Posted on 04/14/2002 9:37:19 AM PDT by Dan from Michigan
Proposal A: Funding reforms felt across state
Poor districts are getting ahead as rich ones falter
By Tim Martin
Lansing State Journal
As a recession and falling enrollment slam some of Michigan's wealthiest public schools, some educators and politicians say it's time to take a fresh look at how the state funds education.
The struggling schools say reforms that Michigan voters passed in 1994 are threatening to change the way they educate kids.
East Lansing could lay off an estimated 45 teachers next year. Okemos might slash budgets for sports and maintenance. Waverly and Mason are among the other mid-Michigan K-12 districts patching budget holes they say were primarily blown by Proposal A - the measure that switched the primary source of school funding from local property taxes to the state sales tax.
Proposal A has helped rural, less affluent schools improve programs as they cash in on a system designed to strike a better funding balance between rich and poor districts. But wealthy schools say they've been squeezed for years by relatively small funding increases. And educators are concerned because the state will have to adjust its property tax collection schedule to pay next year's $200 per-pupil increase - exposing potential flaws in the system.
"When this became law, everyone said the real test would be when the economy slows," Michigan Education Association spokeswoman Margaret Trimer-Hartley said. "Now we're facing that test."
It's emerging as a key issue in the 2002 governor's race. The candidates are considering ideas to adjust the system - including ways to let certain districts raise more money and make the formula more recession-proof.
But Proposal A stands as one of the most effective and significant accomplishments of the 1990s in Michigan, supporters say. It provided property tax relief and still boosted K-12 education funding to record levels.
And by helping to level funding between rich and poor districts, it's given more students statewide the opportunity to have better computer labs, newer textbooks and expanded academic programs.
Nearly 70 percent of Michigan voters favored the plan in 1994. And well over half would vote for it again if it were on the ballot today, according to a recent statewide poll.
Gov. John Engler and others say the system works. Their message: Wealthy districts should stop complaining and manage their money better.
Schools have more money than ever and, in some districts, fewer students.
"So the question comes back to the school districts," Engler spokeswoman Susan Shafer said. "How are they spending their money? That's the question parents in those districts should be asking."
System structure
Before Proposal A, school districts were funded mostly by property taxes collected from within their boundaries. The reform slashed overall property taxes by about a third statewide and raised the sales tax from 4 percent to 6 percent as an alternative funding source.
Schools no longer can ask local voters to approve new millages for money to pay for things such as teachers' salaries and textbooks. Nearly half of the operating millage elections in 1993 failed, many of them in districts where voters grew weary of a succession of requests.
Failure to pass millages nearly doomed some districts. In Kalkaska, schools ran out of money and closed 10 weeks early.
The funding gap between districts that would pass millages and those that wouldn't widened, triggering the push for a statewide funding system.
Schools still are allowed to hold local elections requesting higher taxes - for new construction only.
But the operating budget problem is so acute for some districts that even next year's increase - boosting minimum funding to $6,700 per student next year - won't be enough to prevent cuts in some of Michigan's wealthier schools.
And schools with declining enrollment are hardest hit because funding is based on student population.
With the state's revenue down during the recession, Michigan began the year trying to head off a $1.3 billion deficit. That could have meant little or no funding increases for Michigan's 550 public school districts and 1.7 million students.
The state plans to move up part of its property tax collection and tap its rainy day fund to help cover schools next year.
But analysts say another year of data is needed to make a true evaluation of how well Proposal A would survive a recession.
"We shouldn't jump the gun on condemning Proposal A until we have more information," said Craig Garthwaite, an analyst with Lansing's Public Sector Consultants. "So far, it's been successful."
Promises kept
Proposal A has done as advertised. It has lowered property taxes and made funding more equitable statewide.
Michigan's overall property taxes were about 30 percent higher than the national average before 1994. Today they're much closer to the norm.
Proposal A cut them by at least a third, on average. The typical homeowner saved several hundred dollars or more on annual property taxes.
"If it hadn't passed, I probably wouldn't be in my house today," said Eve Ranney, an Eaton Rapids homeowner. "I wouldn't have been able to pay the tax bill."
Increases in the sales tax and cigarette taxes more than made up the difference - particularly when the economy was good.
Overall state spending on education has outpaced inflation. And schools in rural, poorer areas that sometimes struggled to provide even the most basic programs have benefited most.
Districts relied on their property tax base and taxpayer support to run schools before Proposal A. That led to wildly different revenue streams, even within the same region.
For example, Waverly Community Schools collected $6,998 per student in 1993-94 largely due to a strong industrial and retail base anchored by General Motors Corp. and the Lansing Mall.
But Maple Valley School District - in the heart of Eaton County's farm country - took in just $3,889 - an 80 percent difference.
Next year, that gap will narrow to about 30 percent. Waverly should get about $8,660 per student as Maple Valley collects the state minimum: $6,700. The gap could shrink in future years.
Maple Valley - which covers the Vermontville-Nashville area - has bolstered technology, raised beginning teacher pay 40 percent and improved athletic fields in recent years.
Ingham County's Stockbridge district was able to buy new buses and swap old 286X computers for speedy Pentiums.
Complaints rise
But improvements are relative. Mid-Michigan's lowest-funded districts still get $2,000 per student less than the richest. And increases for all schools have shrunk in the past two years because of the slow economy that limited state revenue.
That hasn't been a challenge in districts such as Maple Valley.
"We've learned over the years how to make our dollars stretch," Superintendent Clark Volz said.
Before Proposal A, some of the more affluent districts had increases of up to 10 percent a year and they're struggling to adjust to below-inflation bumps.
The problem is compounded for districts losing students because Proposal A doles out money on a per-pupil basis.
East Lansing has lost 175 students since 1995, about a 4 percent drop. The district faces a nearly $3 million deficit next year, and plans to lay off about 45 teachers.
Okemos has 115 fewer students than in 1995, a 3 percent dip. The district has recommended more than $800,000 in budget cuts, including in athletics and maintenance.
Mason has lost about 180 students since 1995, a 5 percent slide. The district may charge student-athletes $10 each to offset athletic trainer costs in the wake of a $400,000 budget shortfall.
Even the state's wealthiest districts are taking a hit. Bloomfield Hills Public Schools expects to get about $12,000 per student next year, well above the projected $7,229 state average. But officials in the affluent suburban Detroit district fear they may have to cut programs soon.
"A number of school districts are facing difficulties they haven't had at least since the recession of the 1980s," said Edith Suttles, vice president of the Waverly school board.
Critics say the per-pupil funding hurts because some fixed costs don't change when enrollment dips.
A drop of 15 students scattered across a K-5 elementary school, for example, isn't enough to justify the loss of a teaching job. But the lost enrollment means $100,000 less in state funding.
Looking inward
Tweaks to the system are possible - both inside and outside the Proposal A framework.
But supporters say districts should look internally first - and determine whether they are truly doing all they can to cut costs without hurting kids.
East Lansing parent Debby Harrison says those reviews should be made regardless of Proposal A's future.
"People just don't want to give up programs, so we have to make our pennies count," she said. "It's a different era. People are questioning schools and governments and how they spend their money more than ever."
But there is resistance to change in many districts, and it can lead to higher costs by deliberate decisions.
East Lansing, for example, wants to keep traditional neighborhood schools with elementaries that include kindergarten through fifth grade. And the community wants to keep its academic programs and well-funded sports teams. That helps make the district's administrative costs among the highest in mid-Michigan.
"Proposal A has been front and center," East Lansing Superintendent Thomas Giblin said of his district's budget issues. "But it's not the entire problem. We also make local decisions, and East Lansing has made some expensive decisions."
Giblin said those decisions are far more costly than the one-time "mistakes" the district has made - such as the hiring of an administrator who was bought out for $160,000 after spending six weeks on the job.
Engler has questioned why many districts continue to buy health insurance from the Michigan Education Association, which he says is more expensive than other plans. Introducing more co-pays and deductibles could save districts thousands.
Administrative staff size, labor contracts and contracting out transportation or food services are other areas for possible savings.
Criticizing Proposal A is easier than making tough decisions to save money, said Lawrence Reed, president of the Mackinac Center for Public Policy, a Midland-based think tank.
"They try to squeeze more blood out of the turnip, versus managing a little better," he said.
I know liberals like the Lansing Statist Journal, Jim Blanchard, and Jenny Grandstand are looking for a return to the good ole days, but I doubt most Michiganders are going to look forward to thousands more in property taxes. BTW - Do you think the sales tax is going away too? I doubt it.
"If it hadn't passed, I probably wouldn't be in my house today," said Eve Ranney, an Eaton Rapids homeowner. "I wouldn't have been able to pay the tax bill."
During the late 80's Michigan's motto was "Last one to leave the state, please turn off the lights." High taxes, unemployment, and a bad economy caused thousands of Michiganders to bolt. That's why there are so many in Texas and West Florida.
I'll be damned if we go back, at least if I have any say in the matter.
Eaton Rapids is a rural area 20 miles Southwest of Lansing. Stockbridge is a rural area 20 miles Southeast bordering Ingham and Livingston Counties.
I think, frankly, that it is driven by the auto unions. It is hard to hire a teacher for less than what a guy bolting on bumpers make.
The article you posted is part of coordinated effort by the Left in Michigan to force open the flood gates of taxing authority. If this effort is not destroyed, thousands of people in Michigan will be impoverished to feed the insatiable craving the Left has for our money.
You may want to do the same thing in your part of Michigan. Then challenge the Left to put up or shut up!
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