Here's a Tip for the Defense: TIFs | Politics | Chicago Reader

Here's a Tip for the Defense: TIFs 

Mayor Daley's all for suing the state over the education spending gap—but his pet program's partly to blame.

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About a month ago I called on the citizens of Chicago to revolt against our screwed-up tax system by filing lawsuits—but I never dreamed it would happen this way. On August 20, in the midst of the fuss state senator James Meeks has raised about the spending gap in education funding, the Chicago Urban League filed suit against the state, seeking to overturn our system of financing public education. Represented by legal powerhouse Jenner & Block, the league has been egged on by none other than Mayor Daley—the irony of which I'll get to in a bit.

The complaint (viewable as a PDF at jenner.com) does a public service by laying out some of the ugly details of Illinois' cockamamy educational funding formula. As any teacher can tell you, there are dozens of reasons that some kids succeed and others struggle in school—you can't expect educators, administrators, or even money to solve all the problems schools face. But it's indisputable that money plays a key role. Better-funded schools can afford everything from lower class sizes to expanded offerings in music, drama, art, and sports. Many of Chicago's cash-starved grammar schools can't even afford recess.

The problem is that schools in Illinois are far too dependent on the property tax—an increasingly regressive tax that more and more people, especially in rapidly gentrifying communities, can't afford to pay. State law mandates that each school district spend a minimum of $5,743 per pupil annually. If a community is too poor to meet that with property taxes, the state makes up the difference out of its education budget, in addition to funding the other programs it usually doles out for. The more property taxes a district raises, the less state funding it gets. Since there's no cap on expenditures—other than an electorate's willingness to be taxed—the sky's virtually the limit for wealthier schools. But impoverished communities that depend on the state struggle to cover basic expenses.

For example, compare Chicago Public Schools and the New Trier district—the preferred whipping boy of Reverend Meeks, who's threatened to lead a student boycott of CPS and march on New Trier High. In 2006 New Trier, which serves Winnetka, Wilmette, Kenilworth, and a few other North Shore suburbs, spent about $85.4 million to educate 4,105 students, or $20,811 per student. About $76 million, or 89 percent of that money, came from local property taxes. New Trier also got about $2.5 million, or just under 3 percent of its budget, from the state and more than a million in federal funding.

By contrast, Chicago spends $10,409 per student. Roughly $1.5 billion, or 35 percent, of its school financing comes from the state. (That's well above not just New Trier but also the state average of 18.2 percent.) Another 16.7 percent comes from the federal government.

Though it's nowhere near illegal, Meeks calls this discrepancy criminal. But in the past voters haven't appeared to agree. In her 1994 gubernatorial campaign Dawn Clark Netsch proposed a swap: a cut in property taxes for a hike in the state income tax to pay for more state education funding. The Republican incumbent, Jim Edgar, blasted her as a tax-and-spend liberal and trounced her at the polls.

In the 1990s two lawsuits were filed in attempts to change Illinois' education funding policy. Both failed, but this time around the plaintiffs predict they'll prevail, if for no other reason than that the federal No Child Left Behind Act requires students in poor schools to match the academic achievements of their counterparts in wealthy ones. If Chicago's students are supposed to score as high as New Trier's, it's only right that they have an equal amount of money spent on them, the argument goes. "We're hoping in a very short time to have a full hearing on the merits of our case," says Lisa T. Scruggs, the Jenner & Block lawyer handling the suit. "We're confident."

The suit argues that by not raising the overall per-student minimum, the state is exacerbating the spending gap and perpetuating an unfair educational system that violates the Illinois Civil Rights Act of 2003. "The state of Illinois has established a funding scheme that generates the nation's second largest school funding gap between low and high income schools," the suit notes. Moreover, it's getting worse: In 1976 the state paid about 48 percent of all public school costs, according to the complaint. In 2007 its contribution "reached a new low—27.8 percent."

I can't really argue with these claims. The system is unfair—the lawsuit's an echo of an argument I used to hear years ago from budget watchdog Edna Pardo and other school reformers at the League of Women Voters. However, it does overlook one important factor: tax increment financing.

Yes, believe it or not, TIFs manage to exacerbate funding inequities too, at least in Chicago. Here's how. As you've probably read in this column, TIFs are tax districts created by the City Council in which the amount of property taxes the schools, parks, and other taxing bodies get has been frozen for up to 24 years. Any tax increases go into a special fund to be spent by city officials with next to zero oversight. To compensate for the income siphoned off by the TIFs, the schools raise their tax rate. Even so, the city doesn't reach its per-student minimum, and the state has to make up the difference.

The schools surrender roughly $250 million a year to the TIFs. CPS officials estimate the state compensates them for roughly 70 percent of that. I suppose it's not a bad system if you're part of the Daley team and want to give the mayor tax dollars to play with as he sees fit. But it's not such a great system if you're trying to provide the best education for Chicago's schoolchildren.

For Arne Duncan and other school officials, who know all this, to cheer on the lawsuit against the state's funding policy is pretty cynical. But that's the way it goes in this go-along-to-get-along town.

In the meantime, I wish Meeks and other would-be demonstrators would stop picking on New Trier. Yes, New Trier's arrogance can be insufferable—especially when they beat Evanston in football. But when it comes to funding education they should be Chicago's model. You don't see their leaders handing over millions of property tax dollars to well-connected developers who want to build town houses over wetlands (to cite just one of Chicago's more ridiculous clout-driven TIF deals of the past year). For that matter, you don't see Wilmette or Winnetka offering to shoulder the burden of financing the 2016 Olympics. People in the suburbs invest their property tax dollars in their children. They use their money to pay top salaries for teachers and buy state-of-the-art facilities. They keep class sizes low and offer their students a vast array of languages and electives.

The state won't tell me what its defense will be in the suit. "The board does not comment on pending litigation," says Matt Vanover, a spokesman for the Illinois State Board of Education. "So I have nothing to say at this time."

I have a suggestion: expose Chicago's TIF scam. The city that's crying poor paid $8 million in TIF funds to subsidize a car dealership at North and Clybourn, to give one more recent example.

Still, I wish the Urban League well in its suit. And when it's over, I recommend that it turn right around and join the state in going after Daley's TIF program.v

Care to comment? Find this column at chicagoreader.com. And for more on politics, see our blog Clout City.

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