State budget & taxes

Time to move in a new direction

Dear Friends,

After a welcome break over the holidays, our Legislature is back at work. Unfortunately, these days, that's not a good thing.

In this issue:

• School Aid Budget - Magical numbers from the CPA-in-chief
• EAA - We know how to turn schools around. Trust us.
• A la carte school funding proposal not so popular on the menu
• A parents' vision for public education

In his budget presentation to the State Legislature, Gov. Rick Snyder billed the education portion as making an investment in Michigan. He described increased spending on preschool – a good thing – and efforts to limit the costs of the public school employee pension system – the burden of which falls mostly on current and future retirees. But he also claimed that the state government had increased spending on K-12 education by 11% over the last four years, including his new proposal. He even had a slide to “illustrate” the point.

Now, with the Governor’s focus on being a “nerd,” and the budget materials all identifying him as a Certified Public Accountant as well as Governor, you might think that all these numbers pretty much reflect reality. But as we have learned over the last decade, to our cost, financial numbers can be “massaged” to tell different stories depending on the audience.

Gov. Snyder, CPA, was engaged in a litte bit of what they call “earnings management.” A closer look at K-12 spending shows a different, and more accurate, picture. We need to keep the true picture in mind as we discuss the performance of our public schools.

UPDATE: 14 June. The state House of Representatives today passed a revised version of SB 1040, a bill that aims to restructure the public school employee retirement system. The changes in this compromise bill are less dramatic than those proposed in the Senate version, but they still represent a substantial change in retirement benefits for future employees and increased costs for current employees. While some financial pressure is being taken off local school districts, the added costs of the transition will still come out of the School Aid Fund. Absent other measures to increase revenues to the SAF, this bill will not remove the burden on the education budget in the near term.

However, the state Senate, which had approved a version forcing all new employees into a defined contribution plan, adjourned for their summer break today without voting on the bill. They resume session on 18 July.

Past commitments to school aid fade away

Updated with final conference report

None of the school aid budget proposals for next year offer significant help to our struggling local school districts. Overall funding is essentially flat, though the dollars are allocated differently in the various proposals. For a detailed breakdown of the final budget and the alternatives as passed by each chamber, please see this companion story.

Nevertheless, the budget bills do outline some major changes in how we fund our schools:

• Use of the School Aid Fund to support community colleges and state universities is now a permanent feature (the final conference report includes intent language to change the name of the SAF to the “Comprehensive Education Fund”);
• The commitment to maintaining the funding stream for K-12 education has been seriously eroded – for example, with the failure to replace earmarked revenue lost when the Michigan Business Tax was ended.