The Roundout Elementary School is surround by industrial parks and office buildings. These businesses are among those generating hefty sums of property tax revenue for the school. (Photo by Jon Lowenstein)

On Bradley Road in north suburban Lake Forest, cars and trucks rumble off of Interstate 94 and into one of the five industrial parks and large office buildings that stand on all four sides of the Rondout Elementary School.

Less than a quarter mile south, more than 50 businesses hum with activity along a mile-long asphalt road snaking through the Bradley Business Park.

A nearby enclave features 3,000-square-foot houses with English basements, granite counter tops and price tags above $700,000.

It’s a different story at Medgar Evers Elementary School in south suburban Ford Heights, nearly 70 miles southeast of Rondout.

Surrounding Evers are subsidized homes, vacant lots, single-family homes and the remains of a burned-out building, where charred beams sit like pick-up-sticks atop darkened bricks. Several streets away, there’s a purple sign with green letters that heralds the construction of two-bedroom townhouses starting at $137,500.

Once described as “the poorest suburb in America,” Ford Heights has about 10 businesses, all of which are located on U.S. Route 30, about a mile away from Evers. The strip includes a liquor store, grocery, fast food restaurant, currency exchange, beauty supply, and a used car lot where some vehicles sit with deflated tires, mangled hoods and dented bodies.

In 2004-2005, propelled primarily by property tax revenue from businesses, local sources in Rondout School District 72 generated $26,356 per pupil—the highest rate in the state. Local sources in Ford Heights School District 169, which includes Evers and one other school, generated $5,548 per pupil even though the district’s property tax rate is more than five times higher than the Rondout district’s.

These per-pupil figures reflect the total dollars these districts received from local sources and not the amount these districts spent per pupil for regular operating expenses.

Since the latest statewide figures show that local property taxes account for 57 percent of all public education revenue, the gaping differences—between local property tax rates and the money these taxes generate—lie at the heart of what many contend is one of the nation’s most inequitable school funding systems.

Districts rich in residential, commercial or industrial properties, like the Rondout district, generate large sums of local revenue to produce well-funded schools. And, coupled with low property tax rates, these communities continue to attract development that keeps their economies—and their schools—vibrant.

The prospects are dimmer for poorer districts like Ford Heights and others in downstate farming communities that assess high property tax rates in an effort to generate money for area schools. The higher tax rates fail to eliminate the funding gaps, and they also decrease the likelihood that businesses and other developments will locate there.

Some say it’s a never-ending cycle where the rich stay rich and the poor remain poor.

“There’s no way out of this box,” said Scott Goldstein, vice president of policy and planning at the Metropolitan Planning Council, a nonprofit that examines development issues in the Chicago region.

“[Poorer] areas end up trying to squeeze blood out of a turnip,” said Bindu Batchu, campaign manager for A+ Illinois, a coalition of groups working to boost school funding and improve the quality of education in the state. “This makes it hard for communities to attract business and jobs. All things being equal, [businesses] will want to go in communities that have lower property taxes and [good] municipal services, including schools.”

During the 10 school years from 1995-1996 through 2004-2005, the state of Illinois provided $47.9 billion, or nearly 30 percent, of the $162.2 billion spent on public schools, according to the Illinois State Board of Education data. The federal government provided another $11.7 billion, or 7 percent. But the greatest share came from local sources—about $102.6 billion, or 63 percent of the combined total.

Statewide, property taxes accounted for 92 percent of all local revenue in 2003-2004, the latest year for which a statewide breakdown of local revenue was available. And, because the value of property in Illinois communities varies widely—in 2000, the median home value for Lake Forest was $638,800, compared to $46,900 in Ford Heights—there is an extremely wide range in the amounts of local money that school districts generate.

A Chicago Reporter analysis of the Illinois State Board of Education data shows that school districts with the lowest property tax rates generated much more in local revenue per pupil than those with property tax rates two, three, and even five times higher.

At the low end, there were 69 school districts with property tax rates below $2 for every $100 of equalized assessed valuation in 2003, the latest year for which property tax information was available. At the high end, there were 93 districts with property tax rates at or above $5 for every $100 of equalized assessed valuation. Since the districts with the lowest tax rates were home to properties six times more valuable than the districts with the highest tax rates, they generated more local revenue.

In all, local sources in districts with the lowest tax rates generated nearly $11,752 per pupil, while local sources in districts with the highest tax rates generated nearly $5,783 per pupil, the Reporter found.

“From my vantage point, it’s almost criminal,” said Andrew Wall, assistant professor of education at the University of Rochester’s Warner School of Education and Human Development in Rochester, N.Y. In property-poor districts, “Parents pay more of their take-home pay, but it doesn’t make up for the difference in per-pupil spending.”

Since residential property values make up nearly two-thirds of the state’s overall property wealth, the vast gaps in residential property wealth accounted for much of the discrepancies in local revenue generated from property taxes, according to a Reporter analysis of Illinois Department of Revenue data. But gaps in the values of commercial and industrial properties contributed, as well.

In fact, the gaps in commercial and industrial property values were wider between the richest and poorest districts than the gaps in residential property values, according to the Reporter’s analysis.

The Reporter was able to link revenue data and school finance data for 647 school districts, including their average daily attendance, property tax rates and property tax amounts billed to residential, commercial, industrial and farm properties for 2003.

The combined value of residential properties per pupil was six times higher than the figure for districts with the highest tax rates. But it was nearly 10 times higher for commercial property and more than 15 times higher for industrial property. “The commercial and industrial base is a major overall determinant to the school funding in the community,” said Goldstein of the Metropolitan Planning Council.

Ford Heights and other poor, Chicago-area communities aren’t the only ones lacking high-end real estate, businesses and industry. Many downstate farming communities are also comparatively property-poor and thus face a similar dilemma in generating local revenue for schools, according to Dennis Vercler, director of news and communications at the Illinois Farm Bureau, which provides services to farmers and represents their interests in political activities.

Like Ford Heights, Vercler said many of these farming communities are also saddled with higher property tax rates and struggle to lure businesses and lucrative real estate.

Just 13 percent of the 647 school districts analyzed were “farming districts,” meaning farm properties accounted for more than half of the district’s property wealth. But 29 percent of districts with the highest property tax rates were farming districts compared to just 6 percent of districts with the lowest property tax rates.

“Everybody thinks about how important it is to educate their kids, but, when they think of it, they think of [their] local situation,” Vercler said. “Very few people think about it as a statewide problem. They just don’t see the systemic nature of the problem.”

Through what is known as “General State Aid,” state contributions to school districts take into account how much money districts raise through local taxes, said Toni Waggoner, senior budget analyst at the Illinois State Board of Education. However, not all state funding is provided in this way, she said.

She described the general state aid formula as an “equalization” formula, which “works such that, the more revenue a district has from local resources, the less they would receive from the state and vice versa.” As a result, school districts with low per-pupil amounts in local revenue receive some of the highest contributions from the state. Even with these adjustments, substantial funding gaps remain between property-rich and property-poor districts.

In addition, local revenue for schools, statewide, has grown faster in recent years than state revenue for schools. From 2001-2002 to 2004-2005, state money for schools increased 3.6 percent, but local revenue grew 16.5 percent during that period.

“If you are growing EAV at double-digit percentage, that’s more than the state can keep up on the state side,” Waggoner said. “The state doesn’t have enough money to make up for that.”

Sara Semelka helped research this article.

Jeff is the founder and executive director of the Center for Collaborative Investigative Journalism (CCIJ) and the Padnos/Sarosik Endowed Professor of Civil Discourse at Grand Valley State University....