Paying for Michigan Schools: State and schools can't get budgets together

Aug 9, 2010

Michigan's schools are required by law to have a budget by June 30th. The legislature doesn't have to complete its budget until September 30th. So for the schools, it's hard to figure out a budget when you don't know how much money you're going to get from the state.

"I mean, that's crazy," said Tom White, Chair of a group called SOS (Save Our Students Schools and State), "We don't know until it's so late in our budgeting year, because every year the legislature appropriates funds, but they don't get around to it in a timely fashion.

This year the legislature got credit for getting the schools budget in early on July 1st. That's still a day after the schools had to turn in a budget. White says in reality, the school administrators and school boards start working on their budget months earlier.

"School districts are doing their budgets beginning in January of the year. So, it's very difficult for schools to do appropriate planning when you don't know until June --last year it was in October-- before they gave us our budget. So, that uncertainty that's created by the system and by Lansing is very frustrating for people," White said.

Legislators who decide how much money schools get say in reality this difference in the fiscal calendars is just not that much of a problem. Ron Jelinek is chair of the K-12 School Aid and Education subcommittee in the Republican controlled Senate. Senator Jelinek says school officials should just plan conservatively, "You know, if they were budgeting on last year's dollars, the wouldn't probably run into problems this year."

But that's not always the case. Last year, even after the state told schools how much money they should budget, tax money designated for schools didn't come in as expected and schools were told they'd have to cut by $165 per student. That amounted to about a 3% cut well into the school year after contracts were signed and commitments made.

"That's true. And you know that did give them a whammy. We didn't see that coming. Nobody saw that coming," Jelinek said.

And school districts found themselves scrambling to cover the costs they'd already incurred. The only choice many of them had was to cut staff like counselors, librarians, and sometimes cuts in the classroom.

Legislators in the Democratic-controlled House don't seem to have a lot of empathy either. Tim Melton chairs the House Education Committee. He says school districts get numbers that should be "pretty close" in May from a conference when the House and Senate Fiscal Agencies get together with Treasury to estimate what kind of revenues the state will take in. That conference issues a report.

"We have a Revenue Estimating Conference. Everyone knows what that number is and a lot of the budgets are, you know, projected based on that number. And what we tell most of the disctricts (is) be very conservative because we don't know if revenue's going to go up or go down," Melton said.

Being conservative for some districts means routinely laying-off employees at the end of the school year and hiring back whom they can afford when they get more solid numbers.

Iris Salters is the President of the Michigan Education Association, a teachers union. She says school districts should not be forced into this kind of situation.

"They have notified people that they are laid off, cut programming in some cases. Then, that if it had been a little earlier they wouldn't have had to do that kind of thing and not know where they are going," Salters said.

And Salters says for teachers and other school employees not knowing if they have a job next year is nerve wracking and they feel like they'd better go job hunting.

"So, a lot of times people are out looking when they don't need to be looking. And sometimes they find those jobs in other entities and are gone! And we've lost them just because of the process."

So there's a lot of chaos in the fact the schools' fiscal year and the state's fiscal year don't match.

You might be asking, "How'd we get in this mess?"

Well the fiscal years used to match. But in 1976, working on the 76-77 budget year, the state was in a financial bind. Through a little legislative sleight of hand, the fiscal year was extended by three months, giving the state some time to deal with the bills. Instead of ending June 30th, it would end September 30th.

When economic times were good, school districts pretty well knew what to expect, so it wasn't that big of a deal. But these days, the economy is a mess and no one really knows how well tax dollars will come in.

So, why not just move the fiscal year back to the way it used to be? Basically the state can't afford it. The legislature would have to come up with its yearly obligations three months early. So that's not going to work.

Another suggestion is to budget ahead two years instead of year-by-year.

Representative Tim Melton has heard that suggestion before, "And the problem with the two-year budgeting plan is that our legislature can't put a budget onto a future legislature. Now you can have a rolling budget where the second year is a projection, but all it is is for planning purposes. So, we really can't have an actual two-year budget."

And besides that, state revenues have been so wildly unpredictable, an analysis by Public Policy Associates indicates a two year budget would be little more than a piece of fiction.

So any other ideas?

"Well, the will of the legislature to get the job done earlier could solve that," says Craig Thiel. He's with Citizens Research Council of Michigan, a nonpartisan public policy research group. He says the legislature has not gotten budget numbers to the school districts earlier because school funding is just one of the problems the legislators are facing in these tough financial times for the state.

"They're pushing off to the very last minute the decisions about what to do about funding for all state programs: schools, prisons, environment, you name it," Thiel said.

And this fiscal calendar problem will likely continue to be a problem for schools -as well as local governments and univeristies - as long as state money is tight and revenues are down.

"I wouldn't call it the biggest issue facing our state or school funding. We'll try to get the budgets done prior to their June 30th date. It's not always possible. It's a lot easier when revenues are going up. There's more money to spend. But, you know, we're facing cuts in most cases," said House Education Committee Chair, Tim Melton.

So, school districts will simply be at the mercy of the legislature. They can only hope lawmakers give them a budget earlier.

RELATED LINKS:
Public Policy Associates: Two-Year Budget is No Quick Fix
Citizens Research Council of Michigan: A Day Late and a Few Hundred Million Dollars Short