Sunday, April 15, 2012

Budget Tales (of Woe)

It's not the most scintillating reading, but as Christine Stead notes, Michigan's Children has a decent overview of the budget proposals for education coming from the governor, the state House, and the Senate. None of it is good news. The only "slightly good" news is that the school districts are likely to know the final details before the school fiscal years begin, rather than after they start (which was the pattern for many years).

Find the Michigan Children's summary here. Christine says, "You may have to get past a pop-up blocker, but it is worth downloading the file for a good comparison."

Christine also notes two other things. The first is applicable to all public schools:
  • Funds from the lottery are being proposed to fund improvements to roads and infrastructure.  Recall that this was part of the ‘deal’ in moving to Proposal A; that these funds would support the SAF.  There could be more reductions yet to come in K12 education when we see a final state budget in May.
THAT is clearly not good news, and it also infuriates me.

The other is applicable only to Ann Arbor:
  • In AAPS, there were incremental expenses of $1.2 M that need to be added to our target general operating budget reductions; we are now looking at reductions of $17.8 M for next year.
Holy Smokes! And that is even with the "found" Medicaid money included. I wonder if that has been true most years--that we ended up spending more than budgeted? I believe it was true last year as well. The purported savings--from the transportation consolidation, for example--end up not yielding as much, or any, savings; while the expenses continue, or increase.

Meanwhile, Michigan Parents for Schools has a nice analysis of the Governor's budget proposal--when Steve Norton adds the legislative analyses I will update this post. Steve has some good links in here, but perhaps the most salient point is that the Governor purports to be providing modest increases, when in fact he is proposing reductions. (Of course the reason for that is somewhat complicated, so do read the article.)

There is a big piece of the budget puzzle that is retirement-related, so you might be interested in this Detroit Free Press editorial which discusses retirement. The bulk of the article is spent describing the problem of why retirement costs have gone up so much, and there is a nice graph that captures the essence of the problem. The key points are that:

1. After 1994's Proposal A, retirement funding was shifted to the districts, and was no longer paid for with a state appropriation.
2. Retiree costs rising while foundation grants stay flat or decline.
3. Charter schools that don't participate in the retirement program, and school districts outsourcing employees in food service and transportation (for instance), and/or laying off teachers and other staff, mean there is a smaller "base" to draw on for funding.

In sum:

These are budget tales of woe
They are clearly things
We've got to know!


  1. In addition to charter schools and out-sourcing contributing to a decrease in the employee base, there's also a decrease in kids, and fewer teachers overall. Combining the decade of recession in Michigan during which many families left the state, as well as, a declining birth rate, there's just fewer kids. Supporting a defined benefit pension requires a perpetually growing base of those paying in, doesn't matter if it's teachers, auto industry, or other private enterprise. So the push to reform MSPERS becomes critical.

    With fewer collecting private health benefits in retirement, what will this do to Medicaid? In the haste to reduce costs, we're pushing more people to rely on federal programs down the road. I would be nice to see the Free Press report on that.


  2. Points well taken, but I think in the last paragraph you are referring to Medicare, which is the program for people over 65; Medicaid is for people who are poor and have another qualifying condition as well (being a child, being pregnant, having a disability. . . )

  3. Yes, Medicare is what I was referring to. Thank you!