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The Financing of Illinois K-12 Education 1998-2007

The Financing of Illinois K-12 Education 1998-2007. Dr. Michael Jacoby Executive Director, Illinois ASBO Chair, Illinois Education Roundtable. Topics, Documents. Revenue/Expenditure Data 2008 AFR Rev and Exp Summary Data 1998-2008 Rev and Exp Graphs 1998-2008

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The Financing of Illinois K-12 Education 1998-2007

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  1. The Financing of Illinois K-12 Education 1998-2007 Dr. Michael Jacoby Executive Director, Illinois ASBO Chair, Illinois Education Roundtable

  2. Topics, Documents • Revenue/Expenditure Data • 2008 AFR • Rev and Exp Summary Data 1998-2008 • Rev and Exp Graphs 1998-2008 • Historical Review of Funding Reform Proposals • Legislative Research Unit Report

  3. How Data is Collected: (See 2007 AFR) Illinois Program Accounting Manual (IPAM) Revenue (by Fund [9] and Source): Annual Financial Report

  4. Expense (by Fund [9], Function & Object): Annual Financial Report

  5. ADA = Average Daily Attendance

  6. Operating Fund Data – 10 Year Summary Source = ISBE Analysis of AFR Data 1998 - 2007

  7. Revenue and Expense Growth 1998-2007

  8. Inflation Adjusted • Inflation measured by the Consumer Price Index indicates that $1.00 in 1998 is equivalent in purchasing power to $1.27 in 2007. • Inflation Adjusted • Revenue Increase 1998 to 2007 = 22.4% • Expense Increase 1998 to 2007 = 18.5% • Policy Implication • CPI is not a reliable inflation index for education. • “ECI is a more accurate measurement of the inflationary spending pressures that school districts face” (EFAB 2005)

  9. Operating Fund Revenue Per ADA

  10. Operating Fund Revenue Per ADA

  11. Local vs State Revenue – Operating Funds (2 Axis)

  12. Operating Fund Expenditures Per ADA by Function

  13. Operating Fund Expenditure Per ADA

  14. Operating Fund Expenditures Per ADA by Object

  15. Operating Fund Expenditure Per ADA

  16. Operating Fund Expenditure Per ADA

  17. Expense Per ADA – Change from 1998 by Function Denotes potential policy implication or budget trend

  18. Local Budget Trends • An increase in Debt Services within the Operating Funds suggests an increased reliance upon Tax or GSA Anticipation Warrants, or non-referendum debt (i.e. performance contracts). • Both principal and interest for these types of borrowing must be paid directly from the fund that receives the revenue. • Total Warrants/Notes issued or outstanding FY 2007 = $268M • Total principal/interest paid from Operating Funds in FY 2007 = $90.2M • An increase from 1998 of $63.6M

  19. Expense Per ADA – Change from 1998 by Function Denotes potential policy implication or budget trend

  20. Local Budget Trends • Employee benefit increases over 10 years have had a significant impact on school budgets. • This is primarily associated with health insurance premiums. • Total expense from Operating Funds in FY 2007 = $2.2B • An increase from 1998 of $1.05B

  21. Benefit Cost Per ADA % Change from 1998 Total Cost Inc = $1.052 Billion

  22. Local Budget Trends • Purchased Service increase suggests more external contracting by schools for various functions • Custodial Services + $211M or 76% over 1998 • Transportation Services + $224M or 82% over 1998 • Capital Outlay decrease suggests schools purchased less equipment or equipment at lower costs. • Education Fund down $74M or 25% decline over 1998 • Instruction down $30M or 21% decline over 1998

  23. Local Budget Trends • Transfers decrease is difficult to discern and AFR data is not sufficient to make an evaluation. IPAM Definition: “This object category does not represent a purchase; rather, it shows that funds have been transferred in some manner. Included here are transactions for moving money from one fund to another and for transmitting flow-through funds to another LEA.”

  24. Local Budget Trends • Tuition increase is summarized below: • Regular program increase suggests more districts paying tuition to other districts for programming. • Sp Ed increase is within expectations when compared with total expense increase 1998 to 2007 • Increase in CC tuition suggests more dual credit programs.

  25. What About Special Ed? • Special Education Cost Study (PA 95-0555) • 2007 Study Findings • Expense = $3.2B • Revenue (specific sources) • Local $802M (25%) • State $1,132M (35%) • Federal $384M (12%) • Unsupported by specific sources • $900M (28%) • Policy Implication • Increased State Funding or More Local Tax Authority?

  26. What About Special Ed? • 1998 to 2007 per ADA (select *Function #s) The PA 95-0555 Expense methodology is preferred, however comparable 1998 data is not currently available.

  27. Local Budget Trend • Special Education expenses per ADA from 1998 to 2007 increased 64% compared to the total Education Fund increase of 45%. • Speech and Hearing expenses represented the largest increase at 134%. • As a % of the total Education Fund Budget, Special Ed increased from 16% in 1998 to 18% in 2007. • This 2% proportional increase = $334M

  28. Illinois Funding Proposals • Handout • Historical Review of Selected Education Funding and Reform Proposals -Illinois Legislative Research Unit December 20, 2006

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