Friday, October 18, 2013

Financing Michigan's Schools--Or Not

I am taking this directly from an email alert from Tri-County Alliance for Public Education, which is an advocacy group in Wayne, Oakland, and Macomb counties.


For the second time in a month, a report was released highlighting the major issues facing K-12 funding. This report, which was commissioned by the State Board of Education, is entitled, “Michigan Education Organization and Finance Research Brief” and was authored by Meg Jalilevand of Michigan State University (MSU). The report considered a range of issues facing our schools today and conducted an extensive review of several, well-known analyses concerning K-12 education.

What the report found will not shock anyone connected to their local, community schools, but its conclusion is that schools are in the midst of a perfect storm of significant negative pressures equating to a substantial loss in school revenues. Those burdens squeezing the School Aid Fund, include:

·         Declining enrollment: The per-pupil allotment, as created by Proposal A of 1994, does not account for declining enrollment, which has only been further exacerbated by the implosion of “new” schools. According to Jalilevand, school populations have declined around 10% since 2003, and traditional schools have been the hardest hit with 70% of them suffering from declining enrollment.

·         Increased Choice: Jalilevand has been quoted as saying, “We have created hundreds of new schools without a strategy and without quality control.” Holding charter school operators accountable has been a priority of The Education Trust-Midwest, and a worthwhile reform that would help alleviate additional strain on the School Aid Fund. Without quality controls for “new” schools, we are cutting the School Aid Funding pie into smaller pieces on account of bad actors who are multiplying with very little oversight.

·         Legacy costs: Although last year, Lansing passed legislation providing for a new retirement option for new teachers and capping school district’s portion of retirement costs, they did very little to contain the long-term unfunded liability costs for our local schools. This means that fewer school aid dollars are actually making it to the classroom as more dollars are needed to pay for unfunded retirement liabilities.

·         Decreased funding: The report notes a 14 to 16% decline in state foundation allowances from 2004 to 2013, as measured in 2004 dollars. This is exactly what we saw in the Center on Budget and Policy Priorities Report, which we shared with you a few weeks ago.

The Report concludes by stating, “Many believe the Michigan education system is reaching a crisis point.” We are sad to say that we could not agree more. The purpose of this email is to encourage you to use the findings of this Report and The Center on Budget and Policy Priorities Report to engage your elected officials and ask them why we aren’t investing in our children’s future?

Tri-County Alliance for Public Education has a Facebook page, if you are interested.  


  1. Is anyone talking about making a campaign to amend the Proposal A section of the constitution? It seems like that's what it would take to fix this situation.

  2. There is always some talk about changing Proposal A, especially now that nearly 20 years has passed since its adoption. But it's a complex issue, and changing the constitution might not be the best way to fix school funding.

    What I'm hearing most about right now are some proposed constitutional amendments (in the Legislature) that would restrict use of the state School Aid Fund to K-12 education only. (Currently, some of it is being used to pay for higher education - a use that is allowed under the Constitution but was clearly not anticipated by the authors of Proposal A.) As we saw last year, constitutional amendments are hard to sell to the public, but this one might have momentum. However, it would not truly solve the problems.

    The funding system created by Proposal A has a lot of pieces, not all of which are in the Constitution. Different people dislike different parts of it: some upstate residents are angry that per-pupil funding has not yet been fully equalized across the state; some districts are frustrated that they cannot vote to increase their own taxes to support school operations; most people like the limits on the growth of taxable value of property but many - especially those in real estate - do not like the fact that taxable value resets to SEV when a property is sold (the "pop-up tax").

    There are really two approaches to changing the funding system: giving local districts more control, and changing the funding stream. A lot of districts, typically those with high property values, would love to be able to increase their own local taxes to fund school operations. However, across the state, most districts have a pretty modest tax base and would not benefit much from that (and they worry it would increase inequality and reduce pressure to increase funding for all schools). It would be very hard to move any but the most limited proposal along these lines through the Legislature, though it can be changed in statute and does not need a constitutional amendment.

    The other approach is to change the funding stream - and this can also be done in statute. Increases in the 6 mill State Education Property Tax are difficult - the constitution requires a 3/4 super-majority in both houses of the Legislature to do this. However, most of the state School Aid Fund comes from the sales tax and the income tax. Changing the rate of the sales tax might take a constitutional amendment (and would be undesirable for other reasons), but extending the tax to services can be done by the Legislature with a normal change in the law. Since services have been the growing part of the economy, and retail sales have not grown as fast as the economy, this would fix one of the built-in limitations of the current funding system. Similarly, the formula for earmarking income tax receipts to School Aid can be changed with normal Legislative action.

    But recently, we've been going in just the opposite direction. As part of Gov. Snyder's proposal to end the Michigan Business Tax and replace it with a much smaller Corporate Income Tax (passed into law in 2011), the state School Aid Fund permanently lost $750 million per year that had been earmarked from the MBT but was not replaced. This helped turn the dip in school aid caused by the recession into a permanent state of affairs.

    The true battleground is tax policy. If we want to fund education adequately state-wide, we need to change the funding stream to education. There is no mystery about how to do this. What is lacking is the political will - in the Governor's office and in the Legislature - to even discuss raising revenue for the benefit of education.

    Steve Norton
    Executive Director, Michigan Parents for Schools

  3. Thank you, Steve, for this--very informative. How can interested people (like me) help?

  4. That's a good question: how can interested people help?

    There are several layers to this. One is local, and it has to do with getting the community re-engaged with our local public schools and reminding people that we have a responsibility to our community and our future when we consider options for our schools. We're not customers, we're owners - and that implies both authority and responsibility.

    But on the state level, residents of the Ann Arbor Schools region need to be a little creative. Unlike parents in much of the western and northern parts of the state, our state legislators are almost universally supportive of more funding for education and community control of our schools. Voting for state-wide offices is important. But perhaps most important is to take the lead in shifting the debate on education policy.

    Ann Arbor is in a special position to lead on this issue, because we are an affluent community that cares about quality education but wants it for all children, no matter where they live. We don't have a problem sharing resources; we just want to be able to keep what is best about our schools at the same time. This gives us the opportunity to take the moral high ground: what we want for our children is what we want for all children. My organization has taken precisely this position on hot-button issues like the Education Achievement Authority, and as a result we were able to bring together groups that don't usually work with each other, from both upstate and western Michigan and Detroit. We need to break down the regional barriers that have fractured the parent community and prevented us from uniting behind a common purpose.

    How to do this? Well, all Ann Arbor citizens can help back up our state lawmakers when they argue for sound education policy in Lansing; we can also reach out directly to lawmakers from other regions. Parents and citizens can participate in state-wide efforts to unite those who care about authentically public education, giving strength to the efforts of organizations like Michigan Parents for Schools. We can and should form alliances with people of goodwill in all parts of the state. And we can use the intelligence and energy of our community to change the public discourse about education all across our state. The current trend to denigrate community-governed public education is based on some core (flawed) ideas; we need to spread other ideas that remind people why our nation has always put a top priority on democratically-governed public education.

    It won't be easy or quick. The current situation, where education is seen as just another consumer good and market competition its salvation, has been decades in the making. If we are to turn it around, we must all look beyond the walls of our own schools and the borders of our neighborhoods, and ask others to do likewise.

    Steve Norton
    Executive Directory, Michigan Parents for Schools