Fracking Delay Harms Under-Funded Illinois Schools
Illinois’ public education system and oil and gas industry share a common theme. The lack of much needed updates has left them both without the tools needed to make Illinois a much better state.
Illinois schools have had to cut teachers left and right in recent years due to poor state funding, while drilling companies have been unable to unleash the state’s enormous shale energy potential due to the IDNR’s delays in drafting rules for the Illinois Hydraulic Fracturing Regulatory Act.
Fortunately, both problems share a mutual solution: the latter law getting enacted as soon as possible.
Got your doubts? Consider the following facts.
No state’s public education system is more poorly funded than what we have in Illinois. The state funded just 28.4 percent of Illinois public school budgets in 2010, more than 15 percent below the national average.
Remarkably, the state can’t even manage to meet that modest level of financial obligation. Due in large part to a pension crisis, public school funding has been pro-rated at 89 percent in recent years. Since 2009, the general education fund has been cut by 12 percent, $861 million total as of 2013.
That has placed even more burden at the local level, where too much has been asked in the first place.
Local tax revenue accounts for more than 60 percent of Illinois’ public school budgets, which is bad news for poorer areas of the state such as Southern Illinois.
The good news: That area of the state just so happens to sit atop the New Albany Shale and other oil and gas resources, where potential oil development can take place. Drilling companies have leased more than a half million acres in Southern Illinois during the past three years, spending hundreds of millions of dollars in leases with landowners.
The bad news: More than a year after Gov. Pat Quinn signed the IHFRA into law, shale development remains on hold indefinitely as the IDNR takes its time finalizing rules and a Nov. 15 deadline creeps closer and closer.
So let’s get this straight: The Illinois’ public education system has been forced to dismiss 6,400 teachers and teacher’s aides between 2008 and 2012, and the average student has received $385 less funding than is legally required since 2010, all due to poor state funding and inadequate property tax revenue at the local level.
In roughly the same timeframe, the oil and gas industry has leased more than a half million acres in the poorest region of a state, which suffers from a 7.9 percent unemployment rate.
The next logical step is obvious: Allow hydraulic fracturing, which would generate millions of mineral tax dollars — 62 percent of which would go directly to public school funding.
The oil and gas industry already contributes greatly to Illinois’ beleaguered public education system. Conventional drilling methods produced 9,980,814 million barrels of oil statewide in 2012.
Tiny Hamilton County received $234,143 in funding via mineral tax revenue for its lone school district, Hamilton County Unit 10, thanks to its 208,379 barrels of oil production. Schools in counties such as White (1,193,407 barrels), Marion (1,001,337), Clay (541,514) and Wayne (525,574) also benefited greatly from their considerable oil production.
But, thanks to the IDNR’s delays enacting the IHFRA, each of those counties are just scratching the surface of their full potential.
A mock assessment compiled by Clay County Supervisor of Assessments Kevin Logan shows that a single well producing 73,000 barrels of oil a year (200 barrels per day) would generate $172,111 in total mineral taxes, $99,265 which would go directly to the tiny Clay City school district. Imagine what a bigger-producing horizontal shale well could generate for the county!
And conservative estimates indicate that if just half of Clay County (468.32 square miles) is prospective, an average of two wells developed per square mile could result in $100 million in tax revenue for the county’s school districts — in a single year.
Shale development outside of Illinois has already saved Illinois schools $59 million in energy costs, as booms in North Dakota, Pennsylvania, Texas and many other areas deliver massive economic benefits. And there’s no reason to believe hydraulic fracturing would be anything less than a success within the Illinois state lines.
After all, there is a reason that more than a half million acres have been leased in this area of the state, already producing hundreds of millions in revenue for landowners.
There is a reason the Illinois Chamber of Commerce estimates hydraulic fracturing could create more than 45,000 desperately-needed jobs for a state with one of the highest unemployment rates in the country.
There is a reason that the Illinois Chamber of Commerce estimates shale development could generate $9.5 billion in economic activity.
IDNR is in the perfect position to take the final step necessary to make hydraulic fracturing in Illinois a reality and save the local school systems in southern Illinois.
By the agency’s own admission, it’s just a matter of time.
“The law is the law,” DNR spokesman Chris McCloud said recently. “And it says hydraulic fracturing is going to be allowed in Illinois.”
The question now: How long can Illinois schools afford to wait?