Republican Gov. Bruce Rauner often points out that despite the state budget impasse, elementary and high schools are better off than when he took office, thanks to a $750 million surge in state funding.
Left unsaid: The record-setting budget stalemate means the state is more than $1 billion behind in paying school districts the money it promised for the school year that ends this month.
Rauner twice signed into law spending bills for schools in the hopes of shielding students, parents and teachers from the budget fight at the Capitol. But 2 years of budget-free spending has created a $15 billion pile of unpaid bills, with the money owed to schools caught up in the mix. Now district superintendents say the state’s financial troubles are spilling over into their books – and could have consequences in the classroom.
The complaint from schools – a key constituency courted by Rauner as he’s billed himself Illinois’ education governor – is one of the few developments that’s changed the dynamics of the budget stalemate since last June, when Rauner and lawmakers settled on a stopgap spending plan that boosted school funding but failed to address the state’s larger taxing-and-spending imbalance.
Superintendents say they’re now acting as creditors for the state: They spent money that was promised to them, for things like bilingual education and transportation, but the dollars to pay for them never came. To keep from going into the red themselves, they’ve had to trim expenses elsewhere, by holding off on buying supplies, computers and other items they aren’t sure they’ll have the money to pay for. Some are already planning to dip into reserves.
Adding to the problem is the lingering question of whether Rauner and Democrats who control the General Assembly will be able to reach any sort of budget deal to send out money for the upcoming school year. Some districts say they only have enough reserves to keep school doors open through Thanksgiving. Dipping into those reserves to cover unpaid state bills from the current school year adds to their anxiety about the future.
Rauner has ordered lawmakers back to the Capitol for a special session that starts Wednesday. What will come of that exercise is unknown. Last year, the two sides reached an eleventh-hour deal on a stopgap spending plan that gave schools their general state aid. But Democratic Senate President John Cullerton has said his chamber won’t be participating in a repeat of that outcome, and he points to superintendents as one of the reasons.
“My members are not going to just authorize spending of money without the money,” Cullerton said in a recent interview with the Tribune. “And by the way, the school districts don’t want to do that. The school districts themselves, maybe not all of them, but the ones that are poorer, I think there’s 500 of them said, ‘We don’t want the authorization.’ So, we have clear direction. So we ain’t going nowhere until the House votes on revenue.”
Those districts that rely heavily on state tax dollars are hit hardest by the bill backlog – and are the most worried about a prolonged budget fight.
Chicago Public Schools is owed the biggest chunk – $467 million, according to the district – and has announced plans to borrow to fill the gap. District CEO Forrest Claypool insists that Chicago schools will open in the fall no matter what happens at the Capitol.
Other districts are holding out for a solution from Springfield.
“We can’t keep operating at the same level with fewer dollars from year to year,” said Karen Sullivan, superintendent at Indian Prairie School District 204, which serves 28,500 students in Naperville, Aurora, Bolingbrook and Plainfield.
Sullivan was among several dozen superintendents who went to the Capitol at the end of the spring session last month to lobby for a complete budget. “The next round of cuts will significantly, directly impact our students,” she said.
The frustration from schools sounds much like the complaints that have been swirling for years from not-for-profit social service agencies, colleges and universities, and from companies that sell products and services to the state. Those others have had their funding either substantially cut or eliminated entirely as a result of the nearly 2-year budget standoff. School districts had been shielded from the money troubles, at least on paper, because Rauner and lawmakers twice approved spending plans to funnel money their way.
A look at the hard numbers: During the standoff, state government has been spending about $7 billion a year more than it collects in taxes. Money has been going out the door on autopilot because of state laws that require payment on debt and government worker pensions, as well as court orders requiring payment of state worker salaries and medical bills for low-income families. That’s resulted in a $14.7 billion backlog of bills waiting to be paid out of the state’s general checking account. Payments for schools are caught up in that mix.
The state has kept current on general state aid to schools. That’s the big-ticket item in school funding, which has increased from $4.4 billion in the 2015 budget year to $4.6 billion in 2016 and $5.1 billion in 2017. But it has fallen behind on payments for other expenses like extracurricular activities, transportation costs and special education, known as “mandated categoricals.” The state requires those programs, so it contributes money to help cover the costs.
In the 2015 budget year, the state paid school districts $1.72 billion to help with those programs. For 2016 and 2017, it promised to pay $1.76 billion each year, but this year has missed three of its four quarterly payments. The total owed to schools is at least $1 billion, according to the comptroller’s office.
Other factors at play could make the situation worse. A recent federal court order requiring the state to prioritize payments to doctors and hospitals that serve Medicaid patients means more bills could be pushed to the back of the line as the state tries to find the cash to pay down its $2 billion Medicaid backlog. Lawsuits also are underway in attempts to make the state pay up on contracts to social service providers that haven’t had their bills paid in two years.
Superintendents say the missing money has put a strain on their budgets because districts already have paid for the programs, expecting the money would come through.
“We are down $10.5 million of what the state owes us for expenses and services we’ve already committed (to) and we’ve already expended,” said Jeff Craig, superintendent of West Aurora School District 129, a 13,000-student district in the far western suburbs. “If this continues forward, we will have to make more dire cuts.”
Craig said that even after cutting spending by $6 million, his district has just 25 days worth of cash reserves. And it’s unclear if Rauner and Democrats will be able to strike a deal to get money to schools in time for the new school year, much less a plan to start dealing with the bill backlog that’s held up the special program money.
“If we have to shut our doors, I’m wondering which of the legislators, or which of the leaders or the governor, is going to stand next to us and attend to our 26,000 parents across our district,” Craig said.
When lawmakers left town at the end of May without sending Rauner a budget, it set up a replay of what happened last year, where Rauner blasted Democrats for “dereliction of duty.” Democrats complained the governor constantly moves the goal posts on what it would take to strike a deal, and those who rely on state tax dollars were left to wonder if a solution would be reached in time for the July 1 start of a new budget year.
Last year, lawmakers waited until the last minute, cutting a stopgap spending deal on June 30. The pressure point that made the stopgap possible was the issue of schools – both sides wanted to ensure that parents wouldn’t have to worry about whether their kids’ schools would reopen in the fall, especially not in the midst of an election year. Only elementary and high schools were granted a full year’s appropriation. Social services and universities got bare bones spending amounts that went through just the end of 2016.
Similarly in 2015, the governor’s first year in office, elementary and high schools were alone in having their state funding approved. Rauner vetoed the bulk of the spending bills Democrats sent him, but he signed into law the portion that appropriated money for elementary and high schools, including about $275 million extra for schools and early childhood education programs.
All told the past 2 years, schools have been granted an extra $751 million in general state aid and an additional $92 million for special programs. Early childhood education spending has been boosted by $121 million.
And Rauner has made the spending increases a signature achievement of his time in office. Asked earlier this month to explain his reasoning for pushing for a property tax freeze – a key element of the economic agenda that he’s held out as a condition for signing a budget with tax increases – Rauner pointed to the extra money for schools as evidence that he has the schools’ best interest in mind.
“Before I became governor, the Democrat majority cut school funding 4 years in the prior 10 years from the state. I will always push for more,” Rauner said after a property tax event in Peoria. “I’m a big advocate for improving our education funding. I pushed for and received approval to put $750 million a year more from the state into our local schools. And we need to put more into our local schools every year.”
Tony Sanders, CEO at Elgin Area School District U-46, said the situation has become worse, not better, since Rauner took office.
“The issue is that yes, they did pass a budget for K-12 education last year, but they can’t afford it,” said Sanders, who has organized a group of superintendents to pressure Rauner and lawmakers for a budget. “Districts cannot operate off of IOUs.”
U-46 is owed $25 million, and Sanders said he has canceled plans to buy new school buses and upgrade classroom computers, but still expects that the district will spend at least $12 million more than it can afford this coming school year. The district has enough cash in reserves to keep the doors open through Thanksgiving, he said.
“We’ve borrowed to do capital investments just to keep our buildings maintained, pushing more costs onto our local taxpayers,” said Sanders, whose district is the second largest in the state, serving 40,000 students in Elgin, Streamwood, Bartlett and several other towns. “And it’s all because of uncertainty in state revenues coming.”
Early childhood issues
The situation is even more dire for early childhood education programs, whose funding stream also is backlogged. An early childhood education cooperative in Downstate Williamson County has decided that if the state doesn’t pay its bills in full by Aug. 1, it will close its preschool program that serves 600 children, said Ireta Gasner, a senior policy associate with the Ounce of Prevention Fund, where Illinois first lady Diana Rauner is president.
The cooperative could not be reached for comment. Its phone line is answered by a recorded message that directs callers to try back after Aug. 1.
“At this time we do not know the status of next year’s pre-K program due to state funding,” the recording says. “Do not leave a message at this time.”
Early childhood education programs are supposed to be raking in $100 million more this year than the $293 million in the 2015 budget year. But, as Gasner told lawmakers at a recent budget hearing, “whether you have an appropriation or not, at this point, it kind of doesn’t matter because this impasse is having lasting and significant damage to early childhood programs across the state.”
Rep. Bob Pritchard, a Republican from Hinckley whose focus is education, said the situation is so bad, and the politicians are so entrenched in their positions, that disruption to schools might be needed in order to force action.
“They need to start talking about not opening school this fall and get their parents engaged in pressuring legislators,” Pritchard said of school districts. “That’s the only way we’re going to get a budget before July.
Sanders, the Elgin superintendent, said he wouldn’t be surprised if that’s what it took.
“I do think that it might take a crisis like that for there to actually be action coming out of Springfield,” Sanders said. “But at the same time, if we can afford to open, I think we owe it to our families to open.”