9][10][11]

The Illinois General Assembly passed Senate Bill 1 (SB 1) on May 31. SB 1 would increase state funding for local school districts and would provide additional funding to CPS, including $215 million in allocations to the Chicago Teachers' Pension Fund for FY 2017. The bill has not yet been sent to Gov. Rauner, who told the Chicago Sun-Times that he would not sign it in its current form.[12][13][14]

The City of Chicago School District 299, also known as Chicago Public Schools, is the largest school district in Illinois and the third-largest in the U.S.[6][15] In the 2016-2017 school year, CPS served 381,349 students. Forty-seven percent are Hispanic and 38 percent are African American. According to CPS, 80 percent of its students are economically disadvantaged.[16]

CPS had a $1.1 billion deficit in FY 2016 and a $300 million deficit in FY 2017.[17]

State funding

General State Aid (GSA) made up 68 percent of state funding for school districts in FY 2016.[18][19] GSA funding comes through two grants, neither of which is based solely on school enrollment. Under the Equalization Formula Grant, funding is allocated to balance differences between districts in the amount of property tax revenues generated for local schools. The Supplemental Low-Income Grant provides additional funding for districts with a higher proportion of low-income students.[20]

The state allocated a total of $6.5 billion to school districts in FY 2016—not counting the state’s pension contributions.[2] CPS received $1.5 billion, equal to 23 percent of total state funding, while serving 19 percent of all Illinois public school students.[21][22][2]

The $1.5 billion from the state equates to $4,379 per CPS student, compared to a median of $3,140 per student across all other school districts. (That means CPS received $1,239 more per student than the statewide median.)[2]

According to data compiled by the Illinois Policy Institute, which describes itself as an independent organization that "focuses on economic liberty and free market principles," CPS has similarly received a larger proportion of state funding relative to its share of statewide student enrollment for at least 10 years.[23][24]


Illinois teacher pensions

There are two teacher pension systems in Illinois: the Teachers' Retirement System, which serves all districts except CPS, and the Chicago Teachers' Pension Fund, which only serves teachers in Chicago.[25] Each is funded by contributions from the school districts and employees, the state, and investment income.[26][3]

The largest funding source for the Chicago Teachers’ Pension Fund is property taxes from Chicago residents, collected by the school board and city. State lawmakers recently agreed to institute an additional property tax levy in Chicago estimated to bring in an additional $250 million per year for teacher pensions.[27][3]

State law requires that teachers and school districts contribute a combined 9 percent of employee salary, though the exact split varies by district. CPS picks up 7 percent of that contribution to the Chicago Teachers’ Pension Fund, while teachers pay the remaining 2 percent.[28][29][3]

CPS' employer contribution to the Chicago Teachers' Pension Fund was $676 million in FY 2016 and is estimated to be $721 million in FY 2017, 12 percent of CPS' total revenues for both years.[3][22]

In FY 2016, the state paid $3.7 billion to the other fund, the Teachers' Retirement System, representing 78 percent of the Teachers' Retirement System's total revenues that year.[30][4]

The Illinois General Assembly set a goal to also contribute to the Chicago Teachers’ Pension Fund the equivalent of 20 to 30 percent of the annual contribution it makes to the statewide Teachers' Retirement System, although it is not required by law.[31] Toward that goal, the state contributed $12 million to the Chicago Teachers' Pension Fund in FY 2016.[3]

Over two recent periods, from 1996 to 2005 and 2011 to 2013, the Chicago Public Schools district halted annual pension contributions and diverted those funds to its operating budget.[32] CPS redistributed $2 billion between 1996 and 2005, and $1.2 billion from 2011 to 2013.[33]

The Chicago pension fund went from nearly fully funded in 2002 to 52 percent funded in 2016, amassing an unfunded pension liability of $9.6 billion.[33][34] Based on details included in the lawsuit, Claypool’s claim that CPS received $500 million less than enrollment dictates was derived from a calculation that included state contributions to the Teachers' Retirement System and the Chicago Teachers' Pension Fund.[6]

Historical data analyzed by the Illinois Policy Institute shows that in some years, CPS did receive less per student than the statewide average ($4,379 compared to $5,913) if teacher pension contributions are included (although this was not the case as recently as FY 2013).[35]

Conclusion

Chicago Public Schools is urging Illinois Gov. Bruce Rauner to support legislation that would provide the district with an additional $215 million in state funding. Forrest Claypool, chief executive of the district, claimed, "Gov. Rauner continues to fund schools in the predominately white portion of Illinois while providing CPS students, who are 90 percent of color, with $500 million less than their enrollment dictates."[1]

Claypool’s claim is inaccurate. Under the state’s funding formula for education, enrollment is only one among a number of factors that determine each district’s funding. Even so, Chicago Public Schools received more state funding in FY 2016 than the median received by all other districts. Only when pension contributions are counted can CPS be said to have received less state funding than other districts.[2]

See also

Sources and Notes

  1. ↑ 1.0 1.1 The Bond Buyer, "Illinois Brinkmanship Over Public Pensions, CPS Funding," March 24, 2017
  2. ↑ 2.0 2.1 2.2 2.3 2.4 ILEARN Illinois Local Education Agency Retrieval Network, "Illinois State Board of Education: School Business Services Division (pdf)," accessed May 10, 2017
  3. ↑ 3.0 3.1 3.2 3.3 3.4 3.5 Chicago Public Schools, "Chicago Public Schools Fiscal Year 2017 Budget: Pensions," accessed May 17, 2017
  4. ↑ 4.0 4.1 Teachers' Retirement System of the State of Illinois, "Comprehensive Annual Financial Report for the fiscal year ended June 30, 2016," accessed May 10, 2017
  5. ↑ Chicago Teachers' Pension Fund, "Public School Teachers’ Pension and Retirement Fund of Chicago Actuarial Valuation and Review as of June 30, 2016," October 27, 2016
  6. ↑ 6.0 6.1 6.2 Illinois Cook Judicial Circuit Court, Board of Education of the City of Chicago v. Bruce Rauner, Governor of Illinois, February 14, 2017
  7. ↑ Law360, "Chicago Schools Try Again On School Funding Lawsuit," May 23, 2017
  8. ↑ Illinois Cook Judicial Circuit Court, Board of Education of the City of Chicago v. Bruce Rauner, Governor of Illinois, May 19, 2017
  9. ↑ Illinois General Assembly, "Full Text of SB2822: Governor's Message," December 1, 2016
  10. ↑ The Wall Street Journal, "Illinois Budget Woes Stir Businesses to Action," December 27, 2016
  11. ↑ ABC7, "Gov. Bruce Rauner vetoes overhaul of Chicago city pension system," March 24, 2017
  12. ↑ Illinois General Assembly, "Bill Status of SB0001," accessed June 15, 2017
  13. ↑ Chicago Tonight, "How SB1 Would Rewrite Illinois’ Broken Education Funding Formula," June 7, 2017
  14. ↑ Chicago Sun-Times, "Rauner won’t sign education funding reform bill with $300M for CPS," June 1, 2017
  15. ↑ Ballotpedia, "Chicago Public Schools, Illinois," accessed April 20, 2017
  16. ↑ Chicago Public Schools, "CPS Stats and Facts," accessed April 20, 2017
  17. ↑ Chicago Public Schools, "Chicago Public Schools Fiscal Year 2017 Budget: Budget Overview," accessed May 12, 2017
  18. ↑ Funds for programs such as free lunch, special education, and transportation made up 25 percent of statewide district funding. The remaining 7 percent of general funds went towards early childhood education, bilingual education, and other programs.
  19. ↑ Illinois State Board of Education, "FY 2017 Budget," accessed June 2, 2017
  20. ↑ Illinois State Board of Education, "General State Aid: An Introduction to the Basics," Fall 2016
  21. ↑ Funding figures vary slightly by data source. The Illinois State Board of Education reported that CPS received $1.5 billion in state funds, but CPS reported that it receive $1.6 billion.
  22. ↑ 22.0 22.1 Chicago Public Schools, "Chicago Public Schools Fiscal Year 2017 Budget: Revenue," accessed May 12, 2017
  23. ↑ Illinois Policy Institute, "Frequently asked questions," accessed May 25, 2017
  24. ↑ Data independently verified by Ballotpedia. Illinois Policy Institute, "Chicago students receive more state funding than the average Illinois student," April 7, 2016
  25. ↑ Chicago Public Schools, "Chicago Public Schools Fiscal Year 2016 Budget: Pensions," accessed June 5, 2017
  26. ↑ Teachers' Retirement System of the State of Illinois, "Tier I Member Guide," June 2017
  27. ↑ Property tax rates are set and collected by local governments. Sara Reynolds, "Phone communication with John Klingner, Illinois Policy Institute," June 15, 2017. See also Chicago Tribune, "Taxpayers hit again under Emanuel as CPS hikes property taxes," August 25, 2016
  28. ↑ Teachers' Retirement System of the State of Illinois, "Calculating Contributions," accessed May 17, 2017
  29. ↑ Teachers' Retirement System of the State of Illinois, "Contribution Confirmation," accessed May 17, 2017
  30. ↑ Local districts paid 0.58 percent of teacher salaries to the Teachers' Retirement System.
  31. ↑ State law does not require a state contribution of 20 to 30 percent, but rather says, "it is [the General Assembly's] goal and intention to continue this level of contribution to the Fund in the future." Illinois General Assembly, "Sec. 17-127. Financing; revenues for the Fund," accessed June 2, 2017
  32. ↑ Illinois Policy Institute, "CPS pensions: From retirement security to political slush fund," August 2015
  33. ↑ 33.0 33.1 Chicago Teachers' Pension Fund, "Pensions matter," accessed May 18, 2017
  34. ↑ Chicago Teachers' Pension Fund, "121st Comprehensive Annual Financial Report for the year ended June 30, 2016," accessed June 2, 2017
  35. ↑ Illinois Policy Institute, "Chicago students receive more state funding than the average Illinois student," April 7, 2016
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