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August 27, 2002

Cut Property Taxes, Increase State Support for Schools, Education Funding Board Says

The state’s Education Funding Advisory Board recommends a substantial reduction in local property taxes, a sizable increase in state support for schools and adding incentives to encourage school consolidation.

EFAB members hammered out the recommendations in Springfield Tuesday after more than two years of deliberations and extensive discussions by work groups looking in-depth at problems with the school funding system. The group will hold three public hearings around the state to get comments and suggestions before submitting the final report to the Governor and General Assembly in January.

“The problems with school funding have been studied since I began my education career in Illinois forty years ago,” said Robert Leininger, EFAB chair and a former State Superintendent of Education. “Every study has shown we are too dependent on local property taxes and the state is not paying its fair share in supporting our schools. Illinois ranks near the bottom of all states in terms of the percentage of school funding from the state.”

“We don’t need more studies to tell us the Illinois school funding system needs fixed. These recommendations are designed to provide the framework to fix the school funding system. We want comments and suggestions, but we strongly believe that it is time that all policymakers stand up for the future of this state by acting to fix the way Illinois funds its schools.”


EFAB proposes that local property taxes for education be cut by 25 to 50 % and replaced dollar-for-dollar by the state. Illinois property owners pay about $9 billion in property taxes for education, so property tax relief would be between $2.25 billion to $4.5 billion. No school would lose money or access to property tax support under the EFAB plan, since the state would replace the decreased property taxes dollar-for-dollar.


EFAB recommends that General State Aid be increased to support a Foundation Level within the range of $5,665 to $6,680 per pupil – an increase from the present level of $4,560. The proposed level is based on studies of the spending practices of successful and efficient school districts. A variety of revenue replacement options were suggested by EFAB. Much could be generated by raising the income tax rate, closing loopholes and graduating exemptions. The sales tax rate could be reduced while providing additional revenue by broadening the tax base.

In addition, the recommendations call for the elimination of hold harmless and reinstatement of the continuing appropriation to assure districts of funding stability. A Department of Human Services poverty count would be used for calculating poverty grants for districts, rather than the ten-year census count.

The combination of property tax relief and state revenue increases assures that the state will provide the majority of funding for elementary and secondary education.


Unit districts are the preferred school district organizational structure with high schools enrolling a minimum of 250 students, according to EFAB. Rather than requiring schools to consolidate, EFAB recommends a reasonable approach by expanding the incentives for reaching these targets. Presently, the state has 893 school districts, 407 of which are units while 103 are high school districts and 383 are elementary districts. Having all unit districts would simplify the funding mechanism, increase equity among districts and provide efficiencies in the delivery of services.

To accomplish this reorganization, EFAB proposes that the current incentives be continued and additional incentives be added and that feasibility studies be required in all districts. If consolidation resulted in the need for a new building, EFAB proposes that the state fund 100 % of the cost of the building. In addition, a state implementation grant should accompany the reorganization and the new district should get a five-year exemption from the state designation system.

While many categorical programs remain unchanged, the recommendations provide for a new transportation formula and a study to combine special education funding sources. Combining some existing programs into block grants would increase the flexibility for local school districts while reducing the paperwork necessary to receive state funds.

Other recommendations include a simplification and reorganization of school district accounting and reporting procedures through a reduction in the number of levies and accounting funds.

Illinois State Board of Education
100 North First Street
Springfield, IL 62777