Education
11:20 am
Thu October 16, 2014

Has public education funding gone up or down under Gov. Snyder's watch?

Update 11:20 a.m.

As predicted, the debate rages on.

Tons of people have written about this issue over the last year, and today the Citizens Research Council released some more analysis on this question, so we thought we'd add their findings to this post we published last May. (Our investigative reporter, Lester Graham, is also looking into this question and will have more for us in the coming weeks.)

What did the Citizens Research Council find?

You can read the full-report here, but in short they tackled these three questions:

1. Is school funding up compared to four years ago?

The answer is "yes." The CRC finds total state funding is up by $1 billion comparing FY 2011 to FY 2015, but that money isn't going into the state's classrooms:

...the increase is almost exclusively earmarked to satisfy school employee retirement costs, specifically legacy costs arising from the financial market downturn and state retirement system reforms.

2. Has education funding gone up as much as it could have?

The answer is "no." Two things here (also mentioned below as well): Gov. Snyder the the state Legislature significantly changed tax policy which "substantially reduced the amount of state tax revenue deposited in the School Aid Fund,"; and the School Aid Fund, traditionally used for K-12 education, is now funding higher education spending, and pre-K spending.

The CRC writes:

Combined, these decisions have effectively reduced the amount of state resources schools receive.

 3. Are individual school districts better off today than they were four years ago?

To this we get a "reply hazy try again" from the the CRC's Magic 8-Ball.

Per-pupil funding is up (see more on the "foundation allowance below"), but schools are paying higher retirement bills, and they're struggling with declining enrollment. Schools in Michigan are largely funded based on the number of kids attending their school, if that number goes down, funding goes down.

Again, from the CRC report:

Because declining enrollment is a pervasive issue across the state, the vast majority of traditional public school districts must manage with less non-retirement funding.

As we note in our original post, the bottom line is that funding for schools has remained relatively flat, while the expenses to run them are going up. 

Original post, May 5, 2014, 2:33 p.m.:

Funding for public schools in Michigan is becoming a centerpiece in the race for Michigan's next governor.

In this corner, you have current Gov. Rick Snyder:

"I'm proud to say, in the last three years we've increased educational spending at the state level for K-12 each and every year to the point where we've invested $660 more per student than there was previously before I took office. That's a huge investment in K-12 education."

And in the other corner you have the guy who wants his job, Democratic hopeful Mark Schauer:

"[Snyder] cut over $1 billion from education to pay for his $1.8 billion corporate tax break."

There have been a lot of "so-who's-right-here?" analysis pieces written. You can find them herehere, and here.

As always, with budget numbers – especially with school funding budget numbers – it can be quite confusing. And politicians cherry pick their favorite numbers to make a point.

This much is true: Schools all over the state are feeling the pinch.

Forty-six school systems across Michigan are running in the red. And if they're not running in the red, many are making big cuts to stay in the black.

School funding is a hot-button political issue – especially now that some parents are noticing more kids packed into the classroom, half-day kindergarten is gone, some art teacher positions have been cut, and some schools have closed.

So can we blame those at the top?

Did Gov. Snyder cut more than $1 billion from public education in Michigan?

This is what Democratic hopeful Mark Schauer is saying as part of his campaign against Gov. Snyder.

Analysis of Gov. Snyder’s and the Republican-led Legislature’s first proposed school aid budget shows an overall decrease of $930,663,300 in school funding – close to a billion-dollar cut – compared with the last year of Gov. Granholm's tenure.

But in their analysis pieces, the Detroit Free Press and MLive point out that those planned cuts didn’t come to pass.

Actual cuts, they wrote, amounted to a much more modest cut – $393 million, according to the Freep, and $235 million according to MLive – nowhere near a $1 billion cut.

Not a cut, but $1 billion taken off the table

That’s the other perspective being offered on this $1 billion number.

The governor and the Legislature did make big changes in how the state collects revenue, and how it spends money from the School Aid Fund.

The former director of the House Fiscal Agency, Mitch Bean, argues those changes do amount to $1 billion a year "taken off the table" for K-12 education in Michigan.

Businesses in the state paid more than $600 million in taxes each year through the old Michigan business tax.

That tax was scrapped. The new business tax no longer pays into the School Aid Fund. And in 2011, the Republican-led Legislature and the governor tapped the School Aid Fund for other purposes.

"In my view these changes are more properly characterized as a reduction in available resources rather than cuts..."

The state continues to use part of the School Aid Fund to help fund Michigan's community colleges and universities to the tune of $400 million a year.

So for those who look back on those changes, the math works out this way:

$600 million no longer collected in business taxes + $400 million given to post-secondary education = $1 billion taken off the table for K-12 education.

Mitch Bean writes:

“Part of the running argument about K-12 funding revolves around whether or not there was a $1 billion cut to schools.  In my view these changes are more properly characterized as a reduction in available resources rather than cuts – but they still have important implications.

Where would we be if these changes didn’t happen and $1 billion more was available to fund K-12 each year?”

Did Gov. Snyder increase education spending by $660 per pupil in Michigan?

This is what Gov. Snyder said in his last State of the State address.

But, again, that increase depends on how you count the numbers.

Critics of the governor’s numbers say he’s conflating two things: money going directly to school districts, and money going to the overall education budget in the state.

When the term “per-pupil” is used, it’s generally thought of as the state’s “foundation allowance.”

The foundation allowance has historically correlated with “per-pupil” funding coming from the state School Aid Fund.

You can see how the foundation allowance has changed for your school district here.

And here’s a look at the increases (and decreases) in the state’s basic per-pupil foundation allowance over the last 20 years.

Changes in the state's per-pupil foundation allowance.
Credit Senate Fiscal Agency

 According to Mitch Bean’s piece in Bridge Magazine, Lies, damn lies and education funding,  Gov. Snyder’s $660 increase in per-pupil spending includes budget items like:

  • debt service for the school bond loan fund
  • money for the state Center for Educational Performance and Information (CEPI)
  • the Michigan Virtual University
  • the Michigan Public School Employee Retirement System (MPSERS) rate cap for libraries.

In his piece, Bean says:

“This money doesn’t go directly to districts and hardly seems appropriate to include in a per-pupil calculation for schools.”

Retirement and health care chewing up the budget

One of the big items Gov. Snyder counts in his education funding increase is the amount the state spends directly on the Michigan Public School Employee Retirement System.

Health care and pension costs in the system have ballooned over the years.

The Citizens Research Council wrote a report highlighting how these costs are impacting school districts:

“From a school district’s perspective, the increased contributions into the MPSERS retirement system essentially mean less revenue available for other educational and administrative purposes.”

Here’s a chart the CRC produced showing the amount that must go toward covering these costs:

How retirement and healthcare costs are eating up more of a school district's budget.
Credit CRC

So less money in Michigan’s overall education budget is going directly to classrooms, but the governor's team argues the money it's spending on retirement and health care costs is helping the bottom line for school districts. They say when the state puts money into the pension system, schools can put more of their dollars into the classroom.

So it all depends on which numbers you count and how you count them

If you want to get a general handle on how much money the state is spending on education, you can look at this chart put out by the Senate Fiscal Agency:

If you look at the gross dollars spent from the school aid fund, it shows, that yes, school funding has increased over the last three years.

But the overall trend is pretty flat.

Mitch Bean notes that the average yearly increase in education funding that goes to the classroom is about 1.03% – that's less than the annual inflation rate.

Bean's conclusion:

"...when you pull back to look at a decade-long trend, education funding may not be trending much of anywhere."

When it comes to education funding, politicians are going to try to use numbers that make them look good – or at least look better than their opponent.

The bottom line for Michigan schools is that expenses to run them are going up, while funding remains relatively flat.