I have read all the questions on our listserv recently about what everybody is using for a foundation allowance increase or decrease next year, is it in addition to what the legislature passed this year, etc. so I thought it would be a good idea to provide a brief summary of what has been proposed thus far.
First let’s review some of the highlights of the Governor’s proposal. The Governor has proposed a myriad of reforms to help that will directly affect the School Aid Fund and indirectly ORS. Her retirement proposal would provide a limited retirement incentive for eligible retirees by increasing the multiplier from 1.50% to 1.60% for those who retire between July 1 and September 1, 2010. Her proposal would also increase the retirement contribution for Basic and MIP members by 3.0% and by 0.9% for MIP plus members. Her tax structuring reforms would generate an additional $554.3 million for the School Aid Fund. Absent this reform, schools will be subject to an additional cut of $255 per pupil. This is in addition to the $165 cut this year and section 20(j) cut. Although this is not specifically part of the Governor’s proposal, we have been informed that the retirement rate will increase next year from 16.94% to 19.41%. To put this in perspective, this equates to a $184.12 per pupil cost to my district. As I look at the possible two-year effect on the Troy School District, it is $165 plus $248.18 cut of 20(J) in 2009-10, plus $255 and $184.12 for 2010-11 for an astonishing $852.30 per pupil. It is just not possible to balance your budget when one is faced with these revenue cuts and increased costs without making major budget reductions. Another part of the Governor’s reform proposals is Executive Directive 2010-1, which requires the Office of the State Employer and the Department of Management and Budget to take necessary action to open the state’s health care systems for enrollment by any school district, county, city, village, or township employee.
Section 11d. of the Governor’s proposal calls for the implementation of a Consolidation of Services Plan. No later than March 1 of 2011, every district must calculate on a per pupil basis the cost for providing purchasing, payroll, financial accounting, facilities maintenance, pupil transportation and maintenance, human resources, technology and student information services systems, and food services. The ISD must also calculate on a per pupil basis its costs for performing the same services. If the ISD’s per pupil cost is lower, the local district must enter into a service consolidation agreement to be effective no later than July 1, 2011. Failure to do so will subject the local district to a penalty of 1% of its foundation allowance times the number of pupils.
The Senate has released a number of bills for the 2010-11 school year. Senate Bills 1046 and 1047 and SJR P would require public employees to pay 20% of their health care premium. For any district with 1,000 or more students, Senate Bill 1073 would limit administration costs to no more than 28% of the budget. Senate Bill 1074 would require public schools to seek competitive bids for custodial, food, and transportation services. SJR U would reduce pay for all public employees by 5% with no increases for three years.
The House is currently reviewing a series of reform proposals so there is not much information to share, but House Bill 5682 would limit a school superintendent’s salary to no more than the salary of the state superintendent. The State Budget Office indicated that the 2010-11 School Aid Budget is a continuation budget and that it would remain that way for the next four years.
The Citizen’s Research Council recently issued a report entitled “The Fiscal Year 2011 Executive Budget: Déjà Vu all Over Again.” The report reaches a few interesting but gloomy conclusions. Among the conclusions is that the Michigan economy will continue to struggle over the next 24 months and that policymakers will continue to face the same long-term problem that they have faced for years. The report states that, “even when economic growth and state revenue growth return in the coming years, Michigan’s budget will face a fundamental imbalance between on-going revenue and projected spending.” The report goes on to state that “the FY 2011 budget presents yet another opportunity for the state’s elected officials to begin the process of correcting the near-decade long problem” but without further sources of budget resources such as the recent federal ARRA funding, “the solutions available to policymakers to achieve long-term, lasting balance in FY 2011 are limited to cutting and eliminating programs or raising taxes.” The issues facing our legislators are daunting. It is our job to keep them informed, and to make them aware of the effects of the proposals on our budgets. The future of Michigan’s 1.5 million students depends on us.