The Fair Tax and School Funding

Civic Action, Equitable Funding, Fair Tax, Property Taxes | 09/10/2020

Jessica Handy
Government Affairs Director

On November 3, voters will have the chance to fundamentally change the way Illinois funds its schools by supporting the Fair Tax. I plan to vote YES on the Fair Tax amendment so Illinois can more fairly fund our schools and reduce our reliance on property taxes.

The Evidence-Based Funding Formula (EBF) overhauled Illinois’ outdated and inequitable school funding formula. We’ve shared a lot about the benefit of this new and improved funding framework (here, here, and here, for example). However, the success of EBF depends entirely on Illinois’ ability to continually increase funding to the formula.

Currently, there is a $6.8 billion shortfall in the K-12 education system. About 330 districts still have less than 70% of the funding they need to adequately fund their students’ education. The years of research that preceded the passage of EBF unveiled a little-known disparity: school funding inequity is unfair to both students and property taxpayers. Taxpayers in under-funded school districts paid higher tax rates on average than taxpayers in wealthier districts. It’s a vicious cycle that drives property taxes higher, concentrates poverty further, increases segregation, and makes it even harder for underfunded schools to reach funding adequacy:

The Fair Tax can interrupt this cycle in two fundamental ways:

  • First and foremost, the Fair Tax generates much-needed revenue to invest in EBF without increasing taxes on 97% of Illinois families. The school funding law sets a goal of investing at least $350 million more each year. The Fair Tax would help fill that gap.
  • Secondly, the Fair Tax enables property tax relief, which is built directly into EBF. Of the $350 million annual increase, $50 million is set aside for Property Tax Relief Grants that go to taxpayers in high-tax-rate school districts. This isn’t a one-off subsidy that reverts back to the old rate the next year. This is embedded in EBF in perpetuity. It is lasting reform. And it can’t happen if we don’t fund EBF.

Supporting the Fair Tax Constitutional Amendment in November is the single best way we can get Illinois on the trajectory for a fully funded and equitable education system without increasing the tax burden on middle-class families and property taxpayers.

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