I’m sure you have all heard this phrase before. In fact, it is so common a phrase, that we even learned it in my high school French class–plus de choses changent, plus qu'ils restent les mêmes. But is there any truth to this phrase? I decided to visit the MSBO website and see what we were talking about in our November newsletters, which date back to 2002. I discovered we have a “theme” for our November newsletters–ominous budget projections.
The 2002 newsletter had an article entitled “Budget blues for Michigan schools.” Quite a catchy phrase and one we could use even today. The article stated that the Citizen’s Research Council had recently released a report that state revenues were coming in worse than expected, and the use of one-time revenue sources had created a large structural deficit without any new revenue sources to provide support for existing programs. The article went on to report about the possibility of cutting categorical revenue for the 2002-03 school year. That possibility became a reality as the foundation allowance was reduced $50 per pupil mid way through the school year.
The lead article in the November, 2003 issue was “Bleak revenue means blues for schools.” It reported that state fiscal projections were off for both the 2003 and 2004 fiscal years, and the governor and legislature needed to solve a budget problem that left a shortfall in both the General and School Aid Funds. Sound familiar? The article talked about potential proration amounts in the $185 to $200 per pupil range. The actual proration that year was $74 per pupil. Two districts, Adrian and Grandville were spotlighted and they talked about what they were doing in their respective districts to deal with the budget issues. The talk centered on making reductions that would not affect the instructional process avoiding the use of fund equity as a long term solution.
How much money the Michigan Lottery contributes to the School Aid Fund was the focus of the November, 2004 article. Sales taxes, income taxes, and the 6 mill SET made up approximately 72% of the $12.312 billion SAF for 2004-05. A recent budget projection I saw estimates that the SAF fund for 2010-11 will be $12.476 billion assuming a 3.1% increase. It’s obvious that School Aid Fund growth has been virtually non-existent over this seven-year period. The article closed by saying that “despite the lottery’s contribution to education, the state’s current budget crisis continues to leave schools struggling with how to make dollars stretch to pay the bills.”
President Jeff Mills wrote an article in November, 2005 analyzing five years of financial data from the Michigan Department of Education Bulletin 1011. Jeff reported about the deteriorating financial condition of Michigan school districts, noting that the total state wide average fund balance for the 2003-04 fiscal year was 12.51 percent, down from 13.66 percent from the year before. 20 districts were following a deficit reduction plan (there were 27 deficit districts for the year ending June 30, 2008). A chart showed that on a per pupil basis, statewide revenues were $8,530, but expenditures were $8,607 for the 2003-04 school year, an imbalance of $77 per pupil.
There was no newsletter published in November of 2006, but in November, 2007 President Stephanie Eagen wrote about consolidation of services. PA63 of 2007 required each ISD to conduct a study involving consolidation opportunities for their constituent districts, including the ISD. The ISD had six months to file a report with the MDE and the MDE then had two months to prepare a summary of the information for the legislature. Stephanie said “the consolidation of services issue isn’t going away”. How true these words are. In order for a school district to have flexibility in applying all or a portion of their $165 per pupil reduction against non-protected categoricals, Section 11D.(2) of the K-12 budget that was passed on October 9 states: NOT LATER THAN FEBRUARY 1, 2010, A DISTRICT SHALL ENTER INTO AN AGREEMENT WITH THE DEPARTMENT TO DEVELOP A SERVICE CONSOLIDATION PLAN TO REDUCE SCHOOL OPERATING COSTS THAT IS IN COMPLIANCE WITH DEPARTMENT GUIDELINES. THE DEPARTMENT GUIDELINES MAY IDENTIFY, BUT ARE NOT LIMITED TO, ALLOWABLE COST-SHARING ARRANGEMENTS FOR THE PROVISION OF BUSINESS SERVICES AND INSTRUCTIONAL SERVICES AND THE CREATION OF JOINT OPERATING AGREEMENTS BETWEEN AND AMONG DISTRICTS AND INTERMEDIATE DISTRICTS. THE DEPARTMENT SHALL ESTABLISH GUIDELINES FOR SERVICE CONSOLIDATION PLANS UNDER THIS SUBSECTION NOT LATER THAN 60 DAYS AFTER THE EFFECTIVE DATE OF THIS SECTION.
I have not seen any department guidelines at this point, but it is obvious that we will be looking into consolidation of services again. We have been cut by $165 per pupil plus a handful of categoricals, and the ISD’s have a 20% reduction in their section 81 funding. From what I have been hearing all year, next year will be even worse. We all know about the impending funding cliff, and an article that ran in the Detroit Free Press on September 27 said that the next two fiscal years are likely to be even more ugly than the current year, and that the economy for Michigan over the next 18 months will be just as bad as it currently is if not worse. None of this bodes well for the funding of our schools. We will continue to deal with a system of school funding that clearly is not working, and I’m afraid that the number of deficit districts will continue to grow. I’m not sure if much has changed–children are still being educated, the buses continue to roll, football teams take the field every September–but in terms of our budget struggles, much has remained the same.