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Schools and the "T" word

Taxes. There, now I’ve said it. It’s a word no one wants to hear, especially now that Michigan’s economy seems to be sliding downhill. (And never in April.)

But wishing won’t make it go away. So here is the question:

Do we really have to pay more taxes to get decent schools? Don’t we pay enough already?

Well, it depends. What do you want your kids’ schools to look like ten years from now? What would you like our state’s economy to look like thirty years from now? That’s really the bottom line. To quote a colleague of mine, “You get what you pay for.”

How we got here

Here’s the problem: Since 1994, funding for schools has depended primarily on money raised by the sales tax, part of the income tax, the real estate transfer tax, and a state property tax for schools (along with a few other things). But when the economy slows down, people buy less, they don’t move to a more expensive house, they often earn less, and so on. So this means that the tax revenues that support our schools shrink – real fast.

The Legislature is still figuring out how to make up for $377 million that they thought would be collected this school year, but won’t. State government economists have forecast that things will look a bit better next year, but only by comparison. Income to the state School Aid Fund will still be lower next year than was originally forecast for this year. While we can use some one-time accounting “tricks” to help close this year’s gap, our bag of tricks will be empty as we face choices about next year.

When our state and our economy is in trouble, we all have to tighten our belts a bit. But is this the right time to pull the props out from under our schools? How much cushion do they have?

The basic foundation allowance – the benchmark funding amount per pupil that the state allows districts to spend – has barely grown in constant dollars since 1994 and has actually fallen since fiscal 2003, once inflation is taken into account. Even lower-spending districts, which were below the basic allowance level in 1994, have seen their real (inflation-adjusted) funding stagnate over the last few years since catching up with “the basic” in 2000. Many districts, which spend more than the basic, have actually had the real value of their allowed spending fall nearly every year since 1994.

(My home district of Ann Arbor is one of those. Once inflation is taken into account, we were allowed to spend 10% less per student last year than we were in 1994.)

As we all know, there is one thing that continues to go up in leaps and bounds: the cost of health care. This hits schools two ways: they have to pay for the health care of their current employees, and they have to make contributions to a state-run pension system which, in turn, has to look ahead to how much it will cost to take care of these employees once they retire. These costs have grown to consume a substantial portion of school districts’ budgets, and they are still growing. School districts must pay these costs out of the same pot of money they have available to run our schools.

What to do?

So budget cuts have become an annual rite in school districts around the state. “What’s wrong with that?” some might say — “Cut the fat!” But where, precisely, is the fat? I have been dumbfounded as I read the comments posted to newspaper web sites whenever school funding is mentioned – apparently greedy, lazy teachers and fat-cat teacher’s unions are to blame for everything. Everybody has a story about about a time-serving teacher who plays video games while the kids do their work. And a few people like this surely exist. But how many of the teachers, staff or administrators you have met would fit this description? Does anybody really think that their children’s teachers joined the profession to get rich quick? Should teachers get the short end of the stick because our economy has a problem with health care costs?

We may have to continue figuring out how to do more with less, but hard choices are involved. As Warren Rudman – Republican former US Senator from New Hampshire and fiscal pragmatist – once put it, “There’s no budget line item for ‘Waste, Fraud and Abuse.’” There is nothing we can point at, say “let’s cut that,” and fix everything in one stroke.

It’s becoming clear that any solution to this problem really needs to include three groups: citizens and parents, teachers, and administrators.

  • Administrators need to be creative in figuring out how to control costs without undermining the quality of our children’s education. This is not a time for pat answers. In some cases, they also have some work to do to demonstrate that they can be careful stewards of public funds.
  • Teachers have already been asked to sacrifice a lot, but they will still need to be flexible in making changes that allow us to protect the quality of our kids’ schools during these trying times. And while they can’t be blamed for the out-of-control costs of health care, we may still need to look at a variety of options to keep those costs from drowning our schools.
  • Finally, we as parents and citizens need to step up and do our part. On the one hand, this means being willing to squeeze our budgets a little bit to find some money to help our schools – and to let our lawmakers know that we are willing to do that. On the other hand, it means getting involved and becoming a constructive partner in the process of safeguarding our schools. No one will hear us if we do not use our voices, but we can’t just be shouting from the sidelines.

We can, and will, argue the details – that’s where the hard work comes. So let’s sit down, roll up our sleeves, and get to it!

Footnote: For the policy wonks among you, here are some details. Last May, state economists came up with a “consensus estimate” that the taxes earmarked for the School Aid Fund (SAF) would bring in $11.552 billion during the 2006-7 fiscal year (FY07). When the Legislature agreed on a budget in July, they appropriated $11.647 billion from the SAF for school spending (plus $35 million from the general fund budget, and available Federal funds). In January, the state economists revised their estimates for this year dramatically downwards, saying that the SAF would collect only $11.230 billion, leaving a $417 million hole. Take out $40 million that everyone agreed could be saved by refinancing some school debt, and you’re left with that $377 million deficit.

Also in January, the state economists estimated that the SAF would bring in $11.533 billion in fiscal 2008 – $30 million less than the original estimate for revenue in FY07, and $150 million less than was originally appropriated for FY07. It’s hard to see how any increases can be made given those numbers.

It’s true that the School Aid Act does specify a formula that takes into account student population and revenue changes to set the annual change in the foundation allowance. In their January estimate, the state economists said that this formula would indicate a 2.84% increase in the foundation allowance, or $201 per pupil. But this formula can be over-ridden by specific legislation, as it was in both FY06 and FY07.

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