From: STATE SUPERINTENDENT
Sent: Monday, June 02, 2003 2:16 PM
To: Regional Superintendents and Special Education Directors District Superintendents
Subject: Budget Message from State Superintendent Robert Schiller 6-2-03

On Saturday, the General Assembly finalized an FY04 education budget totaling $6.56 billion in General Funds – an increase of $330 million over FY03 for programs, not including retirement. Until the Governor signs the appropriation bill, the budget items are subject to his line item veto power.

In a year when this state and many others are facing multi-billion budget deficits, one must conclude that at a funding level of $330 million more than last year, Illinois supported elementary and secondary education better than most states.

You will find a comparison of the final FY03 education budget and the final FY04 version passed by the General Assembly at: http://www.isbe.net/news/pdf/04_Final_Budget.pdf. And you will find a summary of program increases, decreases, eliminations and transfers at: http://www.isbe.net/news/pdf/04_Final_Budget_Summary.pdf.

The budget passed over the weekend was similar to the version the General Assembly had passed on May 23 before addressing the question of providing revenue to pay for the programs it had approved.

However, in an action taken last Friday on a supplemental appropriation for FY03, the General Assembly also added $100 million to the FY04 budget that will be used to provide additional funding for Special Education Transportation and Personnel reimbursement ($57 million) and for the ADA Block Grant ($43 million.)

Obviously, it was not a year in which it was politically feasible to address the overall issue of how we fund public education in Illinois (if you know what year it IS feasible, give me a call.) But the General Assembly did address one significant structural problem in the funding formula by changing the basis for calculating poverty enrollment from the federal census to the Illinois Department of Human Services count. The DHS count is more current and will direct more money to districts that need it. The General Assembly and Governor are to be commended for their willingness to support this fairer but more expensive approach.

For FY04, the poverty count will be calculated using a two-year average of “snapshots” of the DHS numbers taken on July 1, 2001, and July 1, 2002. For FY05, the calculation will use a three-year average of “snapshots” from July 1, 2001, 2002 and 2003. Thereafter, the count will be based on a three-year rolling average, with the oldest year dropping off.

General State Aid and poverty payments are included in the same appropriation, and in establishing this new process, the General Assembly gave priority payment status to GSA. After GSA has been calculated at the $4810 level, then poverty payments will be calculated.

If what remains in the appropriations is sufficient to make all payments, that will be done. If not, the poverty payments will be pro-rated. ISBE will calculate what is owed district in poverty money under the new formula. The General Assembly decided that, during a three-year phase in, no district will receive less than it receives in FY03. Further, no district will receive an increase of more than 25 per cent over FY03 in the first year of the phase-in, no more than 50 per cent in the second year and no more than 75 per cent in the third year. Thereafter, districts will receive their full poverty payments, given sufficient appropriations.

It must also be noted that in order to provide some of the money for the increase in General State Aid, twelve valuable programs totaling about $44 million were eliminated, and whether many districts will be able to direct local resources to these areas may be problematical.

But the final budget does include $5.2 million in transitional funding to guarantee no district receives less state funds in FY04 than it received in FY03. Here is how this money will be distributed: in April, 2004, ISBE will calculate which districts received less in FY04 than in FY03 and announce those numbers. If the appropriation is sufficient to pay all districts fully, that will be done. If the appropriation is not sufficient, the payments will be pro-rated unless the general Assembly takes further action.

In all, three programs received funding increases – Early Childhood, Bilingual and ROE salaries. Eight programs received decreases – ADA Block Grant, Technology for Success, ROE School Services and ROE ISBE Regional Services, Charter Schools, Truant Alternative, Standards, Assessment and Accountability and the ISBE administration line.

The final budget passed by the General Assembly resembled in many significant ways the budget proposed in January by the State Board of Education. I believe the Board’s voice in support of the work of local school districts was heard more clearly this legislative session than in many recent years.

In January, the State Board called for directing new funding to the two areas most important to local districts – GSA and the mandated categoricals. The Governor saw fit to propose an increase of $250 in foundation level, and it was approved. The Board urged 100 per cent reimbursement for the mandated categoricals, and, unfortunately, the final General Assembly flat-funded those programs at last year’s 91 per cent level. But the State Board also urged increases in spending for early childhood and bilingual programs, and both were increased in the final budget.

Two other high-profile items in budget discussions were the ROE appropriation and the Truant Alternative program, both proposed for elimination in the Governor’s April budget. In this weekend’s budget document, the ROE’s are funded at $17 million (instead of the ISBE proposal of $22 million) and Truant Alternative receives $16 million instead of the $21.4 proposed by ISBE.

The Governor had proposed transferring several programs from ISBE to other agencies – including Agricultural Education and the Philip Rock Center – but they will remain with this agency. 

Significantly, the ISBE administration budget line was funded at $16.5 million – down more than 30 per cent from last year’s $25 million. As we have told our employees since April, the cuts contemplated by the proposed budget – and now approved in final form -- will require layoffs here at the agency, re-evaluation of all the contractual agreements we maintain and a prioritization of the services we provide to school districts. I will keep you fully informed regarding changes in agency operations as we analyze fully the impact of the budget.

In non-budget activity, the General Assembly passed and sent to the Governor the legislation revising the state’s assessment and accountability program to improve it and to bring it into alignment with requirements of the “No Child Left Behind” legislation. All of us owe a debt of gratitude to my Task Force on Assessment and Accountability, co-chaired by Bob Nielsen, which spent many hours developing recommendation that became the basis for this legislation.

Also passed by both Houses was HB 765, which allows school districts to transfer funds among the O and M, Education and Transportation funds for a period of two years and removes the one time, non- recurring expenses restrictions for this two year period.

The General Assembly did not take action on proposed legislation that would have created a new “independent” Teacher Certification Board.

I will send you a more complete summary of “non-budget” education legislation from this session shortly.

Robert Schiller

State Superintendent

  of Education

statesup@isbe.net