A project led by University of Illinois associate professor of economics Elizabeth Powers is reshaping how Illinois funds its K-12 public schools. Powers, associate director of the Institute of Government and Public Affairs (IGPA), partnered with the Illinois State Board of Education (ISBE) to develop a revised Comparable Wage Index (CWI), a crucial part of the state’s Evidence-Based Funding (EBF) formula.
The CWI is used to adjust funding targets for school districts to account for characteristics of their local labor markets that the district cannot affect. The CWI is higher in areas with higher costs of living because workers will not move to expensive areas if the same pay is offered elsewhere. The CWI is lower in areas with popular amenities that workers value.
Although the legislation that created the EBF formula mandated a CWI update every five years, changes to this foundational element of the formula had been delayed by the complexities of revising and updating the methodology and data. After a three-year delay, ISBE turned to the University of Illinois for a solution that was rigorous, state-specific, and legally compliant.
Powers, in collaboration with co-investigator David Albouy, professor of economics at Illinois, led a data-intensive analysis using the U.S. Census Bureau’s American Community Survey. Their work focused on college-educated individuals employed in Illinois – excluding those working in K-12 education – to build an index independent of local teacher compensation policies. The model assumes that workers are mobile across the state and that compensation must reflect variations in cost of living and amenities. For instance, attracting the same worker to Chicago versus Champaign requires different salary levels, largely due to differences in housing costs and quality-of-life factors.
The resulting index, tailored specifically to Illinois, received approval from the State Superintendent of Education after a thorough review involving ISBE leadership, the Lieutenant Governor’s office, and the agency’s Professional Review Panel. On June 3, the Illinois General Assembly codified the work by amending the EBF statute. The legislation now states that “the State Superintendent shall re-determine the CWI using the methodology identified in a comparable wage index study developed by the University of Illinois.”
“This work exemplifies what IGPA is all about – bringing top-tier academic research to answer urgent policy questions in Illinois,” said Powers. “It’s rewarding to see our analysis directly inform decisions that will help create a more equitable funding system for students across the state.”
Since 1947, the Institute of Government and Public Affairs has served as a vital bridge between University of Illinois researchers and public decision-makers. As the University of Illinois System’s flagship public policy institute, IGPA connects evidence-based research with real-world policy to help build a stronger, fairer Illinois.