William C. Schewe, Ph.D., Superintendent of Villa Park/Lombard Elementary District #45

My name is Bill Schewe and I am the superintendent of the Villa Park/Lombard Elementary District #45. 1 have been the superintendent in District #45 for the past 4-1/2 years. Prior to that, I was an educator in Michigan for 28 years in positions that ranged from teacher to principal to superintendent of a unit district to county superintendent.

I will be addressing five areas:

1. The Myth about Michigan Funding
2. Cost of Living Index
3. Local Effort
4. Hold Harmless
5. Categoricals

First, let me dispel the myth that the Michigan method of funding schools is better. It isn't. They reduced the amount of money going into education and substituted the sales tax for some of the reduction in property tax. The approximately 168 out-of-formula districts in 1993 had the option to go back to the voters for additional property taxes. The other 400 districts were gradually brought up to the foundation level. For some of these districts, this was a large increase, for others, it was not very much.

Once a district reached the foundation level, in addition to the percentage increase given to the foundation level districts, they could only get an additional, one-time, slight increase in funding if their county's voters approved it.

School districts in Michigan which were significantly below the foundation level were helped over the years until they reached the foundation level, The majority of districts at or above the foundation level have had minimal increases over the past seven years at a time when Michigan, like Illinois, had record surpluses. Other school district expenditure increases and revenue reductions were built into the system. Many districts have had to cut staff and programs. Even if a community wanted to raise its spending, there is nothing that it alone could do to raise additional revenue.

In the 168 highest spending districts, the taxpayers in each district approved maintaining their previous property tax levels. Thus, their sales tax was increased from 4% to 6% and their property taxes stayed at high levels. They also were limited to 1.5% increases each year. This is what we call "Leveling Down." That is when both the funding and quality of the top school districts are reduced. Michigan also did not have a cost-of-living index. A specific dollar amount in the Detroit suburbs is not the same as it is in the rest of Michigan.

In a study done by the Michigan Association of School Administrators, they found that in the states where there was substantial school funding reform, the anti-tax forces were able to gain control of the end result such that the amount of total funds spent on schools decreased.

In Illinois, a cost of living index must be included in the formula. It costs at least 50% more for housing in the Chicagoland area than it does in the rest of the state. Housing is the largest expense for our employees. That is why salaries in Chicago and the collar counties are higher than in the rest of the state. The U.S. Department of Labor Statistics or the McMahon Index could be used. $4500 downstate pays for significantly more program and staff than it does in Chicago and the collar counties.

Local effort needs to be considered. Last March, the voters in my district approved a tax rate referendum by a 55% to 45% margin. Our Education Fund tax rate is 3.4475. Voters approved a 35.69 cent increase. They pay more in property taxes than in the districts around us because we don't have a mall, as two of them do, and we don't have the commercial property that a third district does. Our voters are by no means wealthy, but they still approved the referendum.

Theoretically, an income tax is fairer than complete reliance on the property tax. 78% of our funds are local from the property tax. 17% is state and 5% is federal. The base should include some property tax, perhaps up to 50% because that is a very stable revenue source. However, there has to be a guarantee that no district would be harmed and there must be an option for a district's taxpayers to choose to increase their property or income taxes. The income tax also is deductible on the federal tax returns whereas the sales tax is not. REMEMBER THAT IN ALL THE STATES WHERE THERE WAS TRUE TAX REFORM, THE FUNDING FOR EDUCATION WAS REDUCED. We do not want that to happen in Illinois because the quality of education also would be reduced.

The hold harmless is very important. We receive $1,028,000 in state aid on a $32,800,000 annual budget. The hold harmless is $83,876. It has been as high as $200,000. We would have to cut several teachers to reduce expenditures by that amount. Our state aid was increased this past year.

Categorical funding is also very important. We receive $666,000 in special education funding, $127,000 for transportation and $193,000 for bilingual education. This funds approximately 16% of our costs in these three areas. Please protect categorical funding and keep it separated. When you hear the term "full funding" for special education or any categorical area, remember that we are only talking about "full funding" of 16%.

I appreciate the opportunity to present my views on this subject. Thank you for your time and your interest in the education of our children.