Sunday, February 25, 2007

Reform District Spending, or Red Ink will keep flowing

I wrote the following article in response to unwise call for tax increases:

Reform district spending, or red ink will keep flowing - Detroit Free Press (02/21/07)

Here is the original article as written:

Faced with another mid-year per-pupil funding cut, educators expressed a huge sigh of relief when Governor Jennifer Granholm instead proposed raising taxes with her “2 cent” solution.

Re-invigorated after their Proposal 5 defeat, the Michigan Education Association website is now promising, “an all-out lobbying effort to support Gov. Jennifer Granholm’s State of the State proposal…”

Calling it “Prop 5” or “2 Cent” doesn’t change the underlying problem.

Shifting funds or raising taxes only provides a short-term fix, and we’ll continue to face these tax increase debates until schools get spending under control.

Data from Michigan’s CEPI website shows total revenue – and total spending – for schools in Wayne, Oakland, and Macomb counties increased more than the rate of inflation over the past 10 years. And, these increases are despite the “spending cuts” that schools are quick to point out year after year.

Here are the facts for each county:

10 Year Increase
Oakland Revenue
Oakland Pupils
Oakland $ Per-Pupil
Macomb Revenue
Macomb Pupils
Macomb $ Per-Pupil
Wayne Revenue
Wayne Pupils
Wayne $ Per-Pupil

These numbers are state, local, and federal revenue, and don’t include bond dollars.

Also note inflation during this time period was 24.9 percent.

Michigan taxpayers and business attempting to survive in a horrible economy should feel insulted with a tax increase now, especially given that it serves in part to bailout local school boards who refuse to adapt.

But the alternative – simply holding school boards accountable – might result in our children paying the price.

So as the debate begins legislators should make sure that any tax increases be directly coupled with requirements that school boards start spending wisely.

In the 2000-01 school year, schools spent 21.4 percent of their funding on benefits, which totaled $2.8 billion dollars. By 2004-05 benefit spending skyrocketed to $3.6 billion, and represented 25.0 percent of spending. The state legislature bears some responsibility for maintaining an out-of-date retirement system, but school boards are the larger problem because they continue to approve employee health benefits they cannot afford.

District organization also wastes money. There are scores of high-performing districts around the country with 30,000 to 50,000 pupils, but not in Michigan.

Following that sizing model in the tri-county area suggests 15-20 districts might be appropriate, but there are currently 83. Macomb County has 21 school districts, Wayne has 34, and Oakland County has 28.

Just a one percent savings achieved through district consolidation would translate into $60 million more available dollars every year to spend on teachers, or programs – or to avoid layoffs and cuts.

These ideas are nothing new; school boards simply ignore them, and it’s this lack of responsible action that leads to increased school demand for more of tax dollars.

Governor Granholm also chose not to address the benefit problems, but did recognize the value of consolidation. Unfortunately she wants to rely on incentives, which have been offered in the past without success. This time the governor said she’d consider penalties next year if the incentives don’t work.

Under less dire circumstances incentives would be appropriate, but this budget shortfall demands swift and effective action. School boards are known for neither – with or without incentives.

Assertive leadership, and a coordinated approach with Republican lawmakers could solve much of this now, rather than waiting for a definite “maybe” in the future.

Pull the concept of penalties forward a year. Include a similar plan to help drive reform on health benefits. Revamp the retirement system to match what the state does for the rest of its employees. And if there’s time left, then finish the job of moving elections to November!

Any discussion on new taxes should include specific and immediate requirements for wise spending at the local level.

Bold leadership is needed now to solve the budget crisis, and perhaps more importantly these moves are necessary to ensure the long-term health of Michigan’s public education system.

==> Mike

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