Opinion | When did stealing from Michigan kids become an easier political decision than raising taxes

Gilda Jacobs if president and CEO of the Michigan League for Public Policy

It was not an easy decision in 2010 to shift School Aid Fund money away from K-12 schools to fund community colleges. I know. I was there. And I voted for it, albeit reluctantly.

The School Aid Fund was first established in 1955 and in its 54-year history, it had never been used for anything but Michigan’s K-12 public schools. But desperate times called for desperate measures, and Gov. Jennifer Granholm posed the idea of a “loan” of $208.4 million from the School Aid Fund to fund community colleges in order to balance the 2010 state budget, which had been beaten down over the past decade by tax cuts and the Great Recession. A loan, not surprisingly, that was never paid back by future lawmakers.

I was serving my final year in the Senate, and I remember being in the caucus room as Gov. Granholm implored us to make that decision. I remember the discussions and hesitation amongst my colleagues on both sides of the aisle. And I remember us ultimately agreeing that it was and should only ever be a last resort, and that the decision was in the best interest of the state at the time.

It was an extremely difficult decision. And lawmakers are expected to make tough decisions. It’s what we run on. It’s what we’re elected for. And it’s what our constituents expect when we take office. It doesn’t take much gumption or conviction to vote for bills that have unanimous support in the Capitol and that are universally liked outside of it. It’s the tough votes that test our mettle.

It wasn’t an easy vote, and it was intended to be a temporary fix to a temporary problem. But sadly, for the past eight years, taking money away from the School Aid Fund and our K-12 kids has become an easy decision for today’s legislators, not a hard one. The exception unfortunately became the rule, and for the entirely wrong reason—freeing up General Fund dollars for massive tax cuts. Beginning with the 2010 state budget, lawmakers have diverted $4.5 billion from the School Aid Fund and K-12 schools, including $637 million in lost K-12 funding for the 2017-2018 school year and a record high of nearly $1 billion for the 2018-2019 school year.

Pilfering the School Aid Fund to fund community colleges and higher education has been done in every state budget of Gov. Rick Snyder’s tenure, with an increasing percentage of the total community college and higher education budgets coming from School Aid Fund dollars. Prior to the 2010 budget, the higher education and community college budgets were funded entirely from the General Fund. But three of the past five state budgets have funded community college operations entirely from the School Aid Fund, and the most recent budget more than doubles the School Aid dollars going to universities, accounting for a third of their funding.

And let’s be clear: This tactic has not been used to support Michigan’s kids or schools. In Gov. Snyder’s first budget for Budget Year 2012, the nearly $400 million taken from K-12 schools was accompanied by a $470 per-pupil cut in the K-12 foundation allowance—the only year since Proposal A in which the foundation allowance was statutorily cut. The cut was accompanied by a very large tax cut for businesses that cost $1.6 billion, with only part of that amount made up by increased taxes on individuals.

In 2012 and every budget year since, the School Aid shift has continued to only serve to increase General Fund dollars available for other uses, including tax cuts and credits that reduce revenue to the state like the aforementioned 2012 tax shift favoring businesses, repeal of the personal property tax, triggered income tax rate cuts down the road, the recent increase in the personal exemption and more. And lawmakers and candidates continue to talk about cutting the personal income tax.

Meanwhile, recent increases to the School Aid Fund and per-pupil spending have barely returned them to their 2011 funding levels. When accounting for inflation, the 2018 minimum allowance of $7,631 was equal to only $6,780 in 2011 dollars—a 7 percent drop in purchasing power and roughly $1,000 below where it should be. And this approach has not been a boon for universities and community colleges, whose annual funding has generally remained the same, with minimal increases primarily accounting for inflation.

Our K-12 schools and higher learning institutions depend on each other and competing for the same dollars hampers them both. Instead of prioritizing who gets funding, legislators should be funding all of the state’s top priorities, and that requires revenue and investment, not tax cuts.

It is time for lawmakers to make tough decisions again. Regardless of who sits in the governor’s office and Legislature next year, it is time to stand up for all Michigan kids and adequately fund K-12 schools AND our higher education institutions. And improve our roads, invest in public safety and support our communities, for that matter. Doing so will take two ideological shifts. One, legislators should again budget School Aid Fund dollars responsibly and return them to K-12 schools where they belong—while maintaining adequate higher ed funding through the General Fund. Two, state elected officials need to end their love affair with damaging tax cuts and instead RAISE new revenues and INVEST in our top priorities—especially K-12 schools.

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Comments

Kevin Grand
Thu, 08/23/2018 - 8:02am

"And let’s be clear: This tactic has not been used to support Michigan’s kids or schools. In Gov. Snyder’s first budget for Budget Year 2012, the nearly $400 million taken from K-12 schools was accompanied by a $470 per-pupil cut in the K-12 foundation allowance"

Ah, the time-worn $470/pupil "cut" argument (used frequently for about a decade now). I see that someone is still attempting to get just a little bit more mileage out of it.

It would be nice if Ms. Jacobs didn't need to resort to lying to readers.

http://www.senate.michigan.gov/sfa/Departments/DataCharts/DCk12_AppropsF...

Ever since Gov. Snyder took office, operating funds for K-12 has seen a steady and constant increase year after year which can be clearly seen in the above graph. Ms. Jacobs "conveniently" ignored OTHER SOURCES OF SCHOOL FUNDING in a sad and pathetic attempt to cajole Lansing into enacting yet another tax hike.

Does anyone at The Bridge even vet these pieces before posting them?

Jerry
Thu, 08/23/2018 - 10:44am

I'm glad you said it so I didn't have to.

Bernadette
Thu, 08/23/2018 - 11:54am

Kevin,

Your once again simplistic view of the problem of K-12 funding never ceases to amaze me. This current governor and his cronies (are you one of those cronies?) have mismanaged every quality of life issue in MI as evidenced by the statistics in US News state rankings (https://www.usnews.com/news/best-states/michigan), and yet simple minded Republicans call for further tax cuts and smaller government so big business can have their taxes cut(that will fix everything as we have seen).

There is so much arrogance and denial on the part of current republican party, who just wants more personally and does not care about "all citizens" in this once great state. The constant diversion of the issues, the "what aboutism" that you use to conflate the issue is amazing. There is not one republican politician that I have seen that has any ability to manage complex issues. Their answer is to "cut taxes". Well I say "grow up". MI needs real leaders and I can only hope they are on the horizon.

Kevin Grand
Thu, 08/23/2018 - 1:14pm

I'm sorry Bernadette, but were you eventually going to get to the point where K-12 Funding from government had consistently GONE UP, rather than gone down under Gov. Snyder, as Ms. Jacobs is deceptively telling Bridge Readers?

It's literally right there in front of you in that SFA chart I conveniently included. You DO know who the SFA are and what they do, right?

Did you even see the fine print at the bottom where it said that chart DOESN'T include funding from local hold harmless millages?

Let me connect the dots for you since you are clearly having a hard time reading a one-page budget chart: It means that those districts received EVEN MORE money.

And please don't attempt to adopt Ms. Jacobs' own tactic of misdirection.

You only embarrass yourself when you do so.

Bernadette
Thu, 08/23/2018 - 4:39pm

No Mr. Grand you embarrass yourself because you have no sense of the big picture, you don't understand that the quality of educational outcomes is directly due to total mismanagement of every aspect of state government, because men like you think you know it all.

Kevin Grand
Thu, 08/23/2018 - 6:11pm

We're talking abouf the alleged.budget "cuts".

And no, I don't claim to "know it all", but I am capable of looking up information like that chart which fook me a whole 45-seconds.worth of maximum effort.

You ought to try that once in a while. Facts beat out feelings everytime.

Bernadette
Fri, 08/24/2018 - 8:04pm

Mr. Grand,

Please read the rest of the comments to this article. No party is innocent in this issue. Bottom line is how are the kids learning?
Where does MI fall nationally. You sir, look at one chart, tell the author she is wrong. Any educated Michigander knows are kids are failing and the funding has gone down over time.

Kevin Grand
Mon, 08/27/2018 - 11:47am

I really don't see how the comments not made by the actual author of this piece are germane to the discussion, but I'll bite Bernadette.

You want to argue funding...be careful for what you wish for.

According to the latest number available, DPSCD gets on average $14,745 per pupil in funding. Travel 30 miles north and Armada Public Schools receives a disproportionately lower amount of $9,252.

https://mdoe.state.mi.us/samspublic/others/b1014_17%20FINAL.pdf

So, what do DPSCD students get for that $5k+ bump in funding?

Well, I'll let the test scores speak for themselves.

https://www.mischooldata.org/ParentDashboard/ParentDashboardSchools.aspx...

https://www.mischooldata.org/ParentDashboard/ParentDashboardSchools.aspx...

Bob Balwinski
Thu, 08/23/2018 - 1:27pm

Fiscal 2007-2008 to fiscal 2018-2019 shows a 10.3% increase in total revenue for SAF over this 11 year period. That does not keep up with inflation over this 11 year period, first of all. Secondly, Jacobs is talking about how this money was spent.....money first to help pay for community colleges then universities and now education programs deemed needed by the current House and Senate. If my revenue pot increases by 2% but you take 5% out of this revenue pot for non-K-12 spending, then K-12 spending goes down.
The issue is not revenue increases but how that revenue is spent. If you continue to strip the SAF for other spending priorities, how would you replace the money taken that was meant for K-12?

John Q. Public
Thu, 08/23/2018 - 10:00pm

The quote you truncated, Kevin, was that there was a $470 per pupil cut IN THE K-12 FOUNDATION ALLOWANCE. And there was. I didn't interpret the piece as only an attempt to cajole a tax hike. Rather, it was a plea to both the governors and legislators to stop stealing from the school aid fund. And steal they do. It's why I won't vote for any tax increases myself, for that or any other reason. I'm not philosophically against paying more, but when they CONSISTENTLY don't spend it on the things they say they will, and make sly little (mis)representations like "the road repair tax will go 100% to transportation" and instead of fixing roads and bridges, they build bike paths and subsidize mass transit (within the "letter of the language" but clearly not within the expectations of the voters), I'm not giving another dime voluntarily.

Ms. Jacobs does come off in the piece as both disingenuous and hopelessly naive, though I know she is neither. "Shame on the administration for doing what I voted 'yes' on, and oh, what courage I showed for voting that way!" An intrafund "loan"?! Those are never, and I mean NEVER, repaid. Casting a vote to make it happen, and castigating others for it? Please. The courageous vote at the time would have been to say, "Sorry, but we aren't funding you. Let the community college cuts commence" and then letting the political consequences fall where they may.

We need multiple legislative bodies at the state level, the way we have at the local level. We need a separately elected body responsible for nothing but the school aid fund and K-14 budget, with the current legislative bodies having zero responsibility or authority for either. That's the way it's done at the local level, and it works much better than the way the state level does.

Carol Elgie
Thu, 08/23/2018 - 9:37am

I see that the State of Michigan is "borrowing" from our children's education. Just like the Federal Government is "borrowing " from Social Security. A sad day for all of us.

Ken Drenth
Thu, 08/23/2018 - 10:00am

I was on the Michigan Association of School Administrators Board, (MASA) in 1994 when the school aid act was changed.
Never once, that I can recall, was the issue of Community Colleges ever considered to be part of the K-12 School Aid Act.
How could it be by just the name(K-12 School Aid Act)? This is another example of how the legislature, and politicians individually, undermine their own credibility. How this is allowed to continue without legal action against it I fail to understand!

Kevin Grand
Thu, 08/23/2018 - 1:41pm

Sadly, Mr. Drenth, Michigan Legislators have been playing Three-Card Monte with the budget for decades now hoping that Michigan Taxpayers are none the wiser.

State budgets have been "balanced" by shifting money from one line-item towards another like when they use gas tax revenue from Michigan Motorists to pay for mass transit instead of road construction and tobacco settlement funding for education (FY 16-19) rather than tobacco-related health-care costs.

That last example is due to expire in about five years.

And guess where Lansing will go to plug that hole in the state budget?

Matt
Thu, 08/23/2018 - 5:07pm

The reason this issue hasn't been to court is because the k - 12 only crowd would lose! There's nothing that absolutely restricts this money from being used for community colleges. And sure it hadn't been done before but since when do you guys let precedence that you don't like get in the way of anything? You may not like the way money is spent or that the state doesn't take enough from its citizens but that's what elections are all about.

TJH
Fri, 08/24/2018 - 8:29am

Most of the comments are partially correct but mostly wrong in terms of the facts. The argument that there have been steady increases in funding for education during the Snyder administration is on its face true. Mr. Balwinski is the only commenter who accurately characterizes the impact of those increases when considered in light of the reductions in the per pupil foundation allowance or the small increases to the foundation allowance that occurred over the same years.
For a almost a decade the per pupil allowance remained lower than it had been in 2017 in terms of real dollars per pupil. As Mr. Balwinski points out, when adjusted for inflation over that period the per pupil allowance is still quite low.
The cut in 2012 was $467 dollars per pupil, not $470. That $3 error is the only statement in the article that is inaccurate. That cut struck a vicious blows to our schools from which many are still trying to recover.
Three studies have been completed in recent years to assess the adequacy of school funding in Michigan. Even the one commissioned by the Governor found that the funding needs to increase. Last year a comprehensive study of how we fund and staff our schools was conducted by the School Finance Research Collaborative. The findings are now widely available and have been covered in the media. The Launch Michigan initiative in recent months has formed to promote common sense improvements to the way we address public education in Michigan. Rather than argue about whether or not we spend enough on public schools, we should be looking at the current state of our schools and our education results, carefully considering the available research, and working to make the much needed changes and to provide the necessary level of financial support.
The argument that nothing said the School Aid Fund can't be diverted from K-12 education is sort of like a child doing something that she/he knows Mom would not approve and justify the act by saying, "Mom didn't say I couldn't."
In 1994 the voters in Michigan voted to add 2 cents to the sales tax to "establish a dedicated school aid fund." Everyone knew that this fund would also result in the elimination of locally voted property tax millage for the purposes of school operations. Even the Engler era GOP legislators who framed the proposal have since affirmed that it was never intended for anything other than K-12 funding.
The author is correct, but she did not go far enough in her criticism of Grnaholm for the original theft from the school aid fund. She and the authors colleagues in the legislature pried open the vault and grabbed an armful of K-12 dollars. Snyder and the GOP legislators blew the door off the vault and take what they want every year.

Jim Pearson
Fri, 08/24/2018 - 9:12am

Former Senator Jacobs' commentary is supported by this House Fiscal Agency document:
http://www.msbo.org/sites/default/files/former_prog_schaid.pdf

The Michigan Legislature's disinvestment in public education is even more evident when you take into account 1) the miserly Foundation Grant increases (2018-19 is a whopping 0.7 %) and 2) the shell game of passing the costs of closing the traditional school employees plan to new hires onto local school districts by deducting it from the current Foundation Grant.
Proof of the problem is the shortage of certified teachers, bus drivers, bus mechanics, and many other classifications. School districts are really struggling to compete for labor due to a lack of resources.