Reform, revenue and reduction have become the buzzwords in Michigan's
school funding debate, but there's no consensus on which should come first or
how much is needed.
Michael Van Beek
School administrators, board members and business people who
gathered at Saginaw Valley State University for an "Education Summit" Monday
heard panelists and other guest speakers make recommendations ranging from reduced
spending on school employee health care to a statewide tax on services to a
rigorous overhaul of public education.
Robert Daddow, deputy Oakland County executive, opened the three-hour
event with a financial report that highlighted the state's projected $1.85
billion deficit in 2011 — a shortfall that Daddow believes will be closer to $2
billion but that in either case translates to less money for public schools.
Daddow, also an adjunct scholar with the Mackinac Center for
Public Policy, predicted that at least 60 more school districts will be in deficit
by the end of the year, with many next year facing payless paydays, vendor
payment delays and an increased need for cash flow borrowing.
As the taxable value
of property declines — Oakland County expects values to decrease by 12.5 percent
in 2010 on the heels of a 13 percent drop last year — the amount that the state
takes in through the six-mill education tax will decline, as will the amount
schools and intermediate districts receive through local millages for such
things as debt service, special education and vocational programs, Daddow said.
Robert Daddow
The $3.8 billion that Michigan received in federal stimulus
money masked last year's weak state budget, Daddow said. Like a lot of school
districts, the state has used equity to balance its budget in six of the last
eight years, he said.
"You can solve the issue either by increasing revenue or
reducing costs or both," he said. Government and school reform also are needed,
but, "Reforms take time. You don't have that kind of time."
Cutting Costs
In a panel discussion that followed, health care and
pensions were cited as two areas where education costs could be reduced, along
with consolidation of services, privatization and expanded online education and
dual enrollment.
"The bottom line is we have a fairly generous health care
system (for public employees). ... We aren't going to be able to sustain that,"
said panelist Tom White, head of the newly organized Save Our Students, Schools
and State. SOS has mounted a petition
drive urging legislators to "reverse the devastating cuts to K-12 education and
work on a long-term solution."
A statewide health pool for all school and state employees
"has some merit," White said, as does a mandated contribution from employees
toward their health insurance premiums.
On average, Michigan school employees chip in 4 percent of
the cost of their premium
for a policy that costs on average more than $15,400, while Michigan residents
pay an average of 22 percent of the premiums for policies that cost on average
about $11,000, added panelist Michael Van Beek, education policy director of
the Mackinac Center. The national average is 27 percent, according to the
Kaiser Family Foundation, White said.
(The Mackinac Center publishes Michigan Education Report.)
David Michelson, a panelist who works in governmental
relations for the Michigan Education Association, said that the MEA does not
believe a statewide pool as proposed by House Speaker Andy Dillon, D-Redford
Township, would save money unless it also reduced employee benefits.
Michigan also can't afford the defined-benefit
pension plan it now gives to school employees, Van Beek said. Schools
currently pay an amount equal to 16.94 percent of payroll to fund the pension
and retiree health care plan; White said that number might rise as high as 20
percent next year.
Increasing School Revenue
On the increased revenue side of the argument, Michigan
State University economist Charles Ballard said that, "Despite our struggles,
Michigan is not a poor place. The resources are there if we want to educate our
children."
Ballard said the state could lower the sales tax and begin
to tax services as a way to generate revenue.
"There just isn't a case to be made for taxing your kid's
shoes and not taxing me when I go to a Lions game," he said.
In addition to a service tax, he also proposed a graduated
income tax or, alternatively, raising the flat tax on income, as well as taxing
Internet sales. The Michigan Business Tax could be eliminated by revising the
income and sales taxes, Ballard said, who also recommended getting rid of a myriad
of smaller tax breaks and deductions that Michigan now offers.
Like Ballard, Michelson said the state should review its tax
breaks and tax incentive programs to find out if they're worth the cost. He
also said that any new tax incentives or educational mandates should have a
defined funding source.
Reform Ideas
Dow Corning Corp. executive Mary Lou Benecke said that the
business community is "impatient to be a voice" in school reform, which does
not begin by giving schools more money.
"We need to use money more wisely, and we need fundamental
change," said Benecke, state government relations manager for the corporation. Citing
the "Touch Choices or Tough Times" report
of the New Commission on the Skills of the American Workforce, Benecke said
that Michigan should do more to encourage top college students to become
teachers, but pay them based on performance, not on years of service.
Top teachers should be so well rewarded that industry would
have to work hard to lure them from the classroom, Benecke said.
"Make me compete for them," she challenged.
Taking another idea from "Tough Choices," she said school
districts should contract with teacher groups to run schools and link to
community organizations for student services.
"What if we made sure no student passed to the next grade
with a 'ticket to fail,'" she said, emphasizing the need to address learning
problems early and avoid the difficult and more costly problem of high school
dropouts.
Classroom tests reward students for routine work, not for
the critical thinking and problem solving that employers are looking for, she
added. And finally, education should make use of the management tools that have
served business well, like the Six Sigma program, Benecke said.
Reaction
Benecke's ideas resonated with David P. Midkiff, a global
leader in external manufacturing for The Dow Chemical Co.
"My interest is in trying to help identify comprehensive,
long-term solutions that involve all aspects of the problems," he told Michigan
Education Report.
"I think we fundamentally approach it differently in terms
of accepting poor performance and status quo," he said of the business and
education communities, but added, "Education is very complex. I don't think
business has all the answers."
Anne Gies, who recently returned to Michigan from a teaching
job in Nevada, said that, "Michigan teachers are going to have to do it on less
money, and they're going to need more support and guidance."
Debate on education funding is likely to continue for
months. Gov. Jennifer Granholm must submit a 2011 budget by Feb. 12. The Legislature
is supposed to approve a final budget before Oct. 1.
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Lorie Shane is the managing editor of the Michigan Education Report, the Mackinac Center’s education policy journal. Permission to reprint in whole or in part is hereby granted, provided that Michigan Education Report is properly cited.