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Time to leave the "State of Denial"

*This Friday (9 January), the state's top economists will meet, as required by law, and project how much tax revenue Michigan will gather this fiscal year. That's when we find out how bad things are.* If, as most observers suspect, they estimate that revenues will be less than expected, the governor is required by law to propose spending cuts _for the current year_ to bring the budget into balance - unless the Legislature can find a way to plug the hole. This process includes K-12 school funding; the vast majority of the money to operate Michigan's schools comes from the state School Aid Fund and is supported by state-wide taxes. This is not the first time our schools have gone through this ringer, but maybe it should be the last? To fix the problem, we have to acknowledge what the problem is. For the past eight or nine years, our state government has been chronically short of money to pay for public services. Our lawmakers as a group are trapped, afraid to cut spending and loathe to raise taxes. In fact, we cut state taxes in the boom times of the 1990s. In general, we the people get the government we deserve. For many of us, it's both easy and convenient to say that government has plenty of money, and could do a lot more with less if they'd just cut out the waste. Can schools tighten their belts and be more efficient? Sure, and they have been doing just that for years now. But as former Sen. Warren Rudman (R-New Hampshire) used to say, "There is no line item in the budget for 'Waste, Fraud and Abuse.'" Let's be honest: we really want to have our cake and eat it, too. While we wait for our public schools to become a model of efficiency, unequaled in the private sector, we chip away at the foundations of our schools, and our future. *Deja vu all over again* Declines in state revenue have already required $134 million in cuts just two months into the fiscal year, "though school aid was spared at that point":http://www.miparentsforschools.org/node/95. With nearly half of the money for school aid coming from the sales tax, how could there not be a hole to plug later this year? If cuts are necessary, they will take effect this year - and you can imagine the havoc this can wreak in school districts already halfway through their budget year. But this is not a new problem: the state had to claw back money from schools twice in the last five years (fiscal 2004 and 2005) and narrowly averted a much larger cut in 2007 with some desperate measures and inventive accounting. The cuts in 2004 and 2005 of $74 per pupil cost a district such as Flint, which at the time had more than 20,000 students, some $1.5 million in the middle of the school year. The potential cut in 2007 would have been "about $116 per pupil":http://www.miparentsforschools.org/node/79. And this was supposedly before the current recession started. The non-partisan Citizens Research Council of Michigan has been sounding the alarm about the state government's financial picture for some years now. "In a report just released this week":http://www.crcmich.org/PUBLICAT/2000s/2009/sbn200901.html, they point out how the short-term and creative fixes of the last eight years leave Michigan with no reserve to weather the current economic storm. Reserves have been drained, assets sold (including "securitization" of future tobacco revenues, which gets us pennies on the dollar), and budget funds like the School Aid Fund have had to borrow money from each other to close out the budget year in the black. This kind of financial juggling leaves no room for error, and certainly does not leave us with a cushion to cope with a major economic downturn. At the same time as we are dealing with the current emergency, the CRC argues, permanent fixes are needed for the underling problems. *Now what?* It won't be easy to agree on a solution. For one thing, we as a state need to have a serious conversation about what we want from our schools, and what that will cost. At the same time, we need to acknowledge that we've gotten something of a free ride: 1994's Proposal A gave us a huge property tax cut, and caps on increases in taxable value, while shifting the burden of paying for schools to the sales tax - an "invisible tax" - and other "sin" taxes like those on alcohol and tobacco. Our economic troubles have dramatically exposed the weaknesses of this system. So: what do we want our state to look like in five years, ten years, or a generation from now? What will we need from our schools for us to get there? And wouldn't that be an investment worth making?
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