Shifting money away from schools

Apr 8, 2011

Governor Rick Snyder’s budget proposal would change how we fund public schools. That change would start with a cut to schools at a time when the School Aid Fund is growing.

The School Aid Fund is one of the main sources of money for K-12 public schools. Since it was established by the 1908 Michigan Constitution and even though in the 1963 Constitution “higher education” was added, the money in the School Aid Fund only has been used to pay for educating public school children. That is, until this year. 

The last legislature ‘borrowed’ a couple of hundred-million dollars from the School Aid Fund to give to community colleges. I say ‘borrowed,’ but there’s no indication that it’s going to be paid back.

Federal stimulus money helped make up the difference. But for this coming fiscal year, there is no more federal stimulus money.

Good thing the School Aid Fund is seeing some growth. That fund gets money from a variety of sources:  a piece of the sales tax, some property taxes, the lottery and several other revenue streams. With the economy improving ever so slightly and people spending a little more, the School Aid Fund has more cash coming in. There is actually enough money to increase school funding $260 per pupil, according to the Michigan Association of School Boards.

But that’s not what the Governor wants to do. Instead, he plans to take money out of the School Aid Fund and give it to community colleges again. He also wants to take money out of the School Aid Fund and give it to the 15 public universities. At the same time the Governor’s budget cuts public university funding from the General Fund by 15%. 

The net result is $900-million that would have come out of the General Fund, will instead come out of the School Aid Fund.

Craig Thiel is with Citizens Research Council of Michigan, a nonpartisan public policy research group. He says the Michigan Constitution indicates the School Aid Fund can be used for higher education, but it’s never been done.

“Practice has been to fund K-12 exclusively out of the School Aid Fund and not fund higher education with those dollars.”

Thiel says Governor Snyder’s budget breaks with that tradition.

“With this proposal, the General Fund, the School Aid Fund are effectively merged.”

That relieves pressure on the cash-strapped General Fund which under the Governor’s plan will see a lot less money because of tax cuts for businesses.

Peter Spadafore is with the Michigan Association of School Boards. He says the 1963 Constitution might allow it, but in 1994 voters approved Proposal A which fundamentally changed how we gather and distribute money for the School Aid Fund.

“You take a look at the ballot language. It never mentions higher education; it never mentions community colleges; it mentions schools.”

And Spadafore says Governor Snyder’s budget means instead of more money to educate school children, school districts will see another cut in the state per pupil allotment.

“It’s the largest cut we’ve ever seen from state funding. We’re pretty irate about the transfer because it’s a huge shift, almost $700 shift from a $260 increase to a $470 cut.”

The K-12 educators and Democrats say that $700 difference amounts to a 10% cut in per pupil funding.

Republicans say ‘Whoa; wait a minute.’  Two things... just because the School Aid Fund grew doesn’t mean K-12 is guaranteed that money so there is no $260 increase… and an accounting trick last year is being straightened out this year… so really it’s only a $300 reduction in per pupil funding -  or about a 4% cut.

Governor Snyder sees the reduction as part of the “shared sacrifice” to get state government spending under control and make lower taxes for business possible. 

The Governor also wants to use the budget to nudge local governments such as school boards to work harder to cut spending. 

“It could drive them to best practice.  And in many opportunities there are ways for them to improve by doing the same thing, again, that we are asking of oursevles.  And I use the illustration, again, of the schools where we talk about if they change their medical co-pays from 10% to 20% or zero to 20%, there’s a very significant savings there."

 

 “I think Governor Snyder’s proposal aims to use the purse strings to fore consolidation and wage concessions out of employees.”

Again, that’s Peter Spadafore with the Michigan Association of School Boards. He admits the cost of health care for retirees, health care for current employees and pension costs increase every year. And even then the pension fund is still underfunded. But Spadofore says the Governor’s budget cut to schools is too much, too soon.

“What the Governor’s proposal does not recognize is that the collective bargaining process takes time. And to ask school districts that were looking at a $260 per pupil increase to try to make up for a $470 per pupil loss in a few short months is very unrealistic.”

The K-12 educators say it’ll mean even more cuts to programs such as band, art, electives for college-bound students. School districts say it also could mean laying-off teachers and crowding students into bigger classes. 

Republicans in the legislature say those are not the only options. Jase Bolger is Speaker of the Republican-held House of Representatives.

“I would go back, also, to the talk of lay-offs and say that it doesn’t have to happen that way.  If people are willing to reset their compensation like those, our bosses, those who pay our bills have done, then it doesn’t have to lead to lay-offs.”

Speaker Bolger says it’s about serving the taxpayers. And, he adds, making this a debate about centralized state control versus local control,  as some municipalities and school districts have said,  does not help.

“It’s up to them to come forward and really work in partnership, to not focus on the legislature versus local, to look at the focus on our taxpayers and those who we provide our services for.”

Back in 2004 a report from the then State Schools Superintendent, Tom Watkins, predicted the increasing cost of school retiree health care, health care for existing employees and pension costs were unsustainable given the revenue of the School Aid Fund.  Today, Tom Watkins says things are not much better. The state has not done enough.  Local school districts have not done enough.

“So, we have either two choices:  step up, man up and say we’re going to fund.  We believe that teachers, educators in this state deserve significant increases, deserve the health care and the pensions that they are currently getting, stand up and put the money in the budget for that –OR- deal with the cuts.”

Watkins calls for complete transformation. Start from scratch. Decide what kind of education we want to kids today to make them competitive in the world market.  Figure out the cost.  Then find the most efficient way to raise the money and educate the kids.  That means redefining what a school is… what a teacher is.  Do we need school boards and school districts?  Do we need superintendents and principals?  He says in a world connected by the internet, bricks and mortar buildings and a lecturer at the front of the classroom might not be the best way to teach.

The K-12 educators say finding innovative ways to teach children won’t go far when the first decision is to reduce funding.  They say using the School Aid Fund to free up money for other purposes puts the education of Michigan’s kids at further risk.