Good times may be ending for districts

8/20/2001

TECUMSEH - In the Tecumseh Public Schools and in districts throughout Michigan, educators and students are preparing to return to reading, writing, and arithmetic.

But they may not be the only ones who need to get back to the basics.

Some lawmakers, worried about Gov. John Engler's plan to cut per-pupil funding to balance the education budget, believe it's time Michigan returns to the fundamentals of school funding.

State Sen. Bev Hammerstrom (R., Temperance), who served six years in the House before she was elected to the state Senate in 1998, said the education budget impasse between Governor Engler and state legislators may force them to re-examine the original intent of Proposal A.

The proposal radically shifted the burden of paying for education from local property taxes to the state sales tax, which was raised to 6 percent from 4 percent.

For the first time since voters approved Proposal A in 1994, school systems face a possible reduction in per-pupil spending because of a weakening economy. Until now, swelling sales tax revenues have fed the education budget, providing funding for programs that originally were not part of the per-pupil formula.

“[Schools] are going to have less money. We know that,” Ms. Hammerstrom said. “It was the consensus of most of the schools that we not cut the per-pupil funding. In order to do that, we basically had to cut [the extra program] grants” that paid for things like reading assistance and coordinated counseling.

“When [voters passed] Proposal A, basically we took out all those grants. But over time, we've kept returning those grants. Maybe this was good to bring us back to the per-pupil funding formula we started with,” she said.

Last month Mr. Engler chastised the Republican-controlled legislature for failing to make cuts to balance a projected $175 million shortfall for the 2002 state education budget.

In the 2000-2001 school year, Michigan schools received at least $6,000 per student. That figure was supposed to jump to at least $6,300 this school year. Mr. Engler proposes cutting that by $74 per student.

But even with that reduction, education spending will be 5 percent more than last year, or around $11 billion.

Barring action by lawmakers when they return next month, the governor warned he would enact his cuts by Oct. 1.

The saber rattling and the slowing economy are making educators uneasy.

“We know there won't always be an increase that we anticipated or planned in the past,” Tecumseh Public Schools Superintendent Richard Fauble said. “I think you prepare your budgets and try to maintain a reserve the best you can, knowing that it will carry you through the times that are a bit leaner than others.”

Hillsdale Community Schools Superintendent Rich Ames said districts will do whatever they can to make sure students are not affected by decisions made in Lansing.

“We'd use caution making decisions with personnel and purchasing,” he said. “For example, we'd make some decisions not to fill some assignments and possibly not complete some projects. But we'll attempt to minimize the effect it would have on student instruction.”

In the Dundee Community Schools, Superintendent Bob Black said his district grew from being Monroe County's poorest district in terms of per-pupil funding to being equal with its neighbors.

Proposal A, he said, made it happen.

Before 1994, Michigan districts relied heavily on property taxes to fund operations and capital improvements.

In Monroe County, the gap between rich and poor districts was so wide that Dundee struggled to keep its doors open while nearby Monroe Jefferson to the east built an Olympic-size swimming pool.

Passage of Proposal A has meant school districts don't have to rely on voters for operating money.

About 10 percent of Dundee's $11 million budget makes up a rainy-day fund. But a maintenance truck and a deteriorating roof won't be replaced until officials know what they have coming from Lansing.

Teaching staff and programs, however, will be left alone, Mr. Black said.

But the unsettled education budget has Mr. Black concerned.

“It's hard to get on the soap box to say these [cuts] are damaging because we are still getting an increase from last year. It's just not as much as we thought,” Mr. Black said. “But they tell schools to have a balanced budget by the end of June yet we don't know what dollar amounts we'll be working with until October. That makes planning difficult.”

School districts got used to prosperous times, Mr. Black said. Many added programs and staff on the assumption that the dollar amounts would only go up, he said.

The governor based his cuts on estimates from a nonpartisan commission that gauges the shape of Michigan's economy.

For the last seven years, the state economy moved at full-throttle. But in the most recent projection, Michigan Treasurer Douglas Roberts and representatives from the House and Senate estimated that school aid revenues from the state's sales tax could drop as much as $223.9 million in the next 12 months from previous estimates.

The drop would represent about 2 percent of the $10.4 billion education budget and would continue a downward trend that began in the current fiscal year.

State Rep. Ron Jelinek (R., Three Oaks), chairman of the House's K-12 appropriations subcommittee, said school funding looked rosy as little as a year ago, with the state sitting on a fat $1 billion surplus.

“Even after some spending, we were going to end fiscal 2003 with a $500 million balance. But we went from $500 million at the end of 2003 to a projected $500 million deficit. That's a big difference,” Mr. Jelinek said.

The picture wasn't always so bleak.

In May, House and Senate lawmakers worked out a plan that paved the way for a 5 percent increase in the foundation grants for the next fiscal year, followed by an increase of 3.1 percent in fiscal 2003.

The increases would be made while nearly every other state agency was being forced to tighten its belt.

But some lawmakers say that two-year education agreement promised too much, too fast.

“For a bunch of people who call themselves conservatives, we probably gave away a little too much of the candy store,” said state Rep. Randy Richardville (R., Monroe), an assistant floor leader in the Michigan House. “We wanted to make it clear to everyone that education was our priority, but I think we got too aggressive.”

Admitting that Proposal A has been an asset for most school districts, former State Sen. Jim Berryman said the plan has been able to deliver during the last seven years. But the plan's heavy reliance on a volatile sales tax is causing financial instability.

“This shows the defect with Proposal A in that local school districts are so dependent on the state for a large portion of their funding,” said Mr. Berryman, now with the Michigan Education Association. “When the economy is good, the money will be given out, and when it's bad, cuts will have to be made.”

Mr. Ames of Hillsdale said the cost of Mr. Engler's plan equals about a $135,000 loss for the district. If the cuts are not reversed, some vacant teaching positions would stay empty and some building upgrades would remain untouched, he said.

Hillsdale has a $15 million budget and only about $500,000 in reserve, the superintendent said.

Michigan lawmakers, while sharply divided over how to proceed, say they will eventually balance the budget without succumbing to Mr. Engler's cuts.

State Rep. Doug Spade (D., Adrian), the only area legislator who's a member of the education committee, said the legislature's failure to pass the K-12 funding measure was largely because lawmakers couldn't agree on where to cut.

“It was [Republican] leadership's choice to hold it off as long as they did. But there are people on both sides [of the aisle] that don't want to see the cuts happen,” Mr. Spade said.

Mr. Spade said he remains confident lawmakers will pass the education budget when the summer break ends Sept. 19.

“We made a commitment to education, and I think we have to live up to that as much as we can. We don't need to be making all those cuts. None of us have intended to make it more difficult for schools. The intent was to preserve as much of the budget as we could,” Mr. Spade said.

In Tecumseh, which educates about 10,000 students, per-pupil funds bring in a sizeable sum of money. Cuts made to those funds will be just as significant, said Mr. Fauble, the district's superintendent.

The northern Lenawee County school district was forced to rely on voters to handle its growing population. Voters approved a $33 million bond project in 1998 to build a high school and $28 million in 2000 for elementary school upgrades.

Mr. Fauble said his district has about 5 percent of its $22 million annual budget locked away in reserve. But the district doesn't plan to dip into this $1.3 million fund just yet.

“It's going to be a wait-and-see thing. Who knows what the House and Senate is going to do in September?” Mr. Fauble said. “We can jump up and down and fret about it all we want, but until decisions are made, we just have to wait.”