School funding stretched thin as costs rise, corporate revenue source shrinks

SPRINGFIELD – Despite a $350 million increase in base funding for public schools this year, Illinois is falling further behind in its quest to bring all school districts up to adequate funding levels.

That’s according to new data from the Illinois State Board of Education, which announced Friday the details of how it will distribute $9.3 billion in Evidence-Based Funding dollars for public schools.

For the third consecutive year, the number of districts being funded at or above 90% of their “adequacy target” will fall while the overall “adequacy gap” — the amount of additional money it would take to bring all districts up to full adequacy — will increase.

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According to the new distribution figures, only 292 of the state’s 850 elementary, high school and unit school districts will be funded at 90% or more of their adequacy target in fiscal year 2027, down from a peak of 327 in fiscal year 2024.

And the overall adequacy gap this year will total $6.8 billion, up from $4.8 billion three years ago.

State Superintendent of Education Tony Sanders said that’s primarily due to three factors: rising costs; a decline in one source of corporate tax revenue; and an increase in the number of students identified as “low-income.”

Those factors aside, however, Sanders insisted the Evidence-Based Funding formula is serving its purpose.

“Every school district has received more school funding each year since EBF was enacted,” he said Friday during a media briefing about the numbers. “In other words, EBF is working.”

Outside factors

Sanders said one of the biggest factors affecting school funding is a rapid decline since 2024 in a revenue stream known as “corporate and personal property replacement tax,” or CPPRT. That’s a tax the state began levying in 1979 on certain business entities. It replaced a tax on personal property such as machinery and equipment that was phased out under the 1970 Constitution.

The revenue is collected by the state but distributed to local units of government, including school districts, that used to receive personal property tax revenue. It is used in the EBF formula to calculate how much revenue a district is able to raise on its own and, thus, how close it is to meeting its adequacy target.

CPPRT revenue spiked between 2022 and 2024 amid the hyperinflation that occurred immediately following the COVID-19 pandemic, which was a boon for school districts that receive that money. But it has dropped precipitously since then, resulting in many districts moving further away from their adequacy target, Sanders said.

He also cited rising labor costs as another factor affecting schools. That includes increases both in the salaries teachers are paid and the number of teachers employed in Illinois schools.

“This data demonstrates that in Illinois we are paying our teachers better, which we need to be doing,” he said. “The increases in salary costs, though, do push districts further away from adequacy.”

Finally, Sanders said, the state started using a new method this year of counting low-income students in each district. That matters under the EBF formula, he said, because students from low-income households typically need more resources and therefore cost more to educate.

Moving target

Sanders said the EBF formula is designed to take into account changing circumstances like rising costs and demographic shifts. As a result, each district’s adequacy target is always a moving figure.

The net effect of all the changes this year, he said, is that most districts moved further away from their adequacy target, as did the state as a whole.

According to the data, the total statewide adequacy target this year — the total of all local, state and federal revenue it would take to adequately fund all schools in Illinois — grew $2.4 billion this year, to $31.5 billion.

“Let me reemphasize, though, that this is how EBF is designed to work,” Sanders said. “It is responsive to changing resources and increasing student needs.”

Robin Steans, executive director of Advance Illinois, an education advocacy group that pushed for passage of the EBF formula in 2017, agreed that the formula is working and that schools are still far ahead of where they were before the adoption of EBF.

“There is still more dollars available, particularly for all districts and for districts that are in the most need,” she said. “And we’re closing equity gaps as we go. It’s just we got an artificial bump (from CCPRT) and now that artificial bump is going away.”

But Stacy Davis Gates, president of the Illinois Federation of Teachers and the Chicago Teachers Union, said in a statement that the figures show lawmakers need to put more money into the formula above the minimum $300 million per year called for in the statute just to keep up with rising costs.

“Today’s report should serve as a wake-up call,” she said. “A child entering kindergarten today will graduate from a high school that is still underfunded. Our students are about to report to crumbling buildings, without the food, special education support, and transportation that they need to meet the minimum of a functional school day, let alone the quality school day our students deserve.”

Sanders, however, said he does not intend to ask lawmakers for larger annual increases.

“The state board of education’s commitment has always been to request the $300 million that statutorily requested for evidence-based funding,” Sanders said. “It’s really a function of the General Assembly and the governor to determine if there’s additional resources that could be put towards public education. But we will continue our annual ask of $300 million in tier funding every year.”

The other $50 million that’s part of the annual increase goes to property tax relief grants.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.