Misplaying the Angles: A Closer Look at the Illinois Tuition Tax Credit Law

The Illinois Law: Who Gets Hurt

The nation’s economic downturn has negatively affected Illinois’ revenues during the current fiscal year. This is forcing state officials to make deep cuts in services, lay off employees and raise taxes in order to meet current and projected budget deficits. Instead of collecting an expected $850 million in revenue growth in 2002, Illinois’ state income tax collection was reduced by $650 million compared to the previous year. This reduction represented the largest state revenue loss in 50 years, creating a budget deficit of $1.5 billion.29

At such a time, diverting tax dollars from the state treasury through tax credits raises particular concerns. Overall, Governor George Ryan and state legislators made approximately $176 million in cuts to the elementary and secondary education budget in order to balance the state budget for fiscal year 2003. In total, nearly $1 billion was cut from the state budget to erase a $1.5 billion budget deficit.30 Funding cuts have dealt a blow to reading programs, special education, early intervention, and other critical programs for at-risk students. Moreover, this situation was worsened by the more than $61 million that Illinois lost from the state treasury in the form of tuition tax credits.

Among the $176 million in state education cuts were the following:31

  • General state aid was reduced by $111 million.
  • Early intervention was cut by $3 million.
  • Teacher training programs such as professional development and certification renewal were reduced by approximately $3 million.
  • Special education services were cut by a total of $32.9 million.
  • Academic difficulty programs such as bilingual education, parental involvement and extended programs were reduced by $10.8 million.
  • Student transportation declined by $8 million.
  • School safety and education improvement were reduced by $3 million.
  • Free and reduced price lunch program was cut by $758,000.

In the absence of the tuition tax credit law, more than one-third of the $176 million in K-12 budget cuts would have been unnecessary.

For example, facing a huge budget deficit that prompted a property tax increase, the Chicago public schools have eliminated more than 370 administrative positions that oversee many critical functions of the district, including procurement, purchasing, and the hiring of teachers and other staff. Chicago public schools have also reduced the hearing budget for truant students by $1 million and decreased a community-based tutoring program’s staff from seven employees to two.32

Similarly, by early summer, Wheaton-Warrenville District 200 was facing a proposed budget deficit of more than $10 million as state funding decreased. Even though it has yet to finalize its budget, the district’s school board had already approved more than $1.6 million in cuts taken from school supplies, teacher training and hiring of aides. Attempting to forestall more cuts, the district also has increased fees for technology and driver’s education classes.33

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