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IASB Legislative Report 104-17

Delivered via email: June 2, 2025
 

General Assembly Passes FY26 Budget, BIMP, and Revenue

On Saturday night, the Illinois General Assembly passed a $55.2 billion budget for fiscal year 2026 (FY26), aligning closely with the $55.4 billion in anticipated revenue. The final FY26 budget made almost $400 million in cuts from Governor Pritzker’s proposed budget that was introduced earlier this year. The FY26 budget also includes more than $800 million in revenue enhancements that were adopted in the Revenue Package, which is detailed below. The General Assembly also passed the Budget Implementation Plan, also known as the BIMP, which is the substantive companion to the budget appropriation bill; it puts the state budget into action by making the necessary changes to state laws so the appropriated funds can be properly spent. Democratic leaders cited declining federal funding and a weakening economic outlook as reasons for the downward revisions.

For K-12 education, the General Assembly’s final FY26 budget still largely aligns with the Governor’s recommended FY26 budget with two important exceptions:
  1. Only $307 million in new funding was allocated to the Evidence-Based Funding formula (EBF), falling $43 million short of the statutorily required $350 million annual increase. As a reminder, of the $350 million alocated to EBF annually, $300 million goes to the formula and the remaining $50 million goes to Property Tax Relief Grants. The $43 million was cut from the Property Tax Relief Grant portion of EBF. When presenting the budget in Committee, Leader Robyn Gabel noted that there have been some questions about the effectiveness of the Property Tax Relief Grants and therefore, the General Assembly determined to pause the grants for FY26. Legislators noted that the decision to reduce EBF only impacts the Property Tax Relief Grant and not the distribution of the remaining dollars to school districts through the formula
  2. The Teacher Vacancy Pilot Program was reduced from $45 million to $30 million, down $15 million from the Governor’s budget proposal and the fiscal year 2025 (FY25) funding level. This is the third and final year of this 3-year grant program which is an initiative of the Governor.
Mandated Categoricals (MCATs) were not reduced beyond the Governor’s proposed FY26 recommendations. The Governor’s proposed budget maintained FY25 MCATs levels, however, due to increased claim costs, an additional $122 million was needed to keep the proration levels flat for Regular Transportation, Special Education Transportation, and Special Education Private Facilities costs. Thus, proration of these three MCATs will increase further in FY26.

The budget also includes a $75 million allocation to ensure the Tier 2 pension system complies with Social Security minimum benefit standards. However, the proposed Tier 2 omnibus bill (SB1937), which would have addressed the Social Security Wage Base in addition to modifying other pension benefits (retirement age, annual pension increase, calculation of benefits, etc.), was not called in the final days of session. While allocating funds to pay for the Social Security Safe Harbor fix was a first step towards addressing this issue, legislative changes are still needed to implement such a change.
 

FY26 Revenue Package (HB2755)

To help fund the FY26 budget, the legislature also passed the FY26 Revenue Package to raise a number of revenue streams projected to bring in over $800 million. Some of the key revenue enhancements in HB2755 are included below:
  • Tax Amnesty Program ($228 Million)
  • Motor fuel sales tax revenue transfer ($171 Million)
  • Sports Betting Tax Increases ($36 Million)
  • Hotel Operator Occupation Tax ($15 Million)
  • Telecommunications Tax ($49 Million)
  • Corporate Tax Changes ($72 Million)
Additionally, several changes referred to as “leveling the playing field” were made, as well as changes to the Tobacco Tax Act.
 

Key Legislation Impacting K-12 that Passed in the Final Days

Several bills of interest to school board members passed both chambers in the final days of session. A comprehensive list will be sent to members in the coming months, but some highlights are included below.
  • HB2967 - expands dual credit opportunities, enabling more high school students to earn college credit before graduation.
  • HB3522 - creates a direct admission program between Illinois high schools and state universities, offering qualified students automatic acceptance and simplifying the college enrollment process.
  • SB1519 – addresses student ticketing and limits the use of municipal ordinance violations in schools.  
  • SB1740 - eliminates certain mandates and establishes the School Code Mandate Reduction Council to review and recommend the removal of outdated or burdensome requirements.
  • SB1920 - tasks the State Board of Education, in consultation with stakeholders, with creating guidance for school districts and educators on the use of artificial intelligence (AI) in elementary and secondary education.
  • HB3247 - codifies the Supreme Court decision of Plyer v. Doe which prohibits the denial of a free public education based on the child’s perceived or actual immigration status or the child’s parent’s perceived or actual citizenship or immigration status.

Key Legislation that Stalled in the Final Days

Several high-profile K-12 legislative proposals that failed to make it across the finish line in the final days are included below.
  • HB3772 – An initiative of the State Board of Education that puts limits on the use of suspensions and expulsions for students in grades K-2.
  • SB2427– An initiative of the Governor’s office that would require districts to develop and implement a cell phone policy in K–12 classrooms during instructional time.  
  • SB1937 – An overhaul of the State’s Tier 2 pension system which would address the federal Safe Harbor issue as well as make changes to other retirement benefits.
  • SB243 – An omnibus FOIA/OMA bill.
Other high-profile legislative proposals that were not passed before the General Assembly adjourned include the following bills.
  • HB3438 - A major transit bill that would have restructured administrative oversight of Chicago-area public transportation agencies and provided new funding.
  • SB40 - An energy bill aimed at protecting the state’s power grid. The measure sought to enhance reliability amid growing demand, severe weather events, and the broader shift away from fossil fuels.
  • HB1832 - An omnibus elections bill which contained 25 election and ethics-related provisions.

K-12 Budget Summary

K-12 Budget Highlights

Evidence-Based Funding (EBF) - $8.9 billion total appropriation to the EBF which represents a $307 million increase over FY25. This is $43 million less than the $350 million statutory minimum and was achieved by eliminating the Property Tax Relief Grant in FY26.

Mandated Categoricals
  • Special Education Transportation, Regular Education Transportation, and Special Education Private Tuition were held at FY25 levels, despite $122 million increased claims in FY26 over FY25. This will lead to increased prorations in FY26 for these three MCATs.
  • Special Education Orphanage and Regular Education Orphanage increased by $20 million. Both of these MCAT line items are statutorily required to be funded at 100% and the additional $20 million achieves that funding level.
Teacher Vacancy Pilot Program - $30 million total appropriation which represents a $15 million decrease when compared to the FY25 enacted appropriation.

After School Programing - $35 million awarded for after school programs in FY26.  

Career and Technical Education (CTE) - $59.3 million in total appropriation for CTE. This represents a $1.3M increase in state funds when compared to FY25.

Dolly Parton’s Imagination Library - $3.3 million in total appropriation to continue the implementation and expansion of the Dolly Parton’s Imagination Library.    

Computer Science Equity Grant - $3 million which represents level appropriation to FY25.

Illinois Comprehensive Literacy Program - $1.5 million in total appropriations for the implementation of the Illinois Comprehensive Literacy Program and a state numeracy plan. This represents a $1.5 million decrease in state funds when compared to the FY25 budget.

Teacher Recruitment line items - All of which represent level funding to FY25.
  • $8 million for the Minority Teachers of Illinois (MTI) Scholarship
  • $10.75 million for the Golden Apple Scholarship
  • $6 million for Grow Your Own Teachers

Advocacy Ambassador

The IASB Governmental Relations team will be hosting a webinar on Monday, June 9 from noon until 1 p.m. for registered Advocacy Ambassadors. This webinar will take a closer look at the budget, other bills that passed both chambers, and to find out what bills might come back during Veto session. To register for this webinar, visit the IASB Events Calendar. If you are not currently an Advocacy Ambassador and want to learn more about the program or to sign up, visit the IASB website under the Advocacy tab.
 

Legislative Tracking List

The IASB Governmental Relations team tracks all legislation that may impact K-12 public education and makes regular updates to that list. As a reminder, although a bill may be filed, many factors influence whether it makes its way through the legislative process. Some of those factors include whether the bill gets assigned by leadership to a committee, the extent of any opposition, and the priorities of the sponsor.
 
In an effort to ensure that IASB members can monitor all bills the Governmental Relations team is tracking, legislation has been broken down into ten different topics:

IASB will continue to monitor all bills and keep you informed as bills start to move through the legislative process.