Fair and equitable school funding must eliminate PTELL and TIF subsidies

For years, many have sought an equitable and fair funding formula for Illinois school district finances. Senate Bill 1 is not that solution despite numerous educational leaders, politicians and media endorsements of the bill’s passage by overriding the governor’s amendatory veto.

SB1 retains the most unfair and inequitable practices within the current school funding formula – subsidies related to Illinois’ Property Tax Extension Limitation Law (PTELL) or Tax Caps and Tax Increment Financing (TIF) districts.

Most don’t realize that after local taxing districts complained about lost revenue due to PTELL and TIFs, the districts demanded and received state subsidies years ago costing state taxpayers hundreds of millions of dollars per year benefitting only a few districts.

Currently, the General State Aid (GSA) formula calculations are partially based on the property wealth within each school district that could be used to determine the property taxes levied locally to finance its educational needs. The less property wealth a district has the more GSA it receives to equitably fund less wealthy districts.

As a result of the laws passed in 2000, the GSA currently grants large subsidies to school districts that have reduced property values not because of poverty but due to PTELL and TIFs underreporting the district’s actual property values. Chicago has the largest PTELL and TIF subsidies per student in the state.

PTELL does not result in a loss of revenue for any district unless the Consumer Price Index is greater than 5 percent. In the last 35 years, the CPI has only been higher than 5 percent one time and that was in 1990 when CPI was 5.4 percent. Why is there a subsidy?

GSA distributed more than $500 million of PTELL and TIF subsidies in 2013 alone, with just 40 school districts – 97 percent of them in Chicago, Cook County and the collar counties – grabbing almost the entire subsidy. Downstate school districts received just 3 percent of the total subsidy.

The PTELL Adjustment in the GSA funding formula allows Chicago to underreport the $88 billion in actual property value within its boundaries to $54 billion, resulting in a GSA subsidy of $284 million compared to $16 million for the entire downstate districts.

The substantial majority of the school districts – 570 districts out of 862 receive no PTELL subsidies; 238 districts receive only a total of $43 million, while only 54 school districts, including Chicago and Cook County school districts receive $459 million or 91 percent of the total PTELL subsidy.

The data from the Illinois Policy Institute for the PTELL Adjustment shows that Chicago receives more than $800 per student in subsidies, related to its reduction in property wealth, while downstate districts receive only $25 per student.

Chicago also benefits from the $10.1 billion in property value in 145 TIF districts in 2016, and receives an additional $264 million in GSA subsidies, almost five times the amount of reduced property wealth as downstate and more than twice that of the collar counties.

Unlike TIFs in downstate Rockford, which limit their TIFs to blighted areas, Chicago has TIFs in many of the wealthiest areas within the city limits.

Chicago also receives $2513 of poverty funding per low income student, almost double the $1343 per student for downstate districts. Chicago’s total GSA funding has grown at a rate of 11 percent annually since 2000, a rate nearly six times higher than that of downstate’s 2 percent growth.

Is this the equity and fairness endorsed by local education leaders, politicians and the news media? This is why SB1 was vetoed by the governor to eliminate subsidies in the current GSA funding formula to make that distribution fair and equitable to all school districts.

With the amended veto, no district would receive any less than it currently receives and that includes Chicago. It will not cost CPS $463 million because the Chicago pension costs would be voted on in separate legislation.

Rockford would get $9.5M with the PTELL and TIF state subsidies eliminated compared to what it now receives with the subsidies and 97 percent of the school districts would receive more state funding under the governor’s amendatory veto than SB1.

The amendatory veto also reduces funding for declining enrollment in 2021. Why should taxpayers give the same or more money to districts such as Chicago, where enrollment has declined by over 30,000 students or 7.5 percent in the last 5 years?

Proponents of SB1 bemoan the high local property taxes as one reason for billions in additional education dollars from state taxes. But how much do you think our local property taxes will be cut with the passage of SB1, with billions in “new state dollars” paid to the state by the very same local taxpayers that also pay the property taxes?



  1. Fred Thomas

    Mr. Biondo I believe TIF’S have not helped or hurt Rockford. Most of our property values have been stagnant since the early to mid 90’s the increase in values from the baseline assessment has NOT gone up for most of the tif’s. Our property tax rates should be cut in half to 7.5% over 4 years and then our property values would increase year after year without the taxes going up. Many of us are in negative equity(By excessive taxation)and that trend would reverse quickly. Now PTELL that’s a different story!!! Thanks

    • Ted Biondo

      Fred, it’s the hundreds of millions that Chicago gets by with using TIFs in the whole city – rich and poor areas, claiming over $264 million with a General State Aid payment meant for districts that lack wealth, not what happens with Rockford’s TIFs and RSD205. I’ve been unable to discover how much SD205 gets from this terrible subsidy but I know that the $9.5 million that would be distributed to the district and other portions of the $264 million that Chicago gets distributed to others around the state would go a long way to truly to a more equitable and fair way to use GSA funds, don’t you?

      As far as the other portion of you comment, if property values would dramatically increase then PTELL would lower the tax rate to the extent that the districts would still get the same tax revenue plus CPI without voter approval. I wrote a PTELL article in 2015 on this blog that asks if it is time to get rid of Tax Caps.

      And PTELL is a really different story. Thanks for your input.

      • Fred Thomas

        Mr. Biondo. Do you have any scenarios on how property values would increase. The new Mercy hospital-Crusader-ISC-RVC expansion Swedish American and OSF projects that are attached to the main hospitals-airport-The Grove and Fairgrounds rebuilding and many more all of these will not pay any property taxes so the total EAV will not increase. The new homes within Rockford will be reimbursed 80% of taxes for 3 years. My sisters 2 flat in Chicago appreciated about $390,000 since 1991 mine none. If I move from here to another area like colorado I could barely afford an empty lot. I feel like equity was stolen by excessive taxation. Many have lost homes to foreclosure because taxes are not negotiable but interest rates are. What would your home be worth if your taxes were $15K/year?. Look at SouthCookNews.com-some towns in southern cook county pay 10% of total value while the school districts have grown by double digits and enrollment down. Our properties are just ATM machines for all the taxing bodies. Thanks

    • Ted Biondo

      The TIFs have hurt the city, since as values of property taxes dropped and those TIFs which banked on growth in the TIF areas the city had to spend millions of dollars from the general fund reducing reserves until today the city is $8M in deficit this year and for other contracts for pensions which just keep going up!

  2. The reason state legislators are making grabs for local property taxes is because of the debacle they created when implementing the Edgar Ramp. Rather than paying the State’s contribution, legislators preferred to pay for corporate tax incentives and interest to the banks.

    If you’d like more information on this – I have plenty:

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