School districts in Cook County drastically hike property taxes. Here's why.

The Cook County treasurer just released a report titled “How State Laws Failed to Stop Decades of Skyrocketing Property Taxes.” Spoiler alert: It finds property taxes are too high in Cook County.

OK, with that title, the aforesaid finding isn’t exactly unexpected. It’s also spot-on.

According to the report, from 1995 through 2024, Cook County property taxes increased by $6.8 billion or 182%, while the average wage grew by 161%. Because of that, the report noted “a larger share of people’s income is going toward paying their tax bills,” which isn’t ideal.

The report also found school districts “hiked property taxes at nearly double the rate of inflation during the 30-year period analyzed,” increasing levies by 189.4%, while inflation, using the consumer price index, increased by 91%. That’s true but somewhat overstates the increase for two reasons.

First, the CPI covers changes in prices for all goods and services in the economy — from bread to bowling. Schools purchase very few items measured by the index. The employment cost index, on the other hand, just measures changes in payroll costs over time.

The vast majority of school expenses are payroll-related, so the employment cost index is a more accurate inflation metric for evaluating school spending. Over the period studied, the employment cost index grew by 135%, so district spending did outpace inflation, but not by as much as the report indicates.

Second, districts could theoretically limit spending increases to inflation — if Illinois schools were adequately funded. They aren’t. In fact, education funding in Illinois is currently $3.2 billion less than what the evidence indicates is required to provide every child a quality education.

Moreover, as the report notes, Illinois ranks last in the nation in the portion of K-12 education covered by state-level tax revenue. That pushes the primary burden for funding schools down to local property taxes. So it’s no wonder schools increased property tax levies at rates that outstrip inflation — it’s the only way they could fund needed educational programming.

The report also includes a telling example of the very real fiscal problems created when property taxes aren’t increased sufficiently over time. It correctly notes Chicago Public Schools is the sole district in Illinois required to fund most, as in 65%, of the contribution owed to its pension system, the Chicago Teachers’ Pension Fund. That’s because CPS is charged with repaying the unfunded liability owed to the fund.

The state pays the remaining 35%, which covers the normal cost of benefits being earned by current pension fund members. For every other school district in the state, pensions are handled through the Illinois Teachers Retirement System. The state pays nearly all — over 97% — of the Teachers Retirement System contribution, covering both unfunded liability and normal cost.

Context matters: Why city taxpayers pay double on teacher pensions

This pension funding discrepancy between CPS and other districts causes two problems, according to the report.

First, because the Chicago Teachers’ Pension Fund is severely underfunded and CPS has the primary responsibility to fund that system, it creates fiscal pressure that drives up local property taxes. This is absolutely true.

Second, it creates a situation where “city taxpayers pay double, because they help cover the cost of both Chicago’s and the state’s teacher pension systems. Suburban taxpayers only pay once.” While technically accurate, the report doesn’t provide the context needed to understand why that outcome is actually appropriate.

See, although the pension fund is underfunded today, that wasn’t always the case. As recently as 2001, the pension was fully funded. However, then-Mayor Richard M. Daley, who had an aversion to increasing property taxes for political reasons and who also controlled the management of CPS, had CPS zero-fund its pensions for a decade. Ten years, no contribution. So that naturally engendered a huge unfunded liability.

During that 10-year hiatus, revenue that should’ve covered CPS pensions was instead diverted to fund educational expenses. That irresponsible fiscal maneuver benefited city taxpayers because CPS received a higher level of funding for education than what they were paying for in taxes. Folks living in other parts of Illinois didn’t benefit one whit from this mayoral largess.

On the flip side, Illinois’ underfunding of the Teachers Retirement System was done to divert revenue that should have covered pensions to instead pay for public services statewide, meaning everyone in Illinois, including Chicagoans, benefited from that irresponsible fiscal practice, and hence everyone should have skin in the game to repay it.

The report highlighted other negative consequences that ensue from the current overreliance on property taxes and accurately noted state actions are at least in part to blame.

Indeed, the most salient point the report makes is the one decision-makers should take to heart: Getting tax policy wrong at the state level creates fiscal issues at the local level that in turn push property taxes too high. So to end the overreliance on property taxes, the state must get its fiscal house in order.

Ralph Martire is executive director of the Center for Tax and Budget Accountability, a nonpartisan fiscal policy think tank, and the Arthur Rubloff Professor of Public Policy at Roosevelt University.