State poverty grant timeline

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Supplemental General State Aid (SGSA) is the lifeblood of school reforms in Chicago. Previously known as state Chapter 1, its 32-year history marks the pendulum swing from centralized control of schools to local control and back.

Distributed to schools based on the number of low-income students enrolled, SGSA constitutes nearly two-thirds of the discretionary money available to principals and LSCs to pay for supplemental programs. The following is a brief history of this funding stream:

1970s Illinois lawmakers create the Chapter 1 program in 1973 to provide extra funds to educate low-income children throughout the state. Three years later, the Chicago Urban League sues Chicago Public Schools for failing to concentrate the money in programs that serve poor children. Lawmakers settle the suit in 1978 by mandating that 60 percent of Chapter 1 money pay for low-income services.

1988 The Chicago Panel on Public School Policy and Finance finds CPS is spending only 43 percent of its state Chapter 1 money on low-income services, fueling another lawsuit that charges the district with misspending nearly $2 billion since 1978. Under fire, state lawmakers rewrite the rules governing CPS’s share of Chapter 1 in the Chicago School Reform Act.

1989 The Reform Act shifts control of state Chapter 1 spending from central office to principals and local school councils. The funds will be gradually reallocated in 20 percent increments beginning this year, leading to a full transfer by 1993.

1993, 1994 The financial transfer hits a snag when state lawmakers allow the School Board to balance its budget by keeping $32 million in Chapter 1 money that was due to be distributed to schools.

1995 The state Legislature puts Mayor Richard M. Daley in charge of Chicago’s school system and eases many financial constraints on the School Board. One of those provisions allows the board to freeze the amount of state Chapter 1 money it distributes to schools at current levels, roughly $261 million, and budget the rest centrally. Indeed, ten years later, the board continues to allocate no more than this amount to schools.

1997 The state Legislature scraps the Chapter 1 program and replaces it with poverty grants that provide substantially less money. However, it also increases general state aid and requires CPS to continue distributing $261 million to schools.

1999 A coalition of school reformers lobby state lawmakers to raise by $16 million the minimum amount of poverty funds distributed to schools, and to tie further increases to annual gains in general state aid. Despite initial interest among lawmakers, the plan is never called for a vote.

2003 Chicago stands to benefit when the state Legislature adopts recommendations of the Education Funding Advisory Board to change the formula it uses to calculate each school district’s share of state poverty funds. Briefly, the new formula awards more money to districts that have higher concentrations of poor students and uses a more frequently updated source of poverty data.

However, districts slated to lose money under the new formula—many of them rural—win a “hold harmless” provision that guarantees existing funding levels. The formula awards Chicago a $55 million increase in poverty funds, but the district gets only 25 percent of that amount as the state phases in the new law. Another provision allows poverty funds to be tapped when the state cannot otherwise cover foundation-level education funding, costing winning districts $7.6 million in 2004.

2004 The district freezes 50 percent of the discretionary budgets of schools on probation and requires them to get spending approval from area instructional officers, effectively stripping control away from councils and giving it back to CPS administrators. The following year, 100 percent of discretionary funds at probation schools are subject to AIO approval.

2005 CPS budget officials exclude preschoolers from calculations used to determine how much poverty money each school will receive in the fall. Later, Interim State Superintendent of Education Randy S. Dunn mandates in a letter to CEO Arne Duncan that the district correct its mistake, forcing CPS to use $6 million in SGSA reserves to compensate schools with early childhood programs.

John Myers, Daniel C. Vock