Superintendent Says District Worse Off Despite Getting More Overall State Money

Capitol Confidential ^ | 4/8/2014 | Tom Gantert

[MichCapCon]

The Kalamazoo Public Schools get about $53 more per student in state funding this year than the district received in 2010-2011.

Yet Michael Rice, the district's superintendent, said in a recent column in Bridge Magazine that the Kalamazoo schools and others across the state were better off three years ago.

Rice, like others asking for more money from the state, makes the case in his column that funding has decreased because some schools receive less money today from the state's foundation allowance. The foundation allowance is a base per-pupil dollar amount that schools receive, but is just part of the total amount of state funding each school districts get.

Michigan K-12 funding and enrollment Kalamazoo's foundation allowance was $7,930 per pupil in 2010-11 and $7,451 in 2013-14.

But Rice is discounting $15.3 million the district received in 2013-14 from the state for things such as special education, adult education and payments to cover the cost of employee retirement costs in the Michigan Public Schools Employees Retirement System (MPSERS).

For example, the state paid $4.4 million in 2013-14 to help cover some of Kalamazoo Public School's MPSERS costs.

In his column, Rice said: "The increased cost of the state-controlled Michigan Public School Employees Retirement Systems (MPSERS) has been substantial and has in fact diverted funds from the classroom. … Another reason for the rise in the cost of MPSERS has been the fact that the state does not require charter schools, whose numbers are no longer capped by the state, to contribute to MPSERS. When charter schools are permitted to opt out of MPSERS, those that are still in the system by law — traditional public schools — have to pay higher rates."

However, blaming charter public schools for issues with MPSERS is wrong, said Gary Naeyaert, executive director of the Great Lakes Education Project, a bipartisan, non-profit organization that promotes school choice.

Naeyaert said there are about 4,000 charter public school teachers who are not members of MPSERS. There were 223,769 active members in MPSERS as of Sept. 30, 2012 (the most recent available). That means the non-member charter school teachers account for fewer than 2 percent of the total membership.

"It would not impact the cost. Period," Naeyaert said.

The Kalamazoo Regional Educational Service Agency has chartered two of its own charter public schools, the Lakeside Charter School and the Youth Advancement Academy.

What has taken more potential members away from MPSERS is the privatization of non-instructional services, which typically saves districts money.

Kalamazoo Public Schools has privatized its food service manager position as well as some of its custodial services, according to the Mackinac Center for Public Policy's 2013 survey of public schools.

About 66 percent of school districts contracted out for food, custodial or transportation services in 2013.

Regardless, James Hohman, assistant director of fiscal policy at the Mackinac Center, said Rice wanting to add more people to spread the cost of paying for MPSERS' $24.3 billion unfunded liability isn't a solution.

"Regardless if there are two people in the system or a million people in the system, you still have the underfunded liabilities," Hohman said. "The amount the state needs to put in to catch up to pension underfunding is the same. Their answer is, 'We just have to get more people to pay for it.' No. You have to fix the main problem which is open-ended liabilities that the state isn't funding correctly."

Hohman said to do that the state has to close MPSERS to new members, offer a 401(k)-type plan and pay down the unfunded liability.

A spokesman for Kalamazoo public schools did not respond to requests for comment.