1 The Educational Funding Advisory Board (EFAB)-What Does the Future Hold? Illinois ASBO Conference May 19, 2011

2 Our Panel and Topics Jim Fritts, NEIU, Moderator –History of EFAB –Overview of 2011 recommendations Mike Jacoby, Executive Director, IASBO and member of EFAB Advisory Committee –A future approach to defining “adequacy” –The costs and outlook for the “double whammy” Linda Riley Mitchell, Chief Financial Officer, Illinois State Board of Education –The effects of increasing poverty on foundation aid –EFAB agenda and schedule for the next round –Overview of FY12 budget and its legislative status Audience questions and suggestions

3 Statutory Requirements for EFAB Illinois School Code: 105 ILCS 5/ (1997) Consists of five members from education, business and the general public, appointed for four years by Governor with advice and consent of the Senate. EFAB shall make recommendations … for the foundation level …and for the supplemental general state aid grant level … for districts with high concentrations of children from poverty. The recommended foundation level shall be based on a methodology which incorporates the basic education expenditures of low-spending schools exhibiting high academic performance. EFAB is a continuous body, to report to the General Assembly in January of odd-numbered years.

4 Current EFAB Members Sylvia Puente - Chicago, Executive Director, Latino Policy Forum Dean Clark - Glen Ellyn, Graphic Chemical and Ink Co. Arthur Culver - Champaign, Superintendent, Champaign Unit District Ed Geppert Jr. - Westmont, President, Illinois Federation of Teacher Ken Swanson - Springfield, President, Illinois Education Association Assisted by ISBE staff members and an Advisory Committee drawn from professional associations, school reform groups and finance scholars.

5 Based on the successful school district model of defining “adequacy” Methodology in model: –Select a sample of successful and efficient school districts Low-income percentage close to state’s mean State test percentages at 67% or higher proficiency District spends below predicted level Calculate a base level of support based upon districts meeting both success and efficiency criteria A problem has been the small number of districts that meet these criteria EFAB’s methodology and data build on a 1990’s study, but newer achievement measures and financial methodology exist. Testimony to EFAB in 2010 suggested using research-based actual average costs. Switching methodology may require future legislation. EFAB Methodology

6 History of EFAB Recommendations Initial report in January 2001 (FY02)-the only FLEVEL implemented –$135 increase to $4,560 – Lower poverty threshold to 15% Interim report in January 2002 (FY03) –$120 increase to $4,680 – New poverty count and formula Comprehensive report in October 2002 (FY04) –$1,105 increase to $5,665 –New poverty count and formula, (which were implemented.) –Property tax abatement and income tax increase to fund formula changes Report of May 2005 –$1,441 increase to $6,405 –Apply the Employment Cost Index (ECI) to the Poverty Grant Formula Governor Blagojevich made no appointments to EFAB. EFAB began meeting again in July 2009, and submitted its most recent report in January 2011.

7 January 2011 EFAB Report-I The report stated 4 guiding principles for the future. –A Foundation Level sufficient to provide a comprehensive high quality education for all students. –A reliable, predictable, timely and accurate funding stream for the State’s share. –Sufficient, reliable categorical and targeted funds from year to year for poverty, ELL, special ed, early childhood, transportation etc. –Reduce disparities in funding and programs in order to achieve functional equity for all children.

8 January 2011 EFAB Report-II A Foundation Level of $8,360 to inform the ISBE budget process. –ISBE used $6,416 in its first budget recommendation for FY12. –The Foundation Level gap is now almost $2,000 below the EFAB figure Raise the Poverty Grant formula –From $355 to $472 per poverty pupil at the low end (15% poverty) –From $2,994 to $3,981 at the maximum poverty level Included testimony on rising costs of poverty grant and “double whammy,” and on a future methodology for defining “adequacy”

9 Our Panel and Topics Mike Jacoby, Executive Director, IASBO and member of EFAB Advisory Committee –The costs and outlook for the “ double whammy ” –A future approach to defining “ adequacy ”

The Costs and Outlook for “Double Whammy” What is the Double Whammy? –An adjusted EAV for the GSA formula created in 2000 –Intended to “compensate” for the loss of access to local EAV due to declining tax rate as a result of PTELL How many districts are impacted? –460 PTELL Districts –365 (79%) in Double Whammy –Including Chicago Public Schools 10

What Does it Cost? Historical Costs: 2000 (97)$45,998, (255)$52,163, (353)$101,536, (292)$199,137, (299)$205,203, (299)$357,331, (353)$580,582, (326)$624,097, (307)$805,472, (348)$789,022, (296)$792,666, Downstate: $349,130, 236 Chicago: $443,536,335

Relationship of Cost Components in GSA Formula (Tax Payer’s Federation)

Potential Policy Issues for Future Eliminate Reduce (SB 629 – 65% Floor) Change Formula (ISBE discussion) –Eliminate use of actual district tax rate in the formula (addresses the multiple county issues) 14

Measuring Adequacy Current EFAB Model – “Successful School Model” Alternative Approach – “Evidence Based Model 15

Evidence Based Adequacy (National Lewis University Study) See Latest Article in The Journal of School Business Management. –Key Factors: Adequacy based on standard program using –Actual student demographics »Inclusive of most catgoricals –Local salary index –Regional cost differences –Based on current research (“evidence”) »Class size, school size, effective programs, etc. 16

State-Wide Study Findings Requires 16% increase in state funding Many schools currently exceed recommended per pupil allocation Proposals: 1.$12,572 Foundation (inclusive of poverty, not including severe and profound disabilities) 2.$10,856 with separate $1,716 for poverty 3.5 Year Phase-in approach 17