Legislative update: Snyder budget gives schools a bump; school letter grading rides again

Winter is ending, which means it's budget time in Lansing. It's also an election year, which means we're likely to see a mix of generosity, grandstanding, and horsetrading as lawmakers try to burnish their records before facing primary and general election voters. Here are some of the top recent developments:

• Snyder school aid budget gives bump to schools, cuts sketchy earmarks; fate in legislature is uncertain
  • January revenue estimation conference sees increase for School Aid Fund but less so for main state budget; charter schools forecast for first-ever fall in enrollment
  • The School Aid Fund will now pick up the entire community college budget and cover one third of all state spending on colleges and universities
• A-F grades for schools lurches back into spotlight; measure skips summative grade but creates new commission of political appointees
• In wake of Florida school shootings, House committee chair says that "guns in schools" bills not likely to see action anytime soon
• House committee passes bills allowing tax break on private school tuition for the well-heeled; measures also force districts to cost out all their services - for no apparent reason
• Snyder signs bill giving charters a cut of regional enhancement millages, after a notably close vote in the House

Better grab a cup of coffee!

Governor's school aid budget proposal

Governor Snyder has rolled out his executive budget proposal for the 2018-19 fiscal year, and it includes some good news for public schools. The annual budget process always starts with the "executive recommendation," but the state legislature always has a mind of its own, and the final product could look very different.

The semi-annual revenue estimation conference in January revised their projections for School Aid Fund revenues upward for both this year and next, now forecasting 2.9% growth in revenues from this year to next. (The outlook for General Fund revenue is less sanguine, however.)

Gov. Snyder's budget would move the last bit of state funding for community colleges out of the general fund budget, meaning the entire $405 million line item is now covered from the School Aid Fund. The proposal would also shift a further $147 million in higher education spending over to the SAF, with the fund originally dedicated to K-12 education now picking up almost $386 million, or 34%, of state spending on universities.

Overall spending in the School Aid budget would rise by 0.4% in the governor's proposal, after reductions in Federal funding and the contribution from the General Fund budget are taken into account. Even so, an additional $312 million is earmarked for per pupil foundation allowances, giving schools a bump of between $120 and $240 per pupil under the "2x formula." The basic, or minimum, foundation would increase $240 to $7,871 (or 3.1%, well ahead of the projected inflation of 1.9% next year). The maximum state-paid allowance increases by $120 to $8,409, or by 1.4%, which lags projected inflation.

Some of this increase was made possible by greater than projected enrollment declines during the current school year and forecast for next year. In the current year, for the first time, charter school enrollment is forecast to be down by 7,400 pupils, 3,400 more than previously estimated, to end at 146,600. In contrast, local districts are expected to lose only 800 students from last year to this, only two-thirds of the previously projected amount, to end at 1,336,900 pupils. For next year, charter enrollment is expected to stay flat (in contrast to earlier projections showing an increase) while local districts are forecast to lose 5,000 students, a smaller loss than previously predicted.

In their summary of the report, the Senate Fiscal Agency blamed the overall enrollment losses on declining birth rates, though they argue this decline will be partly offset by higher kindergarten and "young 5s" enrollment rates and the expansion of "shared time" programs (where public schools provide supplementary instruction services to private schools).

Among the other important changes made in the Snyder school aid budget:

• spending for "shared time" instruction in any school or district is capped at 5% of the school's budget (and kindergarten is excluded), saving $68 million or a bit more than half of expected spending;
• Online "cyber school" charters would have their per pupil allowance cut to 75% of the standard minimum allowance, saving $25 million;
• last year's one-time $200 million extra pre-payment of retirement system costs is dropped, but other state contributions are increased as required statute and the $100 million offset given to local districts is maintained, for a net reduction of only $75 million;
• saves $23 million by eliminating a number of special earmarks for lawmakers' pet projects, including the online algebra tool ($1.1 million) and the online mathematics tool ($1 million), along with the "reimbursements" to private and religious schools for complying with state requirements ($2.5 million);
• maintains $499 million in funding targeted for at-risk students, with some program changes to expand coverage of literacy and math support;
• maintains the $11 million for high school $25 per-pupil bonuses (which appeared for the first time in this year's budget);
• sets aside a further $23 million for increased special education costs, for a total of $1.4 billion (of which the Federal government covers $431 million, or about 31%) - though these figures still do not cover all district costs;
• increases support from the school aid budget for MDE's "partnership district" program to assist struggling schools by $2 million, to $8 million;
• cuts grants for career and technical education equipment and uses some of the savings to offer a $25 to $50 per pupil bonus for students enrolled in CTE programs.

A-F school rating claws its way back

The House Education Reform committee took a second day of testimony on HB 5526, a bill that would require A-F letter grades for schools based on their performance on federally-required metrics. The bill, introduced by committee chair Tim Kelly (R-Saginaw Twp.), seems primarily designed to supplant the "parent transparency dashboard" just introduced by the Michigan Department of Education, which avoids labeling performance in this way. The MDE dashboard, developed after considerable stakeholder consultation, shows school performance relative to the state average and to a reference group of schools (either demographically similar schools from around the state, or schools nearby, depending on the user's preference).

Rep. Kelly's bill does avoid creating a single, summative, grade for each school, though many school "reform" groups urged the committee to include one in the legislation. However, the bill also focuses on a narrower range of indicators than covered by the MDE dashboard, thereby increasing the apparent weight on test score performance.

HB 5526 also creates a new "education accountability policy commission," made up of political appointments, to create and oversee the accountability system set up in the bill. The commission would have thirteen members: three appointed by the governor, one each appointed by the House Speaker and the Senate majority leader, the state superintendent, and seven nominated by organizations which represent charter schools (2), local districts (2), intermediate school districts (2), and urban school districts (1). The commission would effectively strip control over the school accountability system from the State Board of Education and MDE.

In his introductory remarks about his own bill, Rep. Kelly made it clear that he wants to get tough with the system: he said he had concluded that Michigan's mediocre performance on national tests like the federal NAEP was caused by failures in "governance and accountability." The first he is attempting to address with his constitutional amendment (House Jt Res M) to dissolve the State Board of Education and put the MDE under the control of the governor. The current bill is supposed to address the accountability situation, forcing the use of letter grades which he and others see as the only "honest" way of describing school performance. MIPFS testified against the bill (see forthcoming article).

"Guns in schools" bills on hold, for now

Gongwer News Service reported on 15 February that House Judiciary committee chair Jim Runestead (R-White Lake) said the concealed carry package of bills now sitting in his committee will not come up for a hearing in the foreseeable future. The bill package (SB 584, 585 and 586) would make it easier to get a concealed pistol license and remove the restrictions on carrying a concealed weapon in previous "gun free zones" such as schools, churches, theaters, bars, and college buildings. While the bills would close the current loophole that apparently permits the open carrying of firearms in these areas, the bills also remove the exception that allows school districts and libraries to set their own policies on firearms.

Rep. Runestead said that he had been unable to find consensus around the bills, with Gov. Snyder insisting that local schools should be able to ban guns if they wish. His remarks came in the wake of the 14 February high school shooting in South Florida which left seventeen dead and more injured.

Private school tuition tax breaks for the well-heeled move forward

The House Education committee also reported out a package of bills, managed by Sen. Patrick Colbeck (R-Canton), that would allow families to contribute to their Michigan Education Savings Program accounts (529 college savings accounts) for certain K-12 school expenditures. The bills, SB 544-548, and HB 5428, would create "enhanced" MESP accounts to which families could contribute funds to be used for eligible K-12 expenses and extends the tax deduction for MESP contributions to the new accounts. The bills extend the changes made in the most recent Federal tax bill, which allow the use of up to $10,000 from 527 plans each year for K-12 tuition, including private and religious schools.

Taken at face value, the bills would limit payments from the Michigan plans to public school expenses, but the Michigan Department of Treasury could authorize payments to "other organizations" which provide educational and related services. Most peculiar, and concerning, is the provision requiring public schools which want to be eligible for the payments to provide each year a complete list of services and their cost, even if they would not be eligible for EMESP payments. The services list must be broken down to the grade and subject level (for instance, 4th grade art) and provided to the Treasury each year as well as made available to the public. This provision brings to mind the Oxford Foundation proposal to "unbundle" secondary education by giving students an allowance to purchase services from multiple providers, essentially eliminating high schools as currently conceived.

Charters to get cut of local enhancement millages

Gov. Snyder this week signed a bill (SB 574) which would allow charter schools located in an intermediate school district which passes a regional enhancement millage to get an equal per-pupil share of that millage, even if they are not overseen by any local elected body.

After the passage of Proposal A, which dramatically changed Michigan's school funding system, there were few opportunities for local districts to supplement their operating budgets. In fact, individual districts may not levy local taxes for operating funds beyond the limits set in 1994. A small window was left in state law to allow all the school districts in a region (ISD) to vote on a millage that applies across the region and provides extra operating funds - so-called "enhancement millages." Regional millages such as these are very difficult to pass, in large part because the funds must be distributed proportionally by the number of students in a district rather than by how much tax is collected there - meaning there is often a significant redistribution of funds within the region.

However, after successful enhancement millage campaigns recently in both Wayne and Kent counties, advocates for charter schools began to argue in earnest that their clients should get a share of the funds. Charter schools do not have any local tax authority, and they are rarely accountable to local voters in any way, so there was also significant opposition to letting them share in the proceeds of a tax approved by local voters.

As the bill made its way through the Senate and House, various conditions were placed on charter school eligibility for payments: the charter must actually operate one or more schools in the ISD and can only count students enrolled in those schools to calculate their share of the millage funds; funds allocated to charters located in the ISD must only be used to benefit the schools located in the ISD; and restrictions were placed on online "cyber" charter participation.

The bill still faced significant opposition on the House floor, however, leading three more restrictions to be added to the bill: a charter would not be eligible for payment if there were "unresolved material findings" (i.e. questionable matters) in the two most recent audit reports; charters must certify that they have special education programs in compliance with state and federal law to be eligible; and cyber charters must enroll 100% of their students from inside the ISD to receive payments.

The House did not pass some other significant amendments, from members of both parties. Rep. Martin Howrylak (R-Troy) proposed an amendment to extend payments only to charter schools which participate in the state public school retirement system (MPSERS). Rep. Bill Sowerby (D-Clinton Twp.) proposed that charters managed by for-profit companies be ineligible for payments. These, along with a number of other proposed amendments, failed on non-roll-call votes.

The final vote in the House was uncharacteristically close for a bill benefiting charter schools: the final count was 55-52, with eight Republicans (Representatives Howrylak, Kahle, Lucido, Marino, Maturen, McCready, Pagel, and Roberts) joining all House Democrats voting against the bill.