Paying for Michigan Schools: More cuts to school costs

Aug 12, 2010

School districts across the state have been cutting staff and freezing teacher pay to get through budget cuts made by the state.

Iris Salters is President of the Michigan Education Association, a labor union. She says teachers and other school officials are dealing with the cuts, but it's getting to the point where it's affecting the education your kids are getting.

"If you've been cutting your budget every year, there gets to be point where there's no more fat to cut. It is actually cutting into the bone, the programming of schools. And that's what you have now," Salters said.

She believes there could be further savings in some school districts, but it would mean some very unpopular decisions such as closing neighborhood schools.

"And a lot of times those schools are servicing very few students, but when you try to close a school building in a community, the people that live in that community fight that tooth and nail," Salters said.

Closing school buildings is tough enough, but savings can also be made in consolidating districts. That's even less popular. Communities' identities are often tied up in the school athletic teams and mascots. It doesn't happen very often.

There is one consolidation in the works in the state. Last week voters approved consolidating the Britton-Macon school district and the Deerfield school district, both in Lenawee County in southeast Michigan.

Chuck Pelham is serving as Superintendent in both districts. He says the two small school districts already merged their sports programs several years ago and that was one major hurdle. The final decision to consolidate seemed logical after the state mandated new core curriculum which cost the districts more. To pay for it, the districts would have to make cuts in other programs.

"Well, the community didn't want to cut, you know, our band and they didn't want to cut the art and they didn't want to cut those programs. So, they said by going with Deerfield, we could have enough finances together to offer the required curriculum," Pelham said.

Pelham says combining the districts will mean saving money on office staff, and other support services, freeing it up for band, art, and the classroom. It's not an easy process, but other districts are asking Pelham about it.

"Getting a lot of calls, a lot of phone calls from other school districts How did you do this; what are you looking at?' because no one's done it in so long," Pelham said.

Most of the costs of running a school is personnel. On average, personnel account for 80-85 percent of operating costs. That has many people looking at ways to cut those costs including legislators who think teachers need to agree to scale back on some of their salary and benefit packages.

Ron Jelinek is a Republican state senator who chairs the K-12 School Aid and Education subcommittee.

"I'm not saying that they're overpaid, but this is difficult times. And they may have to give some concessions. Rather than eliminating classes to save money, we have to see our school personnel reduce costs and maintain the classes," Jelinek said.

Many school districts have recently negotiated pay freezes for teachers, not only for salaries, but for step increases, the automatic raises tied to years of experience and level of education. Some districts are also asking teachers to contribute more to health insurance.

And this year the state legislature approved making school employees pay three-percent of their pay toward retiree health care something the teachers union is trying to block. That's on top of six-to-seven percent they pay toward the pension fund.

Tim Melton is a Democratic state representative. He Chairs the House Education Committee.

"You know, we've got pension costs that are out of control, health care costs are out of control, retiree health care costs are out of control. You know, at one time that was about five-percent of the School Aid budget; it's upwards to 19-percent and all projections if we didn't do something about it would be up to 30-percent. That means out of every dollar spent, you know, 19-cents of it immediately is going just to the benefits for health care, retiree health care and the pension system," Melton said.

And state legislators such as Melton feel more changes are needed to cut down on personnel costs at schools.

"There are not many companies out there that offer pensions anymore. I mean, most of our counties, cities, villages and townships have moved to a 401-K which is a defined contribution type of retirement plan. We're still doing pensions. So, we talked about potentially looking at a 401-K style. You know, the problem right now is that transition would cost the state about 150-million dollars up front. So, again, it's an investment to a reform that long term will save us money. But when money's tight it's hard to make that investment up front," Melton said.

Some legislators and others look around the state and see the private sector, like automakers, cutting back. The Michigan economy is forcing those cuts. Teacher salary and benefits seem out-of-step with the rest of the workforce to some observers.

Michael VanBeek is with the conservative think tank the Mackinac Center for Public Policy. He says teachers need a heavy dose of economic reality.

"You know, we did a survey of every school district in the state and found that the average family plan offered to a teacher that teachers contributed on average about four-percent to the cost of the premium. The average across the state in all sectors, private and public, is 22-percent. There's a large disparity there. So, more cost-effective health insurance plans and more sharing of the costs of those plans I think would be beneficial to districts and prevent them from having to be in these situations where either they get more revenue from the state or they cut programs and cut staff," VanBeek said.

But groups representing school employees don't see it the same way. The Michigan Education Association President, Iris Salters, says hurting teachers is not the right approach.

"This economy is not going to come back by my looking at you and saying I lost my health insurance; so, you ought to lose yours.' That's not going to get us out of this hole. What we ought to be saying They still have their health insurance. Why don't I have it? And how can I get it back?'" Salters said.

And the teachers have their supporters. Lynn Jondahl is a former legislator and founded the liberal think tank Michigan Prospect.

"I don't think you get a better educational program by reducing the health care and pension benefits for teachers. I don't think that improves what happens in the classroom. You know, the focus on cuts like that as offering a promise and a hope that is substantial, I think, is illusory," Jondahl said.

Short of cutting teacher's benefits, school districts are left with cutting the 15-percent of their budgets that are not personnel costs. The legislature is considering a non-partisan commission to look at ways districts could consolidate some of those support services and save some money. But those cuts might not be enough, so more drastic budget cuts are still on the table.

RELATED LINKS:
Michigan Education Association: Enough is Enough
Mackinac Center for Public Policy: School Funding Myths
Michigan Association of School Administrators