The Minimum Local Tax Effort 1

Chapter 1
Problem Statement
An enormous number of school districts used state aid to substitute for local property tax
revenues, to fund school budgets on the basis of approximately one-for-one basis (Stevens &
Mason, 1996). State aid does not help alleviate property tax rates. The aid instead compliments
policy spending. This problem occurs in most states including Illinois. This problem affects all
school districts in general, particularly the schools located in poor districts and students as
well.
The formula of education funding should provide the required funds that support individual
school budget needs to ensure excellent education for all students (Duncombe & Yinger, 1998).
The key of successfully allocating school budgets by using the foundation formula is that most
schools could provide equal learning opportunities to all students by considering essential
student needs. Thus, school budgets would improve or suffer due to formula funding.
Jacoby, M., Lindley, E., & Agnos (2011) discussed the offers of local communities to
fund their public school districts and the role of tax rates in the GSA formula in order to answer
the EFAB question; “Should the formula rates be revised or left the same?” The data showed that
8% (33 out of 408) of non-PTELL districts and 26% (12 1 of 460) of PTELL tax are below the
formula rate. Which could be an indication that PTELL has had the result of decreasing local tax
rates in several communities. Furthermore, the non-PTELL districts have the self-determination
to levy taxes to the maximum non-referendum rates and yet they decide to keep their tax rates
below the GSA formula rates. “This would indicate that they are receiving less local revenue
than the GSA formula would indicate.” (p. 2). They recommended that EFAB might study the
employment a minimum and maximum formula tax rates that require minimal local effort in
order to improvement local effort.
The Minimum Local Tax Effort 2
Year by year, the gap between GSA and the amount needed to fully pay the school
district claims to reach the foundation level is increasing. The difference between the GSA,
payments made to school, and amount owed to districts in fiscal years 2012, 2013, 2014, and
2015 respectively are 95 %, 89 %, 88.7 %, 89 % (ISBE, 2014). The Foundation Formula
required a minimum local tax effort to get GSA. The current tax rate is 2.30% for Elementary
district, 1.05% for High School district, and 3.00% for Unit district. However, this means that
many wealthy school districts will get advantage of this rate and receive a portion of GSA. saved
for poor school districts by the extra GSA would go to the poor school districts.
The literature indicates that there local tax rate that shown the local effort has not
changed for almost 17 years, approximately a third of school districts on 2011 were below the
formula rate. Furthermore, it is only 89 % of school districts statements to reach the foundation
level determined by EFAB in Illinois were funded, result to affect poor district negatively. A
study of a tax rate in the Foundation Aid Formula, well widely support school districts in Illinois
to enhance its per pupil spending and reach a foundation level that defined by EFAB. This study
will use critical quantitative analysis to determine the average of minimum local efforts that
school district should gain to be qualified for GSA using publicly accessible data.
Purpose of the Study
The main purpose of this study is to determine the minimum local efforts to provide the
adequate distribution of funding as defined by EFAB in Illinois. The study would find a long
term solution to balancing tax criteria in relation to state aid to guarantee the improvement of
per
pupil spending below the median average. This study takes to examine effective equations that
oversee the functionality of minimum tax rates and adequate distribution funding.
The Minimum Local Tax Effort 3
Developing a formula that providing equitable and adequate educational funding to all
state school districts wide is one of most concerning of legislatures, school administrations, tax
payers which results in equal learning opportunity to students state wide. This study addresses a
foundation aid formula to suggest a tax rate that will enhance equitable and adequate Illinois
school funding.
The study will provide indicators to guide the appropriate local tax rate decision for each
type of school districts individually. Findings from this study will shed some light on the
relationship between local efforts and school finance. This study will provide policy makers and
administrators with empirical evidence for evaluating local effort effectiveness in Illinois public
school.
Research Question
This issues will be guided by the following research question: What is the minimum
adequtable local tax effort that should be required for Illinois public school districts to provide
the distribution of adequate funding as defined by EFAB?
Significance of the Study
Generally, districts in which supreme Low-income students live have less local resources
than wealthy districts. Almost more than 50 % of the students in Illinois are Low-income.
Overall, the percentage of low-income students in Illinois schools increased from 39% of the
enrollment in 2004 to 51.5% in 2014 (Koch & Chico, 2015). The Illinois’ education system
identify low-income students “if they are from families receiving public aid, are living in
institutions for neglected or delinquent children, are being supported in foster homes with public
funds, or are eligible for free or reduced-price lunches” (Koch & Chico, 2015, p.18). Thus, the
districts with the most major educational challenges in Illinois have the fewest local financial
The Minimum Local Tax Effort 4
resources.
Illinois education funding processes natural disparities in local property tax resources of
school districts traditionally by giving districts with fewer local resources a larger percentage
of
state funding to reach the foundation level. Almost two thirds of property tax financed school
expenditures in suburban Chicago collect from households with no children enrolled in local
public schools or with high-value homes. To providing educational services to others
householders with children in the local public schools or with lower-valued homes (Kurban,
Gallagher, & Persky, 2012). Fortunately, this study addresses the problem of balancing tax
efforts in district schools in order to maximize gain of school budget for poor school districts.
Reform local tax rate has the ability to improve spending equality through state and other
aids to school districts that have more underprivileged school to reduce the per pupil spending
disparity between school districts state wide. This study holds strategy inferences to reduce
spending gaps and variances in school funding across school districts in Illinois by analyzing the
minimum local tax efforts will impact positively on per pupil spending. A number of studies
have found a positive and statistically significant association between local effort and GSA
resources to development school finance. This study also shows that tax rate should also
determine the utility of state aid that is not accounted for in the voting model.
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