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 Report
Calls For Increasing School Taxes
Gongwer News Service, November 17, 2003
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Proposal A of
1994 left school funding to the whims of the economy and is
short-changing some schools, particularly those with falling
enrollment, according to a report from the Education Policy
Center at Michigan State University.
The report urged that the state increase the state education
property tax and that the distribution formulas account for the
actual costs in a district.
"Proposal A leaves the school aid fund dangerously vulnerable to
fluctuations in the economy because the fund relies so heavily
on sales and income taxes," said study co-author David Plank.
"The funding gap has existed since Proposal A was enacted, and
it's a problem that needs to be fixed."
Mr. Plank said the Legislature until now has filled the gap with
general fund revenue, an option not now available because of the
deficit in that fund.
"In Michigan, we're cutting school funding at the same time that
national and state accountability standards are requiring much
higher student achievement," said David Arsen, the other
co-author. "Our recommendations are intended to help schools
shift their attention from program cuts back to student
learning."
And the study said the funding change has also cut in half the
growth in per-pupil spending, which grew 13 percent between 1994
and 2002 and about 26 percent from 1980 to 1994.
The study showed that most rural districts have benefited from
Proposal A because it has increased their available funding more
than could have been done through straight property taxes.
The system has also been a boon for suburban districts because
of increasing enrollment in those districts.
But the system has hurt the urban, poor suburban and some rural
districts that have been losing students because they have also
then been losing funding.
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What's New
Researchers Suggest Property Tax Hike to Keep Current School
Funding Levels - Michigan Chamber Calls it a "Nutty" Idea
MIRS, November 17, 2003
A pair of Michigan State University researchers suggested today
that a two mill property tax increase would protect the $6,700
per pupil funding level through the current budget crisis by
eliminating the School Aid Fund’s reliance on the General Fund.
The “only” $100-a-year increase in the average homeowner’s
property taxes would fix a flaw in the way Proposal A was
designed by raising roughly $600 million more for the School Aid
Fund (SAF), the researchers said. The General Fund and the
state’s rainy day fund supplemented the SAF to the tune of $580
million last year.
And as the state leaders look at more state government cuts to
bail out the state’s shrinking manufacturing economy, the
analysts suggest that per pupil funding could be cut to as low
as $6,300 if taxes aren’t raised soon.
Michigan taxpayers saw roughly a $2,000 property tax cut in
exchange for a 2-cent sales tax hike when the state’s education
system became more reliant on sales taxes instead of property
taxes after the passage of Proposal A. The researchers, David
ARSEN and David PLANK, said a $100 increase would not defeat the
promise of Proposal A, only fix an inequity.
“Proposal A leaves the School Aid Fund dangerously vulnerable to
fluctuations in the economy because the fund relies so heavily
on sales and income taxes,” Plank said. “The economy is in a
slump and the state is facing a $900 million deficit, so the
question becomes, ‘Can the Legislature continue to take money
out of the General Fund to make up the gap in the School Aid
Fund.'”
Increasing the state’s property tax from six mills to eight
mills should be made as part of a three-part package that
includes giving all schools declining enrollment money — not
just rural area schools — and base how much schools receive on
the regional cost of educating different students.
Putting in place one idea without the other could exacerbate the
school funding imbalance, where low-income suburban districts
are worse off now than they were before Proposal A. Declining
enrollment and slow growth in the per-pupil foundation
allocation has put them behind their fast-growing neighbors in
the state money department.
Arsen stressed that a $2 mill state property tax hike would not
create a “bonanza” for starry-eyed school districts. Rather, it
would hold the schools harmless while allowing the state to use
the roughly $580 million in saved for something else in the
budget or to plug holes in the General Fund.
“We’re proposing to fix something here that was a flaw in the
initial design of the system,” Arsen said.
Plank stressed that the $2 mill increase would not protect
school districts from rising health care and pension costs, two
of their fastest growing expenditures.
Michigan spends a higher percentage of its state budget on K-12
education (28.55 percent) than any neighboring state, New York
(22.95 percent) or California (21.48 percent).
Don’t expect Gov. Jennifer GRANHOLM to jump at the idea. Press
Secretary Liz BOYD said the governor didn’t hear a lot of public
support for raising taxes during the two-week budget tour she
wrapped up last Thursday.
“She got an indication from the people we spoke to that they may
be willing to pause the income tax rollback, but there didn’t
seem to be whole-scale support for increases in taxes,” Boyd
said.
Rich STUDLEY of the Michigan Chamber of Commerce blasted the
“nutty” idea as a “Back to the Future” response from a pair of
“whacky professors.” Obviously, the two academics missed the
1980s and early 1990s when high property tax rates drove
homeowners and farm owners off their property and made
Michigan’s economy uncompetitive with other states, he said.
“If this recommendation on raising taxes during an economic
slowdown is a reflection of their policy analysis, perhaps this
group should be shut down,” Studley said. “The money could be
spent more wisely when it’s returned to taxpayers.”
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What's New
Mayor Proposes Major Changes For Detroit Schools
Gongwer News Service, November 18, 2003
In a blunt speech Tuesday evening to Detroiters outlining 40
years of failed management of the Detroit Public Schools, Mayor
Kwame Kilpatrick unveiled a proposal to restore an elected board
for the district while more clearly placing the mayor's office
in charge of education.
Prior to the speech, Mr. Kilpatrick briefed Democratic Governor
Jennifer Granholm, House Speaker Rick Johnson (R-LeRoy), Senate
Majority Leader Ken Sikkema (R-Wyoming) and the Detroit
legislative delegation on his proposal, which will require the
passage and signing of a bill.
Mr. Kilpatrick's proposal will return the Legislature to an
emotional issue begun in 1999 by then-Governor John Engler when
he proposed and achieved enactment of a law abolishing Detroit's
elected board in favor of a board appointed mostly by the city
mayor. That same law also provides a seat for the state
superintendent of public instruction and requires his or her
affirmative vote to hire the Detroit schools superintendent, or
CEO.
Under the current law, Detroiters will vote November 2 on
whether to restore the old system with an elected board that
hires the superintendent and does not provide a role for the
mayor or continue with the existing system enacted in 1999.
In the speech, Mr. Kilpatrick calls for the return of an elected
nine-member board, but one elected from districts (the old one
was elected at-large) and to four-year terms. Board members also
could not run for another office while on the board or for one
year after leaving it.
The mayor would have sole power to hire and fire the schools
CEO, who would retain the enhanced powers given to that position
by the 1999 law. Mr. Kilpatrick strongly suggested CEO Kenneth
Burnley would remain in his position. The board would be
responsible for monitoring pupil performance, reviewing annual
financial audits and the annual budget and annually evaluating
the CEO's performance.
"We will not have a board micromanaging the day-to-day
administration of the system. We will not have a board that
changes the school administration depending on the political
winds of the day," Mr. Kilpatrick said in the speech. "This will
provide a clear and straightforward line of accountability for
the CEO and the performance of the Detroit Public Schools to the
people of the city of Detroit. In turn, Detroit, I am
accountable to you.
"This new system will ensure the reforms now underway will
continue. It's our best chance at providing the stability the
schools so desperately need," he said.
On charter schools, Mr. Kilpatrick said the city "must first be
committed to rebuilding and strengthening the traditional public
school system. Only then should additional charter schools be
allowed to open in Detroit," and even then only if locally done
and in partnership with the traditional public system, he said.
Particularly notable about the speech is the bluntness in
describing the state of the city's schools. Mr. Kilpatrick makes
no defenses for past governance decisions stretching back more
than 30 years.
"To understand how our student population plunged from nearly
300,000 to 150,000 today, to understand how half of our schools
are failing minimum levels of achievement and to understand how
almost half of adults in Detroit are functionally illiterate, we
must know our history," he said, outlining years of failed
policies.
Reaction from Detroit lawmakers was generally supportive, but
wanting to see more details. Spokespersons for Mr. Johnson and
Ms. Granholm said they would withhold comment until after Mr.
Kilpatrick's speech.
Part of the Republican desire to address the issue stems from a
concern in GOP circles that the November 2 vote would result in
a larger than normal turnout in heavily Democratic Detroit,
damaging President George W. Bush's prospects for carrying
Michigan.
Sen. Irma Clark-Coleman (D-Detroit), a former president of the
pre-1999 Detroit school board, said her first preference is to
proceed with the 2004 vote, but also said some of the proposal
has merit, particularly the election of board members by
district. But she said she also has concerns about who would
have hiring and firing powers.
"I do agree the district does need stability and a leader," she
said. "I believe it is a work in progress."
Ms. Clark-Coleman said she expected the mayor and the delegation
would be able to smooth out any disagreements on the issue.
Rep. Tupac Hunter (D-Detroit) said he likes the restoration of
the right to elect the board, but is anxious to see specifics on
what powers the board, CEO and mayor will have. "The devil's in
the details," he said.
Sarah Hubbard of the Detroit Regional Chamber of Commerce said
the group's board will meet Wednesday with Mr. Kilpatrick to
examine his proposal. She said the Detroit Chamber is interested
in maintaining the autonomy of the school CEO, adding members
are "encouraged by what Burnley has been able to achieve and we
want that trend to continue."
She said the Chamber is interested in the CEO being able to
properly run the school system "without constant meddling by the
board," but what powers an elected board would have and what
input the city council would have relative to the mayor remains
issues to be resolved.
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What's New
03-04 Budget Deal: Will it Include Cutting School Aid
Categoricals?
Gongwer News Service, November 19, 2003
A deal to complete budgetary cuts and changes to the 2003-04
budget may be reached quickly, a number of sources indicated
Wednesday, and part of the impetus for a fast resolution may be
the looming problems of the 2004-05 budget. Before that budget
is even drafted, officials in the administration of Governor
Jennifer Granholm indicated to lawmakers that there could be
base adjustments-i.e. cuts-in programs of nearly another $700
million.
With that figure and its attendant problems ahead, there is a
greater sense of reaching quick agreement on the changes to the
current budget, sources said. The generally upbeat mood, as
upbeat as one can be when looking at cuts and adjustments of
close to $600 million for the current year, carried over into
Wednesday as both Democrats and Republican lawmakers were
reported to be relatively positive about the budget proposals.
"This thing is coming together just too damn easy," one source
said.
No actual formal meetings between Ms. Granholm, Budget Director
Mary Lannoye and legislative leaders to discuss the budget are
scheduled for the remainder of this week. However, informal
discussions will take place and sources said a meeting could be
called together quickly if needed.
Lansing on Wednesday was a mass scene of lobbyists, legislators,
bureaucrats and journalists trying to track down details of what
Ms. Granholm proposed through Ms. Lannoye and Chief of Staff
Rick Wiener when they met with legislative leaders on Tuesday.
Officially a blackout on releasing details exists, a blackout
agreed to last week when the main players set the ground rules
for the negotiations. And officials are sticking to the
blackout.
Granholm spokesperson Liz Boyd repeated Wednesday that she would
not discuss details, except to say the possibility of a pause in
the income tax rollback slated for January 1 remains on the
table.
Details are very sketchy at this point, however, sources have
indicated that:
The main revenue increases the administration have proposed
include some fee increases, more vigorous enforcement of tax
collections to ensure the state is getting all of its
appropriate revenue, as well as some accounting changes. One of
the accounting changes apparently in the mix would change the
fiscal years of the state's universities, now starting July 1,
to track the state's October-September cycle.
Proposed administrative savings would total some $50 million.
That Ms. Granholm is interested in pursuing a proposal that
would use hold harmless funds for some 50 schools districts be
used to help mitigate the per student cuts required under the
pro-ration requirement for school aid.
That revenue sharing funds would be cut 6 percent.
That cuts to higher education could range, as reported earlier,
from 3 percent to 6 percent depending on whether schools raise
their tuitions. The lower cuts would go to those schools that
hold the line on tuition, the larger cuts would go to those that
raise tuition.
The administration had earlier required all departments to
submit proposals for budget cuts totaling 10 percent of their
full general fund appropriations. Virtually no department will
be cut that much, sources indicated.
But the proposed cuts already discussed are raising great fears
among a number of groups.
Universities especially are concerned, one source said, with
even a 3 percent cut meaning that Michigan's four-year
universities have endured cuts this fiscal year of essentially
10 percent, and that the cuts will come effectively come during
the second half of the universities' fiscal year.
In fact, since a change to the Michigan Merit Scholarship
program is apparently also under discussion-though how that
would be accomplished is uncertain, since sources agreed the
Merit scholarship is on the table but could not agree on what
the proposal is to change it-universities fear they may even see
a bigger cut if Republicans hold firm to no cuts to the $2,500
level of the scholarship.
If there is a requirement for the universities to alter their
fiscal years, officials worry that could mean their academic
years would begin some six weeks before their fiscal year, and
for the first year mean delayed payments from the state until
October.
Only Wayne State University now has a fiscal year running
October 1 to September 30.
A number of lawmakers, including the Senate Republican members
of the Appropriations Committee, had briefings Wednesday on the
proposed cuts and budgetary changes.
Sources said they too were fairly optimistic the combined
executive order and negative supplemental could be resolved
relatively quickly. As one source said, with the problems of
2004-05 still ahead, lawmakers wanted to minimize the time spent
resolving the 2003-04 budget.
One major part of the $700 million in possible adjustments to
2004-05 budget is up to $200 million in Medicaid cuts because of
changes the federal government will enact to the medical program
for the poor.
One source said Ms. Granholm could face some resistance from
legislative Democrats who would push to delay the income tax
rollback-now scheduled to lower the tax from 4 percent to 3.9
percent-to reduce some of the pressure on the budget.
And one Republican source said he expected Ms. Granholm would
eventually come forward with a revenue plan that could include
some of the changes to the sales tax now being discussed to
capture taxes on Internet sales.
THE PRORATION: While the focus of the current budget cutting
proposals is on the general fund portion of the ledger,
reductions in the school aid budget are also required to bring
the 2003-04 budget in balance.
Ms. Granholm has already sent a letter certifying a shortfall in
the school aid budget and requiring a proration reduction in
school aid of nearly $196 per pupil.
But discussions are underway to find ways to minimize the cuts.
And sources said Ms. Granholm was showing great interest in an
idea to use up to $50 million going to the state's "hold
harmless" districts as a way of reducing the effect on other
schools. The idea was broached both during her budget tour and
by lawmakers.
But school groups are opposing any efforts to cut back the
Section 20j grants.
"We've been pretty firm at not looking at the categoricals as a
way to make the cuts smaller," said Don Wotruba with the
Michigan Association of School Boards. He said his and other
school groups had signed a letter to the governor to that effect
and were planning a similar letter to legislators in the coming
days.
Mr. Wotruba said cuts to categoricals do not fall fairly across
the state. "If you're going to do a pro-ration, do it the way
its laid out and don't go into the categoricals and start
pitting one district against another," he said.
And he argued that the hold-harmless districts are not all the
rich suburban districts they are portrayed to be. While there
are some suburban districts, such as Bloomfield Hills, he said
there are also urban districts such as Ann Arbor and at least
one in the Upper Peninsula.
"The districts that are receiving 20j are receiving it
legitimately," he said. "It's an indication of where their
property taxes were in 1994."
Mr. Wotruba said that the attack on the hold-harmless districts
with large fund balances could easily transform into an attack
on any district with a fund balance.
While he said looking at fund balances was not appropriate for
the current fiscal year, he said such an effort might be
considered as part of an overall look at the 2004-05 budget.
"Next year when we're doing the budget for '05, the act will be
open and we'll be willing to discuss anything to get to a good
budget," he said. "Maybe we should be looking at more
specifically what's the way that schools are funded and is there
an adequate revenue stream behind it."
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What's New
Michigan Department of Ed. Preps For NCLB
"I brag on you everywhere. Michigan is getting it right."
Sandy Kress, former education advisor to President George W.
Bush and co-author of the No Child Left Behind Act.
MIRS, November 19, 2003
Members of the State Board of Education met this evening to
discuss with one of the architects of the federal No Child Left
Behind Act (NCLB) a project to help ensure that Michigan meets
the benchmarks set forth in the federal Act.
Sandy KRESS, a former education advisor to President George W.
BUSH and co-author of the No Child Left Behind Act explained to
the board a partnership between the Council of Chief State
School Officers (CCSSO) and MGT of America to provide states
with expert advice on meeting the NCLB requirements.
So far, the CCSSO and MGT have partnered with the state of
Hawaii to provide this service. The partnership would next like
to work with Michigan. The service is a process of examining the
state's current efforts in meeting the NCLB and will include
in-depth interviews with Board members, department officials and
others.
The process is aimed at looking at how that state is measuring
its progress, what the state's weaknesses are with regard to the
federal Act and its implementation and to provide the state with
practical recommendations to assist in maximizing the benefits
of the NCLB.
"I think it's a fabulous way to have some outside eyes working
for you and with you," Kress told the Board members.
The program has a total cost of $100,000. Of that, CCSSO is
picking up $50,000 of the cost. State Superintendent of Public
Instruction Tom WATKINS, who is recommending the program to the
Board, said that Jim SANDY, from the Michigan Chamber of
Commerce and its Michigan Business Leaders for Excellence in
Education has pledged to raise $25,000 of the state's share.
Watkins said he hopes to raise the remaining $25,000 through
other sources.
On the state's progress to date on NCLB, Kress said he's
encouraged and that Michigan is one of the leaders.
"I brag on you everywhere," Kress told the Board. "Michigan is
getting it right. The story of this state is 'we're going to get
it right.'"
Kress said the states that bother him the most are those that
spend more energy and time arguing they can't meet the Act's
requirements than engaging the new law and "wrestling with it."
The Board of Education is expected to give its formal blessing
to the CCSSO MGT program on Thursday.
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