With little help from Lansing, schools raise money from local taxpayers

school funding

Cash-strapped intermediate school districts are tapping a little-used regional tax option, with two successful campaigns in recent months. Other regions are likely to copy the strategy.

teresa weatherall neal

Grand Rapids Public Schools Superintendent Teresa Weatherall Neal expects to use $3.5 million more a year to reduce class size and retain teachers. (Courtesy photo)

One evening in early May, anxious West Michigan school officials huddled at a Grand Rapids restaurant to await results from an election that easily could have gone wrong.

It was a big ask: Voters across the Kent Intermediate School District – encompassing 20 local districts, including Grand Rapids – were being asked to approve a 0.9-mill property tax hike, to offset years of sagging state aid. The officials that invoked a seldom-used law that allows ISD’s to seek millage votes for schools within their region.

The gathering turned into a celebration.

Nearly 54 percent of voters said “yes,” adding nearly $20 million in annual revenue for 10 years for local school operations – or $211 more a student. The millage increase  will cost the owner of a home with a market value of $150,000 about $67.50 a year.

“I was so grateful that taxpayers in Kent County would do that for children,” recalled Grand Rapids Public Schools Superintendent Teresa Weatherall Neal, who attended the watch party. Her district will get $3.5 million more a year, funds she said that will go to reduce class size and improve curriculum.

“You just never know how a vote is going to go.”

That may be. But the results in Kent County – and last year in Wayne County – suggest that more ISD’s will likely seek ballot measures in a state where financial support for education has lagged. With a conservative, budget-conscious Legislature a poor bet to boost K-12 funding any time soon, it might be the best option they’ve got.

How 6 regions raised more money for their students

Six regional school authorities known as ISD’s have won ballot measures to raise taxes for basic local school operations. They say they were forced to ask taxpayers for more money because state school funding has been sluggish. Here is the rise in per pupil funding secured by these ISD’s (sometimes also known as RESA’s) for the school districts they represent:

Muskegon ISD per pupil increase: $161

Kent ISD per pupil increase: $211

Monroe ISD per pupil increase: $253

Kalamazoo RESA per pupil increase: $339

Wayne RESA per pupil increase: $385

Midland ISD per pupil increase: $400

“I can’t imagine that other districts aren’t going to look at the success of Kent County and ask why they aren’t utilizing it themselves,” said Ken Sikkema, senior policy fellow for Lansing-based Public Sector Consultants, a nonpartisan consulting firm. (The Center for Michigan, which includes Bridge Magazine, is a PSC client).

“I think it shows voters are willing to raise taxes to provide what they consider proper funding for local schools.”

Six months earlier, 54 percent of voters in Wayne County, which includes Detroit,  approved a 2-mill tax hike to raise $80 million a year for six years for the region’s 33 local school districts - or about $385 a student. While no magic bullet, that’s no small change given that Michigan’s minimum per-pupil grant grew by just $120 from 2016 to 2017.

Just two years before, Wayne County voters had narrowly rejected a similar proposal.

Despite the recent wins, Sikkema cautioned there’s no guarantee future requests will prevail: “The history of success has not been great. There are reasons not a lot of districts have tried this.”

william miller

William Miller, superintendent of the Michigan Association of Intermediate School Administrators, said ISD tax increases are “hard to pass.” (Courtesy photo)

Timing may be everything

Indeed, one only need look to Washtenaw County, which includes Ann Arbor and Ypsilanti, where school officials in 2009 were optimistic voters would back a proposal to add 2 mills for the county’s 10 school districts, to raise $30 million a year.

Polls showed a majority of voters supported more money for schools. But on election day voters turned it down by 57-43 percent.

Voters also soundly rejected a regional education tax in Livingston County in 2005, as well as in 2013 in the Alpena-Montmorency-Alcona Educational Service District in the northeastern Lower Peninsula.

Former state legislator Dan DeGrow recalled the difficult negotiations that led to the  1993 law allowing ISDs to seek tax hikes for school operations. The Michigan Chamber of Commerce opposed the option, he recalled.

“This was the compromise. Frankly, it was meant to be difficult,” said DeGrow, a Republican who served 20 years in the Legislature and is considered an architect of Proposal A. He retired in March as superintendent of the St. Clair County Regional Educational Service Administration.

nancy thomson

Nancy Thomson, retiring co-superintendent of Memphis Community Schools west of Port Huron: “I think we at least should look at options that will keep our school strong.” (Courtesy photo)

Restoring local authority

The option for ISDs to seek regional funds grew from recognition that Proposal A had taken away much of local authority to do so – largely by cutting local property taxes for schools in exchange for a statewide sales tax increase from 4 percent to 6 percent that was to fund schools statewide.

Proposal A was boon to many districts – especially with lower property values – in its initial years. But their fund base began to erode as state sales tax collections slowed with Michigan’s decade-long economic slide and as enrollment fell in some districts. The rising cost of teacher retirement expenses made things worse.

Before voters in Wayne and Kent counties approved tax increases in recent months, just four other regions in the state had done so over two decades – in Monroe, Kalamazoo, Midland and Muskegon counties.

kristen werner

Kent County voter Kristen Werner: “Education is probably the most important thing we can do for the future of our community.” (Courtesy photo)

In Kalamazoo County, Kalamazoo RESA Superintendent David Campbell said predicting where voters might approve such a tax hike can be akin to rolling dice.

“You never take it for granted. They can be very hard to pass in some areas. We are fortunate in that there is a recognition in Kalamazoo County that we could do better by kids.”

RELATED: Win some, lose some: Getting local voters to pay more for schools

On May 2, voters in the Kalamazoo region approved renewal of its 1.5-mill tax for three years, adding about $339 per student in each of the region’s nine school districts. Districts are free to spend the money as they see fit, with funds going to everything from hiring more teachers, to building repair to the purchase of textbooks or technology equipment.

Campbell said it would have been “devastating” to local districts had it been rejected.

The big squeeze

That was the pitch made in 2009 by Washtenaw County school officials, who said that years of dwindling state support for K-12 schools had forced local districts to cut services and increase class size while they grappled with budget deficits.

Officials in Ann Arbor Public Schools pointed to $16 million in cuts over four years, the elimination of 66 jobs, larger classes and cuts in custodial services. At Willow Run Community Schools, officials faced a $3 million budget deficit while the district closed an elementary school and operated under a state deficit elimination plan.

It was a refrain echoed in districts around the state, as legislators squeezed K-12 funding over a period of years as they scrambled to balance the state budget in a recession. Analysis by the Citizens Research Council found that the true value of Michigan’s per-pupil foundation allowance fell by 27 percent from 2003 to 2013, when accounting for inflation and the rising cost of mandatory contributions by districts for teacher retirement.

A survey of Washtenaw County voters at the time found 54 percent supported the idea of a tax hike to improve schools.

But when the millage came to a vote in November 2009, Ann Arbor was the only municipality in the Washtenaw county ISD to support it. Some outlying communities rejected it three to one.

“It was very disappointing,” recalled William Miller, then-superintendent of the Washtenaw ISD. He is now executive director of the Michigan Association of Intermediate School Administrators.

Miller conceded it was a tall order to ask voters for a tax hike while Michigan was still in the depths of the Great Recession.

“It was a bad time to be asking, looking back on it.”

Kent’s winning strategy

In Kent County, ISD Superintendent Ron Caniff said it was critical in building community support to secure the backing of each local district. All 20 school boards within the ISD voted to support it.

Caniff said he believed the district “could have demonstrated” a need greater than the 0.9 mills it asked for. But this was a new tax, and a conservative county, so a consensus of local superintendents decided to keep it on the modest side.

In Grand Rapids, meanwhile, school officials grappled with fiscal stresses typical in districts across the state. It faced a $7.1 million deficit as it approached the 2016-17 school year. That was on top of an $8 million deficit the previous year.

Over the course of 20 years, officials said, the district had seen 35 schools close and 1,000 jobs eliminated.

Still, the tax measure stirred up opposition from groups like the Kent County Taxpayers Alliance, which put out robocalls saying the new revenue would pay for “exploding” salaries of school superintendents.

But in the end, there were enough voters like Kristen Werner to carry the day. She is a mother with three children in Rockford Public Schools in northern Kent County – who said she needed no convincing to vote for the measure.

“I think the schools have done a very good job trying to trim their budget,” Werner said. “But the state hasn’t increased the amount of money for our schools, so unfortunately we as residents of Kent County have to foot the bill.”

In St. Clair County north of Detroit, one local school official said she was barely aware of this tax option until Kent County voters approved its 0.9-mill tax.

But for the struggling rural district of Memphis Community Schools, southwest of Port Huron, retiring co-superintendent Nancy Thomson said it might be worth considering for the seven districts within St. Clair County.

Thomson said her district of about 960 students has been hit by dwindling state funds and declining enrollment, with the budget squeeze forcing it to defer maintenance on everything from parking lots to gym floors and forego buying needed new school buses.

Thomson said teachers took a 2 percent pay cut in 2012-13 and a freeze in their salary step increases. For several years, the district has not replaced departing teachers, as its staff dropped from 54 teachers to 48. That meant larger class sizes. Its textbooks are 12 years old.

“We have done everything we can to keep cuts as far away from kids as we could,” Thomson said.

Thomson said several other districts within the ISD face similar issues. While Thomson retired at the end of the school year, she hopes other officials pick up the ball.

“It has to start somewhere. I think we at least should look at options that will keep our school strong.”

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Comments

Rich
Tue, 06/13/2017 - 8:58am

Can anyone describe what an ISD does? Just another layer of beaurocracy designed to rob the taxpayers. It should not be legal for one entity to tax the residents and pass the proceeds from that tax to another entity. The local districts have already figured out how to get around Prop A and Headlee without having someone else put their hands in our pockets too.

duane
Tue, 06/13/2017 - 1:35pm

In my county the Intermediate School District is starting to be the sub-contractor for non-core functions such as accounting, IT, etc. This is proving to reduce cost for the individual schools and allowing them to contract out the services without being harassed for the contracting, as the ISD is still part of the community education system.

As for students learning , our ISD avoids that topic and is about grandiose plans and programs not results. Though I have found them more willing to talk to taxpayers that don't have children in school than the local schools/district.

My hope for the ISD is that they contract all the non-teaching services letting school focus on student learning. We had a previous school Superintendent that saw his job as stabilizing employment and benefits for school employees, learning results never quite made it to a topic of discussion.

Dr. Nick
Tue, 06/13/2017 - 9:01am

Can someone please tell me why we need Intermediate School Districts? More duplicative efforts on an already over burdened citizenry with over 500 school districts - most suffering from low enrollments and insufficient funds to maintain themselves. And now you want to tax the people more. PLEASE!!!!!!!

Jerry
Tue, 06/13/2017 - 10:15am

Exactly.

Jerry
Tue, 06/13/2017 - 10:15am

ISD's are largely a waste of money. According to the Michigan Dept of Ed, in 2015-2016 there were 56 ISD's and 540 school districts. All with highly compensated senior management with retirement costs. Extremely inefficient and a big waste of money. Stop blaming the State, Bridge. Advocate for more efficiency instead. Broom the middle management and pay effective teachers three times what they get now (no, I'm not a teacher).

TJH
Tue, 06/13/2017 - 10:17am

Sadly, Prop A stopped working effectively as a way to fund schools while closing the gap between the highest and lowest funding districts many years ago. It is good that some areas have been able to pass enhancement millages to slow the bleeding and the deep cuts to programs, but this is by no means a good way to secure adequate funding for schools. It creates a return to the funding disparities that Prop A was passed to eliminate. Sometimes the areas with the greatest needs are the ones that have the most difficult time getting voters to pass millage increases. We desperately needed to pass such a proposal in CGRESD in order to reverse the annual trend of deep cuts to programs and staff a few years ago, but the modest enhancement millage proposal failed 2-1. Our citizens were still suffering from the recession and the slow recovery in our area. MICHIGAN NEEDS A NEW PLAN TO FUND PUBLIC EDUCATION. WE NEED TO PAY ATTENTION TO THE STUDIES THAT HAVE BEEN DONE TO IDENTIFY WHAT ADEQUATE FUNDING OF OUR SCHOOLS WOULD ENTAIL. OUR LEGISLATORS NEED TO WORK SERIOUSLY TO DECELOP A REAL WORKABLE PLAN RATHER THAN CONTINUE THE "ALL TAXES ARE BAD AND WE PAY ENOUGH ALREADY" CHARADE. Michigan once had schools that were the envy of the nation. Those days are long gone.

Rich
Tue, 06/13/2017 - 1:43pm

When you don't have adequate funding, you look at your expenses. The private sector can not just institute a price increase to cover a shortage of funds. People will resist a tax increase when they see bloated non-teaching staff, union level pensions and work rules, and way too many school districts. Get the house in order before any tax increase. We in the private sector have already seen reduced workers, elimination or reductions in benefits, and bankrupt and out of business companies.

Matt
Tue, 06/13/2017 - 12:48pm

So if Grand Rapids PS needed more money for their schools why didn't GRPS go to their district's voters and ask for It? They seem to approve almost every tax increase ever requested. Why is the ISD now being used to raise tax across the entire county to pass through to local districts? One must suspect that there's more underlying this approach than can be comfortably explained. I always believed that the ISD had some decent reasons for existing (Kent County Skill/Tech Center) that all districts used. Better re-think this.

Steven Norton
Tue, 06/13/2017 - 12:54pm

As a veteran of the 2009 effort in Washtenaw Co., it's worth saying that every school board in the ISD voted in favor of placing the proposal on the ballot, and all but one of them was unanimous. We predicted, correctly, the sharp cuts in state aid to education, though our opponents denied anything was coming. However, we were asking for this increase in the teeth of the recession and during the lead-up to what would become the Tea Party wave of 2010.

While people can argue about the need for ISDs (and I think they serve a number of important purposes), the reality is that the ISDs have little to do with these enhancement millage requests. Member school boards must initiate the ballot proposal, and the money raised goes directly to member school districts - the ISD does not get any. Funds are distributed on a per-pupil basis, regardless of collections in any one district.

I hope the Kent and Wayne Co. votes will make clear that our local communities care about good schools, and if the Legislature will not fund them properly we will do whatever we can at the local level to stop the bleeding.

Steven Norton
Tue, 06/13/2017 - 12:55pm

As a veteran of the 2009 effort in Washtenaw Co., it's worth saying that every school board in the ISD voted in favor of placing the proposal on the ballot, and all but one of them was unanimous. We predicted, correctly, the sharp cuts in state aid to education, though our opponents denied anything was coming. However, we were asking for this increase in the teeth of the recession and during the lead-up to what would become the Tea Party wave of 2010.

While people can argue about the need for ISDs (and I think they serve a number of important purposes), the reality is that the ISDs have little to do with these enhancement millage requests. Member school boards must initiate the ballot proposal, and the money raised goes directly to member school districts - the ISD does not get any. Funds are distributed on a per-pupil basis, regardless of collections in any one district.

I hope the Kent and Wayne Co. votes will make clear that our local communities care about good schools, and if the Legislature will not fund them properly we will do whatever we can at the local level to stop the bleeding.

Clark
Tue, 06/13/2017 - 5:08pm

The Gratiot County ISD has over a 100% fund balance/ annual budget equity. The schools within the district struggle to achieve 10% and most do not. Talk about the fox watching the hen house. Let's take the ISD annual budget and disperse to the school districts. Direct money to education and not fat cats.

John Q. Public
Tue, 06/13/2017 - 6:57pm

Wow, it looks like an opportunity for some Bridge staffer's next article.

The prevailing position from readers willing to comment on this story seems to be, "I have no idea what ISDs do, the circumstances surrounding their formation, or whether they are more efficient and/or effective at delivering the services for which they are charged than local education agencies would be individually (aside: for the vast majority, 'yes' to both), but by Gawd, they sure are worthless!"