The Illinois Tuition Tax Credit: Who Gets the Credit? Who Pays the Consequences?

Law Worsens Financial Pain of Public Schools

The economic slowdown has seriously affected Illinois’ tax revenues, forcing more than $1.1 billion in state budget cuts in the past year. 20 Even those painful budget cuts have not alleviated what, in February, Attorney General Lisa Madigan called a “dire financial crisis”—the state faces a $4.8 billion budget deficit. 21 Last year’s budget cuts hit public schools hard, especially in programs on which low-income, at-risk students rely. A wide range of education programs suffered cuts, including early intervention, teacher training, special education, parental involvement, school safety and other programs. The state’s free and reduced-price lunch program was cut by more than $750,000. 22

In addition to budget problems exacerbated by a sluggish economy, Illinois faces other major challenges. The state received a grade of “F” in this year’s “Quality Counts” report card for the funding equity of its public schools. The report card is published by Education Week. Only one other state received a grade this low, and Illinois’ overall score was the worst of all 50 states. 23 A recent study conducted by The Education Trust similarly found that Illinois ranks 49th out of 50 states in providing tax dollars to public schools with a high concentration of low-income students.

Given these findings, it is hardly surprising that several organizations representing parents, educators and other citizens are urging state leaders to ease school districts’ reliance on local property taxes by significantly increasing state funds to public schools. 24 Yet such an increased commitment is made more difficult by a tuition tax credit law that has siphoned nearly $130 million in state tax revenues over a two-year period.

At the current pace, the tuition tax credit law will have cost Illinois over $200 million in tax dollars after its third year. Such an evaporation of revenues would contribute to public schools’ already troubled financial status. Illinois officials, for example, estimated that up to 85 percent of the state’s public school districts may be operating with budget deficits this school year. 25 An official with the Illinois Association of School Boards warned, “If we have another budget year like this year, a lot of districts will be looking at consolidation, or going bankrupt.” 26

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