Why Ann Arbor may lay off teachers for the first time ever

May 24, 2013

In case you've been living under a rock the last couple of months, many Michigan schools are in financial crisis.

It's not just separate outbreaks. It's an epidemic. Buena Vista had to shut down for two weeks when they ran out of money to pay staff. Albion is closing its high school.

About 50 districts are on the state's financial watch list (as in, watch-out-these-guys-could-go-under).

Now, Ann Arbor, the artsy cosmopolitan Disney Land of public school systems, is feeling woozy.

The district is sending out more than 200 pink slips this summer.

About 100 pink slips went out in 2010, but those were sort of false alarms. In 2010, all those pinks slips were rescinded come fall. 

This time is different. School administrators acknowledge they may have to ax roughly 50 teachers. It's a painful, emotional choice, but it won't be the last.

Tom Watkins is a former state superintendent, and he's forecasting a lot more school angst to come.

"Sadly, and I don't take any great pride in predicting it, but until we deal with these structural issues, the school boards and superintendents have to be like Pac Men, gobbling up other costs in the districts. [That's] in order to fund the costly infrastructure and healthcare and pensions costs. Which are outstripping the revenue that's coming in from the state. And sooner or later, you have to stop paying your Mastercard with your Visa. "

"Sooner or later, you have to stop paying your Mastercard with your Visa."

That's a lot of metaphors there, so let's break this down in ...

The Idiot's Guide to Actually Understanding School Finance for Real this Time, in a Way that Won't Make You Want to Kill Yourself Out of Boredom

Drum roll, please, because this is the fool-proof guide to school finance. 

Feel free to rattle it off at your next dinner party. Your friends will nod like, yes, yes, of course, they knew this as well. But they didn't.

Right now, every school system in Michigan is suffering from three Big Evils:

Big School Finance Evil #1: Declining enrollment. 

You saw that one coming, didn't you? Schools get a set amount of bucks from the state for every kid they have to teach. Think of every child walking around public school hallways with a floating dollar sign over their head.

But the problem is, kids are leaving. Some of them are moving out of state, others are moving out of rural areas into metro areas, and others are just ditching the typical public school model for charters. When they walk out that school door, that state money goes with them. Bye bye, floating dollar sign.

When kids walk out that school door, the money goes with them.

Big School Finance Evil #2: Pensions and healthcare costs.

Like every public institution right now, pensions and healthcare costs are killing schools.

Teachers have long enjoyed excellent healthcare and retirement options.

When doctors discovered my mom had a tumor, her medical benefits as a middle school teacher meant we could pay her hospital bills and still keep our house. Now, she's back to racing up 4,000 foot mountains, leaving the rest of us in her dust. But those benefits still keep paying for the physical therapy she needs. And frankly, if you've ever had to spend 9 months with a classroom full of 8th graders, you might agree with those who say teachers deserve every penny. 

Good benefits are often the reason teachers can afford to even be teachers, and support a family.

But the problem is, those retirement and healthcare costs are rising, and public school administrators weren't doing a great job of saving up to pay those mounting costs to begin with. 

Watkins, the former state superintendent, says we've been kicking these two costs down the road.

"But the problem is, we've run out of can, and we've run out of road," he says. 

"We've been kicking the can down the road. But now we've run out of can, and we've run out of road."

Big School Finance Evil #3: Aging utilities and buildings. 

The number of kids going to public schools in Michigan has dropped by roughly 500,000 since the late 1970's. 

But still, we have some 800 school districts, including public academies and intermediate (aka county-wide administrative) districts.

That's a lot of buildings, janitorial staff, rusting pipes, you get the picture.

Doesn't sound like the worst thing ever, right?

And on its own, it probably wouldn't be. 

But school administrators don't want to fix those pipes or rehab that building or put in that new technology classroom equipment if the alternative is laying off teachers, cutting back on pensions, or closing other buildings.

Watkins says there's a running (and wonky) joke in the school community.

"What do you call a school board and a superintendent that closes an elementary school?

"What do you call a superintendent that closes an elementary school? Fired."

Recalled, and fired." 

So, school employees have lame jokes. But more to the point, Watkins says those community pressures play a very real part in decisions. 

"There's tremendous pressure from students and parents. It's easier to delay these issues and put them off."

So, why not just raise taxes? Isn't that why we have millages in the first place?

This is when your know-it-all neighbor will say, "But Proposal A!" like that's supposed to be a comprehensive answer.

Here's what they mean.

In 1994, Michigan voters approved a new law called Proposal A  that changed the way the state pays for schools.

Basically, it was meant to fix a disparity issue.

See, rich districts could get all the money they needed out of their valuable local property taxes.

But poor districts said, "Wait a second, not only are our property values low, but we'd have to jack up the tax rate just to rake in enough money to keep our schools afloat."

And crazy high millages don't go over well anywhere, especially in communities that are less affluent. 

So proposal A was supposed to be the Super Hero of Justice and Equal Funding. 

Proposal A was supposed to be the Super Hero of Justice and Equal School Funding.

It would sweep into Michigan and do away with all those rich vs. poor millages. 

Instead, all districts would get a chunk of the sales tax.

And on top of that, districts that had been poor would get an extra wad of cash, so that eventually they'd catch up to the rich districts' school funding.

Perfect! Except, this was in 1994, and things have changed. 

Now we're in the Big Evil 3 situation, and schools' hands are tied.

And even if districts like Ann Arbor would like to plug some holes (like, cutting 50 teachers) with millages instead, they can't.

Again, Tom Watkins. 

"There's only three ways to balance a budget.

1) Increase revenue, which local districts do not have the power to do.

2) Decrease your expenditures, and they've been doing so.

3) Or, a combination of increasing revenue and decreasing expenditures."

And until we actually deal with these issues on a statewide basis, "you're going to see crises popping up everywhere from Buena Vista, to Ann Arbor, to your school district."

Remember those 50 school districts in the state watch list? 

"They're taking on more and more water," says Watkins. "And any little wave will pull them

"[Districts] are taking on more water. Any little wave would pull them under."

under."

Fixing a Broken System 

"Just pouring more resources into the existing structure would be like pouring water into a glass with a hole in the bottom," says Watkins.  

"And then we  wonder, why can't we ever fill up the glass?"

In the coming weeks, you're going to hear some new, even radical ideas for blowing up Michigan's current school funding beast and building a new one.

It could mean we don't give schools public money on the basis of how many students they teach.

Or, as with Ypsilanti and Willow Run, more school districts consolidate.

That's what the state is hoping for. They've put aside a nice fat pile of $10 million as an incentive

The state put aside $10 million dollars to get districts to bite the bullet and merge already.

for districts to make the leap and merge, already. 

For Ypsilanti and Willow Run, the state even magically erased most of their debt after the districts agreed to bite the bullet and join hands. 

It's not likely you'll see anyone actually trying to force districts (especially small, rural, and deeply underfunded ones) to merge. 

But it's a way of hitting the reset button that more and more districts may find more attractive than the alternative.

And then, of course, there are the various plans that politicos are hatching. 

Governor Snyder got his favored experts to put together a big white paper that suggests opening up enrollment around the state.

That way, kids can go where they want, and the good schools will flourish and the bad schools will have to get their act together.  At least, that's the idea. 

What we do know for sure is there are going to be a lot of people trying to put all of this information, nuance, and criteria into 15-second sound bites. 

And because school decisions are, at their root, extremely personal and emotional ones, none of the choices are going to be easy. 

So: people who care about schools will have to keep on top of this. As new proposals come out, we'll keep you informed, and we'll make this stuff something the average human can actually understand (we have a PhD in translating Ed Speak into English). 

Watch MichiganRadio.org, and keep tuning in. They're our schools, after all. And we should get to decide what's best for our kids.