State budget & taxes

What they're looking at in the smoke filled rooms

Now that the state's top economists have painted a somewhat less flush picture for next year, Legislative leaders are sitting down and hammering out final budget numbers. You won't get to watch - this is all happening in the proverbial "smoke-filled rooms" where the key players wheel and deal. So what are we likely to get? Our earlier articles outline the Governor's proposed school aid budget, and each house passed their own version. On the surface, the Governor's appeared to be the least generous, while the Senate trumpeted per pupil increases of up to $300 per pupil. But is everything as it seems? The fact that all three proposals spend nearly identical amounts of money should be our clue that the devil is in the details.

In our presentation on school funding to the State Board of Education (see upcoming article), we argued that legitimate school funding models would need to:

• be fair, or equitable, to all participants (though that doesn't necessarily mean equal),
• provide adequate resources for schools to do what we ask of them, and
• put resources where they were most needed.

How do the budget proposals do on these scores? Not so well. A picture is worth a thousand words.

At first glance, there are a number of things to like about Gov. Snyder's budget proposal in this election year - which is hardly surprising, since he launched his reelection campaign at the same time he released his budget. Several of those things even stand up to closer scrutiny. But all this is against a background of real austerity in K-12 education, so that the executive budget proposal is a bit like having the vise around your head loosened after a long period of tightening: it's a relief, but you are still in the vise.

Highlights

• Districts will get a per-pupil increase between $83 and $111 per pupil, but this still lags inflation.
• Most of that increase is made possible by the fact that there are fewer students in Michigan schools this year than originally expected, and the same applies next year.
• The biggest increases are in the payments for unfunded liability of the state pension system.
• Per-pupil funding left after pension payments are covered has fallen 22% over the last 12 years, after inflation.
• Economic recovery is bringing a modest increase in revenues earmarked for the School Aid Fund, but no new revenue sources are being made available to schools.
• Even though the state's General Fund is projected to have a much larger increase in revenue, the School Aid Fund continues to pay for some $400 million in higher education costs that used to be covered entirely by the General Fund.

The Michigan State Legislature approved a final compromise education budget last week, making use of an estimated $140 million in unexpected estimated revenue to make sure that no district saw a net cut per pupil. But despite some of the large numbers being tossed around, the real effect on most students will be almost invisible.

Even after the infusion of an additional $140 million into the school aid budget, school districts will only see very small per-pupil funding increases – that fail to keep up with projected inflation – rather than the cuts previously in the budget. Gov. Snyder’s requested $65 million increase in state-funded preschool programs did receive full funding, however, and some other targeted funding slated for cuts was restored or cut by a lesser amount.

Budgets as they emerged from each chamber are a mixed bag for schools

Both houses of the State Legislature passed their own versions of the K-12 School Aid budget this past week, and the political horse-trading can now begin. While the versions are quite similar, there are important differences that will affect how schools are funded and how much Michigan is able to expand its preschool programs targeted to low-income families. The total amount of proposed spending, however, does not exceed the Gov. Snyder's proposal, and in fact the Senate version comes in some $10 million lower than that.

Both versions of the budgets also include items that worry many supporters of local public education. Provisions requiring districts to permit and pay for students to take online courses from nearly any vendor are reminiscent of "Oxford report" proposals to "unbundle" public education, making local districts a thing of the past. Money earmarked for technology-driven student-centered instruction is seen as a "gift" to the financially troubled and controversial Education Achievement Authority, which the governor and legislative leaders hope to build into a state authority to take over "failing" schools.

As things stand, local school districts can expect a net cut of between $2 and $52 per pupil, though the details vary considerably. Final versions of the budget will not be ready until after the May consensus revenue estimation conference, when top state economists make tax revenue projections for the coming year.