Education Part IV: Poverty Grant and PTELL Subsidy, Why Do They Matter?

“The State has the primary responsibility for financing the system of public education.”
Constitution of Illinois, Article X, Section 1

Robbing PeterUntil the turn of this century, the Foundation Level Grant was the primary component of state education support, and was for the most part an equitable and fair distribution formula. Its purpose is to assure that all schools have access to a basic “foundation” level of support deemed necessary to educate a child in Illinois.

By taking into account the property wealth of school districts, the Foundation Level Grant was intended to be a resource “equalizer,” the goal of which was to ensure students who happen to live in “property-poor” districts receive a base level of support. Until relatively recently, Chicago was a property-poor school district and was strongly protective of the formula. However, beginning in the 1990s, Chicago’s property values began to climb. Suddenly, the base formula that had benefited the City for many years was no longer as attractive.

This is why the poverty grant and PTELL subsidy matter. They take money away from what would earlier have gone into the foundation level grants of the general state aid formula, which are based solely on property wealth “equalization.” As a result, the formula designed to ensure school children in Illinois receive a quality education no matter where they live is being edged out in favor of convoluted policies and formulas.

There is less money available today for Foundation Level Grants than there was twelve years ago. Since 2000, the Foundation Level has been consistently reduced as a component of overall General State Aid. In contrast, two other General State Aid components that could be more targeted to the Chicago Public Schools have risen dramatically. From Fiscal Year 2000 to Fiscal Year 2012, total funding for Foundation Level Grants has actually dropped by 6%, while Poverty Grant funding has soared by 432% and PTELL Adjustments have grown by an astonishing 1,267%.

As you can see from the chart below, from FY 2000 to FY 2012, General State Aid for education has increased by $1.7 billion (57%), but the Foundation Level Grant, that fund which serves as the primary funding source for the overwhelming number of school districts in the state, has actually declined by $160 million (6%) over the same period of time.
State Aid Trends
Both the poverty grant and the PTELL subsidy are buried in the general state aid (GSA) line of the Illinois State Budget, and thus are understood by just a handful of Illinois lawmakers and policy analysts.

Given the natural cynicism that accompanies anything that goes on in Springfield, it’s hard to think that state legislators didn’t know that there would be tremendous growth in these two programs, and approved that growth at the expense of the original purpose of the GSA equalization grant.

For example, if the PTELL subsidy had been eliminated in 2009 and the money devoted to the equalization grants, the foundation level would have increased from $ 5,959 to $6,678, much closer to the assumed EFAB-recommended amount that year of $ 7,128.
The primary beneficiary of these changes in the school aid formula is the Chicago public school district. Sixty-four percent of the PTELL subsidy ($505 million) and 52 percent of the poverty grant ($582 million) went to Chicago schools in 2009.

Special education is another line item in the state budget that cries out for adjustment. Chicago receives a single block grant based on the ratio of special education costs in Chicago to those in the rest of Illinois in 1995. In 2009, that split generated approximately $9,100 per special education pupil in Chicago and only about $3,324 for every such pupil in the rest of Illinois’s school districts. In 2014, the Special Education District of McHenry County (SEDOM) was forced to close its doors because of a chronic lack of funding. Is it too much to think that if special education money was more equitably allocated throughout the state, this valuable resource might have remained open?

The inequities that have developed as more money is funneled to the Chicago Public Schools through the gerrymandering of the state aid formula has resulted in an ever-increasing deficit of funding in school districts outside the City. This has put a greater burden on homeowners, whose property taxes are becoming an ever greater source of ever-increasing school costs.

The situation is out of control, and must be resolved in favor of greater equity in funding to every student in the state. The state must accept its responsibility for its constitutional obligation for financing public education.

NEXT: Property taxes aren’t a bottomless well, and the well is dry.

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