First look at Snyder's 2018 school aid budget

Governor Rick Snyder's proposed school aid budget for next year has been greeted with cautious optimism by public school advocates, and with good reason. All schools would receive an additional $50-$100 per pupil next year, funding earmarked for at-risk students would get a significant increase, and high schools would receive an extra $50 per student to cover their higher costs. But good ideas rarely make it through this Legislature unscathed. This budget in particular is likely to anger pro-privatization forces in the state, setting things up for a major battle over the coming months.

Governor Rick Snyder's proposed school aid budget for fiscal 2018 has been greeted with cautious optimism by public school advocates, and with good reason. All schools would receive an additional $50-$100 per pupil next year, while funding earmarked for at-risk students would also get a significant increase - and, for the first time, be available to all school districts. Perhaps more significant, the budget acknowledges that high schools are more expensive to run and allocates an extra $50 per student to cover the higher costs. But as we have seen in previous years, good ideas rarely make it through this Legislature unscathed. This budget in particular is likely to anger pro-privatization forces in the state, setting things up for a major battle over the coming months.

First look

The most noticed provision in the proposed school aid budget is the per-pupil increase to all schools: between $100 per pupil for schools at the low end of funding and $50 per pupil for those at the higher end. This would make the new minimum allowance $7,611 per pupil, with the state formula maxing out at $8,279.

The second most notable provision is the proposal to spend $22 million, or $50 per high school pupil, to support the higher cost of operating high schools. This has been a long-standing sore spot for local districts, which argue that using an average per pupil amount unfairly benefits schools (mostly charters) which do not operate high schools with their extra programming costs. Elementary grade charters are unlikely to cheer this provision.

Poking the cyber bear

Where will this money come from? This is where it gets interesting. The funds represent part of the savings the state would see from lowering the per-pupil allowance of online "cyber" charters to 80% of the standard level. The budget documents argue that since these schools have little or no facilities costs, they should not receive the same level of funding as schools which operate actual buildings. This is quite a turnaround, since this kind of solution was explicitly rejected by the 2012 bill passed by the Legislature (and signed by Snyder) which effectively took the caps off of cyber charters. That same bill also canceled a planned Dept. of Education study on the actual costs of cyber charters, which would have been used to decide funding levels. We expect that this provision will generate a lot of the heat during the appropriations process, as charter and online schooling advocates fight back against the funding cut. (We should note that the main cyber charter schools now operating are run by private, for-profit companies: K12 Inc. and Connections Education, a unit of Pearson. The full funding allowance going to these schools has likely gone mostly into investors pockets.)

In another important provision, earmarked funding for students living in poverty ("at risk" funding) would be increased by $150 million to a total of $529 million, coming close to fully funding the program for the first time ever. In addition, all school districts would be eligible to receive this funding for those students who live in low-income households.

The proposed budget includes close to $1 billion for special education funding from the state (local and federal dollars make up the rest). Another $1.1 billion is earmarked to help pay down the unfunded liabilities of the public school retirement system (MPSERS) and is taken off the top before per-pupil funding is set. School districts still pick up the largest share of MPSERS costs out of their per-pupil funding, however. The off-the-top MPSERS funding has long been a target of charter school advocates, who resent having to take any of the load of the retirement system.

Other provisions set aside smaller amounts for literacy coaches (part of the 3rd grade reading law), increased career and technical education funding, special early childhood education programs for Flint, statewide voluntary water testing, and STEM programs.

Overall, total state school aid spending increases 1% over last year, about half of the projected inflation rate.

School aid shell game

As with previous years, the devil is in the details. In his proposed budget, Gov. Snyder shifts virtually all of the funding for community colleges over to the School Aid Fund, up from about two-thirds before. This is a $135 million additional shift out of the state's General Fund budget (for a total of $395 million), and a 50% increase in the load carried by the School Aid Fund. The budget documents indicate that this is intended to be a permanent change. About 15% of the higher education budget will continue to be taken from the SAF, totaling a further $236 million not available to K-12 schools.

Put another way, the funds diverted from the School Aid Fund to community colleges and higher education would represent about $420 per pupil for every school district and charter in the state. Even after subtracting the contribution to the school aid budget from the General Fund - at $215 million, slightly down from last year - the net diversion represents almost $280 per pupil that's not available for our schools. The GF contribution is projected to fall dramatically for 2019, partly because projected tax revenues are down for that year.

Moreover, some of this generosity is coming from a balance carried over in the School Aid Fund. Around $100 million of the FY2018 budget, and a similar amount predicted for FY2019, is covered by drawing down the balance in the fund. In other words, projected spending exceeds revenue by that amount. Coincidentally, this generosity is being shown in the two budgets which will be prepared before the next legislative and gubernatorial elections in November 2018.

Some things never change.