70 East Lake Street
Suite 1700
Chicago, IL 60601
www.ctbaonline.org
“For Each and Every Child” — And
Why Funding Reform is Crucial to
Enhancing Student Achievement
For:
National Conference of State Legislators
Georgia World Congress Center
285 Andrew Young International Blvd., NW
Atlanta, Georgia
Presented by:
Ralph M. Martire, Executive Director
© 2013, Center for Tax and Budget Accountability
August 12, 2013
The Equity & Excellence Commission’s
Charge was to Advise the DOE on:
2
“the disparities in meaningful educational
opportunities that give rise to the
achievement gap, with a focus on systems of
finance, and to recommend ways to which
federal policies could address such
disparities.”
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Why Was that the Charge?
3
Public Education in America is not so much “Broken”
as it is under-resourced to education all children
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Test Scores
4
 The International Benchmark:
 Combined PISA (Reading, Math, Science, Critical Thinking)
 Overall, U.S. schools scored a middling 500 with the
OECD average @ 493
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Reality  #1
5
 But adjusting for poverty
 U.S. schools w/ 0-10% poverty scored 551, best in
the world (Finland was 2nd @ 536)
 U.S. schools w/ 10-24.9% poverty scored
527, top in the world for similar profiles (Canada was
2nd @ 524 and 4th overall )
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Poverty
6
 U.S. scores did not start
to drop until poverty got
over 25%
 In Illinois, roughly 44% of
kids live in poverty.
 In CPS, the number is
over 88%.
© 2013, Center for Tax and Budget Accountability
August 12, 2013
So the Charge of the Commission
was on Point—The Core Issues Remain:
7
Poverty
and
Insufficient Resources
Inequitably Distributed
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Which is Nothing New
8
Who first noted these as
core issues in U.S. Education
“Who”
© 2013, Center for Tax and Budget Accountability
August 12, 2013
9
The NIXON COMMISSION
on Education in 1972!
© 2013, Center for Tax and Budget Accountability
August 12, 2013
The Nixon Commission Found:
10
1.
Educational funding at the state level is too tied to
property taxes—and rarely is connected to the
educational needs of children.
2.
Money can help solve many of the Educational
Problems that have surfaced.
3.
States have the responsibility to reform school
financing to eliminate disparities and ensure
adequacyIf they don’t......
© 2013, Center for Tax and Budget Accountability
August 12, 2013
The Solution
11
 Scan Available Resources, Match to Demographically
Driven Needs
 Create a Comprehensive, Strategic Approach to System
Changes Needed to Attain Desirable Outcomes
 Integrate:




Federal, state, local resources/programs to accomplish
outcomes;
Utilize evidence-based approaches and advocacy, bridge rather
than reinforce ideological divides;
Minimize inefficient competition maximize collaboration; and
Develop resources to build and sustain the capacity needed for
success.
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Evidence this Approach Works:
12
 Current Focus of Global Education
Reform Movement (“GERM”)



Set higher standards for student achievement—standardize
education generally
Enhance accountability metrics and implement punitive
consequence matrix
Enhance competition between and among schools and
educators
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Impact of GERM on Programme for International
Assessment or “PISA” Math Scores
13
2000 2009
USA
UK
AUSTRALIA
JAPAN
NEW ZEALAND
© 2013, Center for Tax and Budget Accountability
 493
 529
 533
 557
 537
 487
 492
 514
 529
 519
August 12, 2013
Then There’s Finland
14
 Rejected GERM
 Focused on:
Building collaboration/reducing competition;
 Building teaching profession;
 Investing adequately in poorest schools on up, focusing
on equity as core to excellence;
 Invest in early childhood, wrap-around services and
overall education funding;
 GOAL  Build capacity so that every school provides
high quality education tailored to meet student need

© 2013, Center for Tax and Budget Accountability
August 12, 2013
The Results
15
PISA Math Scores
2000
2009
 536
 541
© 2013, Center for Tax and Budget Accountability
August 12, 2013
The Goal
16
Implementing a strategic, comprehensive approach for
sustainable systems reform that:
 Is driven by evidence and best practice
 Bridges, rather than reinforces, ideological
divides
 Results in promoting economic & social
justice
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Finance
17
 A State Should:
 Identify and publicly report the teaching staff, programs and
services needed to provide a “meaningful educational
opportunity” to all students of every race and income level
(including ELL and special needs) BASED ON EVIDENCE OF
EFFECTIVE EDUCATION PRACTICES;

Adopt and implement school finance systems that provide
equitable/sufficient funding for all students to achieve content
and performance standards;

“Equitable” in some case means more than equal investment—
as in other advanced nations, it includes providing additional
resources for at-risk populations.
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Finance Continued
18
 The Feds Should:

Direct states, with appropriate incentives, to adopt school
finance systems that provide a meaningful educational
opportunity for all students;

Enact “Equity and Excellence” legislation that:
i.
ii.
Targets significant new federal funding to schools with high
concentrations of low-income students, particularly where
achievement gaps exist;
Provides significant financial incentives to states that in fact
enhance investment in “At-Risk” children.
© 2013, Center for Tax and Budget Accountability
August 12, 2013
What Will be Funded?
19
Building Educational Capacity.—For purposes
of this Act, building education capacity of Targeted
Schools will mean implementing systems-based
reforms, programs and/or initiatives which have
been demonstrated, either in the United States or in
any other nation, to enhance student
achievement, learning and/or critical thinking skills
over time. Such reforms, programs and/or initiatives
MAY include:
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Partisan Rhetoric, Pandering to Worst
Instincts, Designed to Create Political
Advantage
20
Disjointed State, Local, Federal
Efforts to Define and Meet Needs
Silo Mentality & Gaps, Overlaps
Counterproductive Competition
Inefficient and
Underproductive
Resource
Allocation/Service
Delivery
Failure to Coalesce Around a
national, evidence-based
strategy to drive systems reform
Lack of Capacity (Human, Service, Fiscal) to Generate
and Sustain Meaningful, Evidence-Based Reform
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Consider — Illinois
Enacted P-12 Appropriations for FY2014 Compared to FY2000
Enacted, Nominal & Adjusted for Inflation (ECI) and Population
21
40.0%
30.0%
28.8%
20.0%
10.0%
0.0%
-10.0%
-16.69%
-20.0%
% Change (Nominal)
% Change (ECI + Pop)
Sources: Sources: FY2000 unadjusted appropriations from Governor’s final budget summary for FY2000; and FY2014 CTBA analysis of GOMB, FY 2014 Operating
Budget Detail (March 6, 2013), http://www2.illinois.gov/gov/budget/Pages/BudgetBooks.aspx. Inflation for healthcare inflated by Midwest Medical Care CPI; all other
appropriations adjusted using ECI-C and Midwest CPI from the BLS as of January 2013, and population growth from the Census Bureau as of January 2013.
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Dollar Shortfall in State Per-Pupil K-12 Education Funding to
Meet EFAB Adequate Education Standard by Fiscal Year
22
$0
$0
-$120
-$500
-$1,000
-$1,269
-$1,270
-$1,500
-$2,000
-$2,500
-$2,553
-$2,747
-$3,000
-$3,500
-$2,946
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Sources: CTBA analysis of January 2013 EFAB data. Education Funding Advisory Board, Illinois Education Funding Recommendations, (Springfield, IL:
January, 2013), p. 9.Appropriations adjusted using ECI and Midwest Medical Care CPI (for Healthcare) from the BLS as of January 2013, and population growth from
the Census Bureau as of January 2013.
© 2013, Center for Tax and Budget Accountability
August 12, 2013
And YEAH, $ Does Appear to Matter
23
Regression of ISAT Performance Vs. Per-pupil Instructional
Expenditure for School Districts with 3-8% Low Income Rates
Percent of Students Meeting and Exceeding
Illinois Standards on the ISAT (2006)
110
105
100
95
90
85
80
75
3000
5000
7000
9000
11000
13000
Per-pupil Instructional Expenditure
Active
Model
Conf. interval (Mean 95%)
Conf. interval (Obs. 95%)
*Linear regression is a statistical analysis that shows the correlation of two or more variables, in this case, how per-pupil expenditures correspond to ISAT test scores.
The regression line (heavy red) represents the predicted test score results a school district should obtain, given a specific level of instructional expenditure.
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Local and State Share of
Education Funding Spending
24
Source: National Center on Education Statistics, 2011. “Revenues and Expenditures for Public Elementary and
Secondary Education: School Year 2008-2009 (Fiscal Year 2009).”
© 2013, Center for Tax and Budget Accountability
August 12, 2013
The Burden is Tough
25
Illinois Total Property Tax Revenue Growth
Vs. State Median Income Growth
45.00%
42.12%
Total Property Tax
Revenue Growth
State Median Income
Growth
40.00%
35.00%
30.00%
25.00%
17.41%
20.00%
15.00%
10.00%
5.00%
All data inflation adjusted to 2008
2.84%
0.83%
0.00%
1990-2005
© 2013, Center for Tax and Budget Accountability
Income Data: US Department of Census
Property Tax Data: IL Department of
Revenue
2000-2005
August 12, 2013
Really????
26
YES: Illinois ranks 50th out of 50 states in portion of education
funding covered by the state
But Education
now matters more
than ever to
economic prosperity:
Generally: unemployment rates are highest for those with the least
education.
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Unemployment Highest Among Least
Educated, 2010
27
Nation
20.7%
5.7%
5.2%
6.9%
9.3%
10%
9.4%
9.1%
15%
12.9%
Illinois
13.1%
18.8%
Midwest
12.0%
Percent Unemployed
20%
21.9%
25%
5%
0%
LT HS
HS Grad
Some Col
BA or +
Source: EPI Analysis of CPS Data
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Wages for Minorities Lag Whites
28
Real wages for Whites increased modestly between 1980 and
2010, but :
 The White-Hispanic wage gap is larger in amount,
but increased by a smaller percentage, growing from
$4.01 in 1980 to $5.86 in 2010, an increase of 46%
over 1980
 Real wages for African-Americans declined. The
hourly wage gap between Whites and AfricanAmericans grew from $1.60 in 1980 to $3.08 in
2010, an increase of 92.3% over 1980
© 2013, Center for Tax and Budget Accountability
August 12, 2013
FY2014 Accumulated Deficit ($ Billions)
29
Category
GOMB Revenue
HJR-17 Revenue
(i)
Projected FY2014 Revenue
$35.63
$35.08
(ii)
Projected FY2014 Hard Costs
$11.16
$11.16
(iii)
Projected Deficit Carry Forward from
FY2014
$8.3
$8.3
(iv)
Projected Net FY2014 General Fund
Revenue Available for Services
$16.17
$15.62
(v)
Projected Net General Fund Service
Appropriations
$24.52
$24.52
(vi)
Estimated Minimum FY2014 General
Fund Deficit
($8.35)
($8.9)
(vii)
Estimated Deficit as a Percentage of
General Fund Service Appropriations
-34.05%
-36.29%
Source: Appropriations from and FY2014 CTBA analysis SB 2555, SB 2556, HB 206, HB 208, HB 213, HB 214, HB 215, passed by the 98th
General Assembly; and hard costs from FY2014 GOMB Budget Book.
*This is the 23rd consecutive fiscal year with a General Fund deficit*
© 2013, Center for Tax and Budget Accountability
August 12, 2013
That Huge Shortfall is a Real Problem
Because……Over $9 out of $10 of G.F. are Spent on:
30
 Education
(PreK-12 plus Higher Ed)
35%
 Healthcare
30%
 Human Services
21%
 Public Safety
5%
91%
© 2013, Center for Tax and Budget Accountability
August 12, 2013
FY2014 Enacted General Fund Services Appropriations
(excluding Group Health & Pensions) Relative to FY2000, in Nominal and
Adjusted for Inflation and Population Growth
31
Sources: FY2000 unadjusted appropriations from Governor’s final budget summary for FY2000; and FY2014 CTBA analysis SB 2555, SB 2556, HB
206, HB 208, HB 213, HB 214, HB 215, passed by the 98th General Assembly. Inflation for healthcare inflated by Midwest Medical Care CPI; all
other appropriations adjusted using ECI-C and Midwest CPI from the BLS as of January 2013, and population growth from the Census Bureau as of
January 2013
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Capitalist Tax Policy Should Be:
32
FAIR

PROGRESSIVE
RESPONSIVE

TO MODERN ECONOMY
STABLE

DURING POOR
ECONOMIES
EFFICIENT

DOESN’T DISTORT
PRIVATE MARKETS
ILLINOIS IS 0 for 4
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Which Creates a Structural Deficit
33
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Revenues of Goods and Services as a Percent of Gross Domestic Product:
Illinois (SIC 1965-1985, NAICS: 1997-2012)
34
80%
68%
70%
60%
Services
as a
percent
of GDP
73%
72%
Goods as
a percent
of GDP
53%
50%
40%
41%
36%
32%
30%
26%
20%
20%
21%
19%
17%
10%
0%
1965
1975
1985
1997
2005
2012
Private producing industries
Source: Bureau of Economic Analysis
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Adam Smith, the father of modern capitalism, contended that
for a tax system to be fair it has to be progressive
35
 According to Smith:
"The subjects of every state ought to contribute
toward the support of the government, as nearly
as possible, in proportion to their respective
abilities; that is, in proportion to the revenue
which they respectively enjoy under the
protection of the state ….[As Henry Home (Lorde
Kames) has written, a goal of taxation should be
to] 'remedy inequality of riches as much as
possible, by relieving the poor and burdening the
rich.'"
© 2013, Center for Tax and Budget Accountability
August 12, 2013
Was Adam Smith Right?
36
The long-term trends in income distribution
in America demonstrate that his reasoning
was solidly on target.
Change in Average US Income
Growth Over Time
Income Group
1947— 1979
Change in Average US Income
Growth Over Time
Income Group
1979 — 2011
Top 10%
34.1%
Top 10%
139.8%
Bottom 90%
65.9%
Bottom 90%
-39.8%
Source: Economic Policy Institute's website: http://stateofworkingamerica.org/who-gains/ Data
used is from Piketty and Saez, "Income Inequality in the United States, 1913-1998", Quarterly
Journal of Economics, 118(1), 2003, 1-39 (Tables and Figures Updated to 2011 in Excel format,
January 2013), http://elsa.berkeley.edu/~saez/ .
© 2013, Center for Tax and Budget Accountability
August 12, 2013
And it Won’t Hurt the Economy
37
From 2000 - 2010
 9 states with highest graduated income tax rate structures had:



Better growth in state GDP per capita
Better change in median wage
Identical unemployment rate
Than the 9 states with NO income tax
Source: Institute on Tax and Economic Policy
© 2013, Center for Tax and Budget Accountability
August 12, 2013
For More Information
38
Ralph M. Martire
Executive Director
(312) 332-1049
rmartire@ctbaonline.org
Bobby Otter
Education and Fiscal Policy Analyst
(312) 332-2151
botter@ctbaoline.org
Website: www.ctbaonline.org
© 2013, Center for Tax and Budget Accountability
August 12, 2013