Illinois Quad-City superintendents are worried part of Gov. Bruce Rauner's amendatory veto of a school funding reform bill will hurt their bottom line in the future, even as they face delays in state aid that is due this week.
Some school officials say the governor's changes to how property in tax increment finance districts figure into the formula for distributing state aid will mean less money for districts, including in the Quad-Cities.
"This would hurt us in a bad way," said East Moline Superintendent Kristin Humphries, a supporter of SB1, the school funding proposal state lawmakers passed in May.
The governor issued an amendatory veto of SB1 a week ago. Lawmakers now have until next week to act on the changes.
Rauner made a host of changes to the bill. But the argument over how limitations on property tax increases and tax increment finance districts should be accounted for when figuring state aid has garnered a lot of attention.
Currently, figuring out how much a district gets is based in part on how much property tax base it has. The law, however, excludes the incremental value in TIF districts from that calculation. There also are adjustments for counties that have used a section of the law, known as PTELL, which limits property tax increases within their borders.
The governor's office says this allows districts to under report the value of their property tax base, allowing them to push state aid higher. The governor's office says that Chicago benefits the most by this arrangement.
"Currently the PTELL and TIF divert millions in state subsidies from truly disadvantaged schools and instead go to districts that hide their wealth through these districts," the governor's spokesperson, Laurel Patrick, said. "This is fundamentally unfair and is in critical need of being addressed if we’re going to talk about true education funding reform."
Rock Island County hasn't taken advantage of the PTELL law that allows it to limit property tax increases. But there are several TIF districts in Rock Island County. In 2016, there was $197 million in incremental value in TIF districts in the county.
Superintendents say TIF districts, by their nature, don't provide any income to school districts. TIFs are created as an economic development incentive and the incremental value isn't used to figure tax disbursements. To include that value while calculating a local district's property wealth in figuring state aid is not fair, Humphries said.
The amount of a district's property value that reside in TIFs varies. Humphries said about 10 percent of its Equalized Assessed Valuation was in TIF districts. Michael Oberhaus, the superintendent for the Rock Island-Milan School District, said the figure for his district is 15 percent. In the Moline-Coal Valley District, it's 5.5 percent.
Oberhaus said he didn't know how the change would affect his district's bottom line because there are too many unknowns. Humphries said it would cost his district about $1 million.
The governor's office disputes the idea this would leave districts with less money than they get now. Officials there say the TIF changes apply only to school money that would be run through the new funding formula, which currently is only a fraction of overall state aid. They also note, in the future, TIFs can be unwound by local governments if they have different priorities.
But state Sen. Andy Manar, D-Bunker Hill, who has been a leading Democrat on school reform, calls this argument "trickery." If the governor wanted to come up with a new set of rules, he could have applied them to new TIFs, not existing ones, Manar said.
The idea, proponents of SB1 say, is to shift the distribution of state funding to this new formula.
Manar claims the governor is just trying to punish Chicago and steer the state resources away from funding education.
"This pits municipal governments against school districts," Manar said.
In the Quad-Cities, state Rep. Tony McCombie, R-Savanna, said Tuesday she is "extremely nervous" about the TIF provision and doesn't know where it originated. McCombie, a former mayor, said the idea of a TIF is to help local economies.
"I’m afraid if this were to be passed this way, and I’m not sure where it came from, I’m afraid it would take away the economic tool aspect of it," she said.
So far, there's been no district-by-district analysis of how the governor's amendatory veto would affect funding. The State Board of Education has been working on an analysis, but the board said that it will be up to Rauner's office when and how to release it. Patrick said she did not have a timeline for release of the figures.