Clearing up the confusion about education funding

By state Rep. Peter MacGregor,

R-Cannon Township

On June 13, Gov. Rick Snyder signed into law both the general budget bill and the school aid budget bill for the state of Michigan. For the third year in a row, the Legislature passed a structurally balanced budget more than four months ahead of schedule, making ‘early’ the new normal in Michigan. This allows schools and local governments the time needed to prepare and finish their budgets and plan for their next fiscal year, on their timeline, not the state’s. Previous to my time in the legislature, the state budget was not being completed by our legislators until the end of September or even into October. This meant that schools were operating on best estimates, rather than true figures because their budgets begin in June, which made it very difficult for them to budget appropriately and effectively.

In the months leading up to the signing of the 2013-14 budget, there had been much confusion about education funding and the Legislature’s commitment to our public schools. One of the comments I hear over and over again is that funding is still below the 2009 per pupil funding levels, which is a comment that conveys only part of the school funding story, and generally refers to former legislators.

In 2009, the federal government passed trillions of dollars in “economic stimulus legislation” called the American Recovery & Reinvestment Act (ARRA), also known as the “federal bailout”.  As you may recall, states, especially our state, (due to its steep economic decline), received millions upon millions of federal dollars to plug holes in our state budget.  One of those areas was the school aid fund.  Every school district was made aware that due to reduced sales tax revenues, decline in property values, and a huge drop in student enrollment (it is estimated Michigan lost close to a million people leading up to this time), there was a large drop in funds available in the school aid fund.  Instead of making large cuts to the school aid fund, past legislatures plugged the budget hole with these ARRA funds, to the tune of approximately $300 per pupil for three years. Though the economy has improved, the school aid funds generated through property taxes and some sales tax, among other sources, did not bounce back to the levels needed to fund all our state’s education funding needs.  Therefore, since the federal ARRA money was no longer available, a cut in per pupil funding had to occur in the 2011-12 state budget.

However, since the 2011-12 budget, we have passed two consecutive years of school aid funding increases. Are we back to the high water mark of 2009?  No, but we are moving in the right direction. Even though it felt like we fell into this hole “overnight”, the reality is, it didn’t happen overnight and it will take a few more years to fully recover.  The 2014 budget we just passed, with bi-partisan support, included a $443 million total increase, or a 3.4% increase to the K-12 budget, despite a decline in statewide enrollment.

Included in the school aid budget — which makes appropriations to the state’s 549 local school districts, 256 public school academies and 56 intermediate school districts (ISDs) — were a number of boosts in per-pupil spending – most of the schools in my district received an average of $72 per pupil more in their base.

Additionally, money was put in the budget again to provide schools the opportunity to qualify for additional per pupil funds if they meet best practice and performance standards – rewarding those that do it right. This increase does not get us back to the 2009 ARRA funded budget, (because we are no longer receiving those federal dollars). However, if you exclude the federal ARRA dollars, the State has funded more than we ever have over the past few years and doing what we can with the money we have in the fund.

In addition to per pupil funding increases, it is important to note that the state has a continued commitment to fulfill the pension (MPSERS) obligation of our hard working teachers and school personnel.  Unfortunately, these legacy costs have continued to increase by between 10-15% year after year and until 2011, had incurred an enormous debt that had never been funded appropriately.  These are direct costs to our schools and a problem that needed to be addressed now.  These pensions, rightly so, are constitutionally guaranteed and this obligation must be met.  The 2014 school aid budget appropriated more than $403 million to paying down our schools’ retirement fund debt liability, coupled with the $100 million more dedicated to payments to school districts for the MPSERS system.  Debts like these force school funding to be taken away from our children and the classroom, and spent on overhead and interest payments. If the Legislature had not passed necessary benefit reforms in 2012, this number would have been even higher.  However, as we are now prefunding our obligation, we are helping schools save money in the long run, and will eventually allow them to put more money directly into the classroom where it belongs.

Additionally, this budget (2014) included a special focus on early childhood development, because inspiring young minds at an early age is an important time in childhood development and learning capacity.  Study upon study has proven the early education of a child leads to increased academic success.

The total state funding for the School Aid Budget in Michigan will be more than $11.6 billion in Fiscal Year 2013-14. This is over 40% of our total state spending.  By taking a hard look at where each dollar is spent in our public schools, we as a Legislature have made it our priority to fund and improve the education system in Michigan. For the third year in a row, the state budget eliminates wasteful spending, improves accountability, requires better performance, and includes additional investments to our infrastructure, public safety, local governments and, most importantly, education.

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