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Snyder and Schauer both wrong; potential revenue lost to schools is a billion dollars a year

Oct 23, 2014

In the race for governor, few things are disputed more than education funding under Gov. Rick Snyder. Challenger Mark Schauer claims Snyder cut funding by a billion dollars. Snyder has called that a lie and says he’s added a billion dollars. They’re both sort of right and they’re both wrong.

“Both sides have truth. Neither is lying, per se,” said Mitch Bean.

He is a former director of the Michigan House Fiscal Agency. That’s a nonpartisan agency within the Michigan House of Representatives. Now he’s a consultant and he’s been looking at the budgets to try to find out exactly what has happened to money for schools.

Image from the "Numbers" ad from the Rick Snyder campaign.

We’ll get back to him in a moment, but first let’s hear exactly what the candidates are saying. This is from an ad featuring Republican Gov. Snyder.

“Since I took office, we put a billion more dollars into education.”

Gov. Snyder further explained the claim at the only joint appearance by the two candidates for governor.

“Let me make this as simple as possible. The year before I became governor, the state budget for K-12 was $10.6 billion. That’s a number that doesn’t change. The budget I just signed into law was $11.7 billion. So, the budget I just signed is more than a billion dollars higher than the year before I took office,” Snyder told the audience.

And the governor is right. In total, there’s $1.1 billion more going into education.

But Snyder’s challenger, Democrat Mark Schauer, looks at it differently.

"What I’m looking at, and this is a fact, that schools have less money in the classroom, substantially less money per pupil, than when Rick Snyder became governor,” Schauer said during a Michigan Calling program.

The bulk of the Snyder increase did not go directly to the schools; it went to shore up the underfunded teachers’ pension fund. There’s no doubt that more money is needed to keep the pension fund solvent, but that means not much of that increase is going to the classroom.

Mark Schauer during the one debate between the candidates for governor.
Credit Courtesy: Detroit Public Television

Over the course of the campaign, Schauer has changed his wording about a billion dollar cut. Now he just says Snyder’s cuts hurt kids.

“They’re in more crowded classrooms. Teachers don’t have the materials they need. Basic programs have been eliminated. Now, today it is a fact that schools still have less per pupil, dollars in the classroom, than when he started four years ago,” Schauer said at the town hall-style debate between the candidates.

Actually, it’s a mixed bag. Some schools are getting slightly more per student, some less, until you factor in inflation. Then, yes, all schools are getting less per pupil to use in the classroom.

But there’s more to the story.

In his budgets, Gov. Snyder has been shifting about $400 million per year out of the School Aid Fund – the money dedicated to K-12 – and sending it to the state’s community colleges and universities to partially make up for cuts he made there. No governor has ever done that before.

Mitch Bean, the consultant who’s kept a close eye on the budget for decades, says the line items in the School Aid Fund have been altered to the point it’s really hard to compare past School Aid Fund budgets to the Snyder budgets. But behind the shell game of shifting money from here to there, a loss is revealed. Bean says since Gov. Snyder cut taxes on businesses, less money is going into the school fund.

“If the School Aid Fund revenues hadn’t been reduced by over $600 million each year by the business tax cut, that alone would be enough to fund resources to higher education and community colleges – $400 million from the School Aid Fund, which they’re currently doing, and pensions, and there would be enough money to give $400 per pupil to the Foundation Allowance,” Bean explained.

Bean says a billion dollars in cuts or a billion dollars added during the governor’s four-year term isn’t the real story. The tax change means billions of dollars of potential resources lost to schools during that time. Fewer business tax dollars going into the School Aid Fund and then dollars being taken out for higher ed and community colleges add up.

“The combination of the two give you a net reduction in how much was available for K-12 of over a billion dollars a year,” Bean said.

That's a billion dollars in lost funds for schools each year.

The question left is this: Is Michigan better off because of the tax cut for business even if it means schools are not doing as well as they could have been?