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Peter Luke:
Eye on the Capitol

Insights into the inside workings of Michigan's state government from a veteran newspaper correspondent.

Politicians talk about school funding, but numbers show failure of effort

Just how broken education spending in Michigan is will once again be on display when Gov. Rick Snyder next week unveils his budget for the 2014 fiscal year on Feb. 7.

The school aid budget has for years now illustrated the failure — either through neglect or design — to maintain what once was an assurance that education would remain state’s top priority, given the belief that every kid deserves an equal shot. That assurance of equity was at the heart of the Proposal A school finance reforms in the 1990s.

Concentrating spending authority for K-12 in Lansing — a necessity for the overhaul in school finance begun 20 years ago this month – required governors and legislators to keep Proposal A’s framework in repair.

Instead they’ve presided over its decay.

The measure’s chief promise was to bring equity to per-pupil school funding, but for the past decade the funding gap between districts that receive the maximum in state aid and the minimum has fluctuated between $1,400 and $1,100 (the current spread) per student.

Lawmakers last year approved a $120 per-student equity payment for the bottom districts. At that rate, it would take 10 years to close the current gap — and that’s only if you give the upper districts nothing.

While 76 percent of all students are in districts where the funding gap is narrower, the minimum remains $142 less per student than six years ago. The gap between the bottom and the even higher spending districts that enjoy local tax effort remains nearly $5,000 ($4,888).

Another measure to promote equity was the creation of an at-risk categorical that provided a fixed percentage of a qualifying district’s foundation grant for each student who receives a complete meal subsidy. By law, the additional funding supports programming designed to mitigate the impact of poverty on educational achievement.

In fiscal 2003, lawmakers appropriated $309 million for 445,000 eligible students, or $706 per student. A decade later in the current year, Snyder and lawmakers appropriated $318 million for 652,000 students, for a per-student rate of $488.

Proposal A linked money to bodies

Proposal A’s main policy change was the financial delivery system of the per-pupil foundation grant. Lose a student, however, and you lose $7,000 minimum, so a district gets in real trouble since its fixed costs can’t responsibly fall as fast as its student population.

Four dozen districts are running deficits, half of them in the seven figures.

Declining enrollment is more a demographic fact of life in rural Michigan, where more than a dozen districts are running deficits. The school budget used to offer supplemental funding to buffer the impact of revenue loss from fewer students. It doesn’t anymore.


Another buffer that in 2003 based 50 percent of state aid on the previous year’s student count has been reduced to 10 percent. Hancock Public Schools in the western Upper Peninsula projected $6.5 million in revenue for fiscal 2012 and a deficit of $738,000. That’s not good.

Backers of school choice that also bleeds enrollment have won new expansions of charter and cyber schools. And school lobbyists are predicting that Snyder’s budget will pursue a greater expansion of choice among districts. That’s fine for students with the parental involvement required to take advantage of such options. It’s not fine for the students in districts that are poorer as a result.

Michigan State University education professor David Arsen argued in a paper last fall that state policy that encourages transfer to charters and neighboring districts with higher socio-economic status causes a “self-reinforcing cycle of decline” in the districts that are losing the students.

“Between 2002 and 2010, enrollment in Michigan’s 14 central city districts declined by 36 percent, translating into a staggering foundation revenue decline of 30 percent in nominal terms or 47 percent in real terms,” he and co-author Mary Mason wrote. “District enrollment change is significantly influenced by the state’s two school choice policies. Nearly a third of the public school students residing in Michigan’s 14 central city districts attend either a charter school or a traditional public school in another district.”

Proposal A sought to narrow inequities in Michigan education. Ignoring the fact of little or no revenue growth for the past 10 years has allowed old disparities to fester. New disparities between financially stable districts and unstable ones have been created because the state has failed to compensate for the negative financial impacts of population loss and choice.

Outstate Republicans whose districts are more likely to receive the minimum state grant profess to be equity champions back home, but settle for less when it comes time to vote because the solution of more revenue runs counter to anti-tax orthodoxy. Democrats are more willing to ask taxpayers for more, but are in no position to do so given their disinterest in reforms that would allow those tax dollars to be spent more wisely.

There have been spending reforms. But they’re not enough. Proposal A can’t be fixed until its revenue streams are replenished.

That requires expanding the base of a sales tax that, as a share of Michigan personal income, has been in steady decline since voters agreed to increase it in 1994.

School districts should have greater, but not open-ended, flexibility to pursue local millage to pay the bills. Approval of public safety millages to compensate for declines in revenue sharing shows voters are willing to pay for services that directly benefit them.

So why do they have the right to raise taxes to keep cops on the street, but not teachers in the classroom?

Peter Luke was a Lansing correspondent for Booth Newspapers for nearly 25 years, writing a weekly column for most of that time with a concentration on budget, tax and economic development policy issues. He is a graduate of Central Michigan University.

12 comments from Bridge readers.Add mine!

  1. arnold weinfeld

    Those who speak of Proposal A in terms of school funding only are missing the other half, local government funding. With the implementation of Proposal A and its forerunner, the Headlee Amendment, local governments are held to a minimal amount of revenue even in good times. Fact is, once our economy turns around and property values consistently increase, local governments will never be able to make up for the last 10 years of losses. So if we’re going to bring up reviewing Proposal A, lets remember to discuss both sides of the coin.

  2. Rich

    How long have we been talking about school funding? Twenty, 30, 40 years? In all that time, there has been little movement toward economizing – mergers of like functions such as purchasing and maintenance, outsourcing of non-academic functions (this has been happening more recently), combining entire districts, taking a hard look at overhead and administrative expense, questioning whether we really need ISD’s. The actual in-classroom function is less than 50% of the school budget. We need to get that up to 75%, then we can talk about more money for the schools.

    1. Duane


      Mr. Luke like s many others onlt care about the money and how to get more. It is easier to talk about money and blame those who control access to it because those who do the complaining have have no responsibility to the public, to the fiscal sustainability of Michigan government, and have no accountability for what they say. They won’t even offer cheese with their whine.

  3. Ron Lemke

    Your article is right on Over 30 years in education and I was here to witness Alpena schools go bankrupt. We and many others are again on that cliff. The lip service Lansing is giving education is just that. We are in very serious trouble in this State Keep up the pressure and hopefully it is not too late. I would love to hear from anyone of you for me input Thank You. Ron

  4. Charles Richards

    ” Lose a student, however, and you lose $7,000 minimum, so a district gets in real trouble since its fixed costs can’t responsibly fall as fast as its student population.” Mr. Luke is singularly uninformative about the nature of a school’s cost function. About 85& of a school’s costs are personnel costs. Those would seem to be, to a large degree, a variable cost. Does Mr. Luke mean to say that a district with declining enrollment should never have its revenue adjusted to meet head count? He says, “School districts should have greater, but not open-ended, flexibility to pursue local millage to pay the bills.” But wouldn’t that exacerbate the inequality he complains about? He complains that charters and school choice drains revenues from central city districts. Would he prefer those students remain and receive an inferior education?

  5. s.melvin

    In 2001 Governor ENGLER raise the per pupil from 1990 $ 4,236 To 2001 …..$6 ,648.. A …..56% increase
    In 1990 we had ZERO CASINOS….in 2001 we had 20 Casinos…………..
    And we Voted for the Olttery to pay for schools……SO SHOW US THE MONEY or it TRAIL..WHO has IT. Audit the BOOKS!

  6. s.melvin

    Total STATE budget in 1990…………. $ 19.6 Billion
    ‘ ” “”” in 2001……………$ 36.5 BILLION increase of 60.7%
    General Fund in 1990…………….$ 7.7 Billion
    2001………………….$ 9.7 Billion increase of 27.1%
    RAINY DAY FUND in 1990………….$ 385 MILLION
    in 2001………….$1.3 BILLION increase of 238%
    and so on Detroit Free Press .April 2001 ////

  7. yvonne zimmer

    I am waiting for the foundation (wealthy) school district voters to decide they are sending buckets of money to Lansing and have lost control over how it’s spent. Their children are not benefiting and there is no accountability. Charter schools that are doing worse than public schools are not closed and public funds continue to be spent. The governor gave K-12 funds to junior colleges when that was never the intent.It is clear the Republicans want to ruin public edication and they are doing a fine job.

  8. Matt

    In last week’s edition we were shown that Michigan spends slighlty more than the national average on it’s schools. There was an additional stat that we even spend much higher relative to our personal incomes. There was no mention of our spending relative to our cost of living that I saw – this would have been interesting. It is absolutely true that our schools spend 85% and sometimes more, of their funds on personnel. Unfortunately schools have moved what should be a variable cost into a fixed cost – this is the definition of bad management! Mr Luke, how do you do you continue with this “not enough money” sob story instead of looking at staffing changes and costs over the last 30 years? This is not only where the money goes, but a big reason why reform is stifled.

  9. Duane

    It is disappointing that the only thing Mr. Luke seems to care about is complaining about the politicians. He has no interested in asking why the schools are losing students to other schools, he seems to have no interest in asking why the the infastructures in schools that have declining aren’t reducing those costs (think of a county of 120,000 has 13 public school systems with one of those in effective bancrupcy, and declining graduation rates), and he has shown no interested in why and how those schools that are succeeding in this environment do it or how to transfer that knowledge to those that need the help.

  10. margaret

    And now the State wants me to pay for early childhood education because some parents won’t read to their children before kindergarden or teach them the a-b-c’s. When I was in school, we started in K, and did what kids that age should do. In first grade, we learned to read. We sat in rows and listened and respected the teachers. We were not behind in any subjects and learned all the things that led to college, if someone wished. I don’t think we’re failing younger children; the teaching methods have not worked. I do not think I should have to pay for someone else’s children to go to pre-school. I paid for my own kids to go because I worked, not because they needed early intervention.

  11. Chuck Jordan

    “Outstate Republicans whose districts are more likely to receive the minimum state grant profess to be equity champions back home, but settle for less when it comes time to vote because the solution of more revenue runs counter to anti-tax orthodoxy. Democrats are more willing to ask taxpayers for more, but are in no position to do so given their disinterest in reforms that would allow those tax dollars to be spent more wisely.”

    Seems to me to hit the problem in a nut shell. Both sides are right though. Throwing money at the problem won’t help, and no consensus can be reached on how best to spend the money if we had money. Meanwhile public schools continue to suffer.

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