Thursday, June 20, 2013

Michigan School Finance Primer: Part II, An Interview & More!

A few months ago, I sat down with Michigan Parents for Schools Executive Director Steven Norton for an interview. I had the best intentions of publishing a finished interview all at once, but--what can I say--that didn't happen, and I've decided to use the interview in several pieces. Today's piece provides some more context, information, and background for school finance discussions. You can find Michigan Parents for Schools on the web at, and on facebook as well.

Me: Looking at more recent history, how did we get into this fix, with school districts continually being in a position where they need to cut more and more?

Courtesy of Michigan Parents for Schools,
To be honest, people didn’t see this coming. Almost everything was being driven by the economy. People saw a cliff coming, but most people expected an economic recovery to give breathing room. That we would at least recover some of what we’d lost. Instead, in Gov. Snyder’s very first budget, not only did he make big tax cuts on individuals to balance the budget, but he also eliminated the Michigan Business Tax and replaced it with a much much smaller corporate income tax. The direct impact was the removal of $800 million dollars from the School Aid Fund. He also took money from the School Aid Fund, $400 million, for higher education. So that in a year where the economic projections would have said that more money would have come into the School Aid Fund, in fact there were huge cuts to K-12.  [Ed. Note: Funding for K-12 schools from the School Aid Fund was cut by more than 10%.]
Me: I thought they fixed the pension system, but the school districts keep pointing to retirement costs. 
Although they ‘fixed’ the pension system, they did so by pushing all of the adjustment costs onto schools and current employees. The existence of a pension for school employees is written into the constitution, and districts do not control the amount the school district needs to donate. 
Current employees are paying a lot more [into the retirement system] (effective pay cut of 4%) and the other money is coming directly out of the School Aid Fund. They also really downgraded the benefits of future employees. And for the next five years, all of the projected revenue to the School Aid Fund will be eaten up by higher contributions to the pension system.
Me: Where do teachers fit in all of this? 

People say, “We should cut the teachers [salaries] more.” Well, these are the people who take care of our children
How do we want to treat our employees? When we have the opportunity to make smart policy for state employees, shouldn’t we do that? We have to look at the long term. And this is happening in every community. This is a conversation that we need to have.”
 [Bold=Emphasis added.]
Steve's bottom line: 
“There is a lot of work to be done changing the discourse around public education.  It’s easy to get lost in the specifics but there is an underlying misapprehension of some of the key issues. There’s a lot of work to be done with people talking to people. You need to talk to your neighbors, educate them about the facts.”

By the way, you can read more about the issues around retirement in this May 2013 report from the Citizens Research Council--Funding for Public Education: The Recent Impact of Increased MPSERS Contributions.

1 comment:

  1. Thank you, Ruth.

    Everyone agreed that it would cost a lot more for many years to transition from the MPSERS defined-benefit retirement pension to something cheaper in the long run. Those increased costs are killing traditional public school districts, even with the legislature capping the cost for unfunded liability at over 20% of payroll. (With current-employee contributions, we still pay about 25% on top of payroll for retirement.)

    For the coming school year, the legislature chose to change the governor's proposal to put more of the "new" money into the Foundation Allowance, instead of the set-aside for unfunded MPSERS liability. So, much of what districts get goes right back out the door for MPSERS. Charter schools, which are not required to participate in MPSERS as we are, get to keep the money for actual education.

    The charters within my district get an additional $58 per student, while the traditional district nets $16. This is not an accident.