Legislative Update

IEA Legislative Update – July 14

Illinois passes bipartisan budget

Illinois finally has a budget. With the passage of the budget, the state bond rating will likely be spared junk bond status. Even with a budget in place, the state’s fiscal house is still in a bit of disarray and some key components need further action. The good news is that with the passage of three bills, over the objection of Gov. Bruce Rauner, the state can begin to rebuild. Below is an overview of the budget bills and an update on where things stand.

Budget bills

Senate Bill 6 is the budget bill that sets spending at $36 billion dollars and has $2.5 billion in spending reductions. This bill passed as a result of 10 House Republicans standing up to their governor and acting in the best interest of the state.

Senate Bill 9 is the revenue bill that revises the permanent income tax rate to 4.95 percent for individuals and 7 percent for corporations. The revised income tax will generate about $5.4 billion in new revenue annually. The passage of this bill was even more impressive as 10 Republicans and 62 Democrats voted to override the governor’s veto in the House, and one Republican and 34 Democrats voted to override his veto in the Senate.

The last piece of the budget puzzle was Senate Bill 42, the budget implementation bill, also known as the BIMP. In addition to coordinating the revenue with the appropriated spending amounts, the bill also has a pension provision that creates a Tier III plan for new participants. The pension bill enables Tier II participants to finally get the value of the pension for which they are currently paying. The bill does not force an unconstitutional “consideration” choice or a reduction in final average salary raises that previous bills included. (For more on the budget bills, see this FAQ.)

K-12 education funding

Unlike last year, the fate of funding for K-12 education has yet to be finalized even though a budget was passed. The budget bill funds K-12 education and includes an increase of nearly $350 million. The funding allocation for K-12 education has changed and will be based upon the evidence-based model, as outlined in Senate Bill 1 (see the fact sheet on SB1 here), as opposed to the General State Aid formula used since 1992. As written, SB 6 (the budget spending bill) appropriates funds that may only be spent using an evidence-based model that does not exist unless SB1 (the new evidence-based model school funding formula bill) is signed by the governor. As drafted, very limited resources would be available for distribution. To further complicate matters, SB 1 has not yet been sent to the governor and did not receive veto-proof votes when it passed both chambers. To date, the governor has vowed to veto the bill due to increased funding for Chicago under the revised plan.

Higher education funding

The downside of the budget means that higher education will see approximately a 10 percent reduction in funding. This is even more egregious when you consider that the comparison is to fiscal year 2015 levels.

What’s next?

The last week of July and the first week of August will be critical in determining what this new budget will really mean for public education. We have been in communication with the House and Senate sponsors of SB 1 and will be in discussions about what it will take to ensure that schools open on time in the fall. We anticipate that the legislature will come back into session to address SB1 and education funding. At this point, all we can say is that this is a high stakes games of chicken that we hope will end in the positive, bipartisan way that Senate Bills 6, 9 and 42 did.

We will keep you posted on any action needed or updates on session dates.

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