Foul for anti-Snyder ad linking pay raises to schools

How we make the call

Truth Squad assigns five ratings to the political statements we review, in descending levels of accuracy:

No factual inaccuracies in the statement and no important information is missing
Mostly accurate
While the statement is largely accurate, it omits or exaggerates facts, or needs some clarification
Half accurate
Truths are interspersed with mistruths, or the speaker left out significant facts that render his/her remarks misleading in important respects
Mostly inaccurate
The major point or points made are untrue or misleading, even while some aspects of the claim may be accurate
The statement is false, or based on false underlying facts

Who:Democratic Governors Association
What:“Teacher,” 30-second TV ad
The call:Regular Foul

Relevant text:

“My name’s Kim Stanley. I’ve been teaching for 25 years. I think education is one of the most important investments we can make. Governor Snyder cut a billion dollars from education, but gave his own administration officials huge pay raises. One of them actually makes $330,000 a year. And Rick Snyder’s administration gave millions in state contracts to his own cousin. I don't understand how Governor Snyder can think those things are more important than our schools.”

The 30-second ad by the Democratic Governors Association marked the seventh ad it has aired on behalf of former Democratic U.S. Rep. Mark Schauer, who is running against incumbent GOP Gov. Rick Snyder. As of Sept. 1, the DGA had pumped $4.6 million into TV ads in this race. This ad raises a familiar charge – that Snyder has hurt K-12 education while rewarding the privileged and those in business. The ad features Royal Oak elementary teacher Kim Stanley, mixed with scenes of children in a classroom.

“Governor Rick Snyder cut a billion dollars from education.”

Supporting documentation for the ad refers to the 2011-2012 school aid budget for K-12 schools, community colleges and universities. It deserves a closer look. The total cut is calculated at $1.16 billion, including $930 million for K-12 schools, $12 million for community colleges and $216 million for higher education.

As we’ve noted before, both sides in the governor’s race are cherry picking numbers from specific windows during Snyder’s first term to make the case that the governor has cut (or boosted) education funding. In his first year in office, Snyder approved a budget that could be interpreted as a $930 million cut from the previous year.

But that tally does not count more than $154 million to allocate $100 per pupil for eligible “best practices” districts and $288 million to support the teacher pension fund – an obligation districts are required to meet. It also does not account for the loss of more than $500 million in federal stimulus funds that had been available in the previous budget. When taken together, the state ended up spending $12.75 billion in school aid funding in Snyder’s first budget, compared to $12.98 billion the year before. That’s a drop of about $230 million – certainly less than $1 billion.

The ad also fails to mention that Snyder and the Republican-dominated Legislature increased school funding in subsequent years. The Snyder camp produced a chart from the Department of Technology, Management and Budget that shows state funding for K-12 education has increased from $10.8 billion in fiscal 2011-2012 – his first school budget – to $11.7 billion for fiscal 2014-2015. In the past three years, Snyder has pumped more than $970 million into districts' teacher retirement obligations. Overall, however, the minimum effective foundation allowance has remained relatively flat since Snyder took office in 2011, standing at $7,146 in fiscal 2010-2011 and $7,187 for 2014-2015.

“But gave his own administration officials huge pay raises. One of them actually makes $330,000 a year.”

In 2013, Jon Braeutigam, Michigan’s chief investment officer, received a 90 percent annual pay bump from $175,000 to $333,000. Other investment officials got pay hikes of 80 percent or more, boosting them to $233,000 a year. Administration officials said the hikes were needed to keep qualified people, while noting they are tasked with managing $70 billion in public funds. “These are rare professionals that manage money, and we were significantly underpaying them and were having a lot of them leave,” Snyder said in February. “We were having turnover issues in terms of keeping these people.”

“And Rick Snyder’s administration gave millions in state contracts to his own cousin. I don't understand how Governor Snyder can think those things are more important than our schools.”

The state Democratic Party obtained emails showing that George Snyder, owner of DBI Office Interiors in Lansing, expressed worries in April 2011 to a top aide to the governor about legislation that could have lowered revenues to his company, which sells new office furniture to government agencies, and had held contracts with the state before Snyder took office.

Those emails were obtained through the Freedom of Information Act and released by Democratic party officials on March 25. In one email to Snyder aide Richard Baird, George Snyder wrote that he was “very upset and nervous” about a Senate bill that would have capped new state office furniture purchases at $1 million. Any amount above that would have required purchase of used furniture. Baird sent an email to then-state budget director John Nixon, telling Nixon of George Snyder’s concern and that George Snyder is “Gov. Snyder’s cousin.” “We are on it,” Nixon replied.

Nixon said he already knew that George Snyder was the governor’s cousin when Baird mentioned it in an email, according to the Detroit Free Press. While Democrats said the emails revealed how insiders received special attention from Snyder’s office that was not available to ordinary folks, Nixon said the emails showed the opposite: that Baird was trying to ward off a potential conflict of interest and assure that George Snyder did not get preferential treatment. Snyder called the Democrats’ claims election-year politics. According to MLive, the governor’s office also said state spending on furniture with DBI fell since Snyder took office, from $18.5 million in the three years before he took office to $17 million in the three years since the start of 2011.

The call:Regular Foul

The claim that Snyder cut $1 billion from education has been well-litigated in this campaign. That calculation is technically correct in the most narrow sense, and for the governor’s first year in office, but only if the tally ignores more $440 million he put into teacher retirement costs and per-pupil funds for “best practices” districts. Teacher pensions are obligations that districts would otherwise have to pay, so that contribution cannot be ignored. Overall, the data show Snyder has increased state spending on education since he took office.

This ad goes more seriously awry when it suggests that steep hikes in executive salaries and contracts for Snyder's cousin ate up budget space that would have otherwise gone to adequately funding public schools. It's a false equivalency.

To be sure, $333,000 a year for a state employee is a lot of money and it could not surprise the Snyder campaign that it has become an election issue, with Snyder’s folks countering that the state needs the best possible talent to manage $70 billion in public funds. The ad also correctly notes that Snyder’s cousin received millions of dollars in state furniture contracts, though it’s also worth noting (though the ad doesn’t) that this cousin held state contracts before Gov. Snyder took office.

The larger implication of this ad is that had the governor held off on pay raises for these investment executives and axed his cousin from the list of state vendors there would have been enough money to avoid cuts in public education.

For the sake of argument, let’s say Snyder rescinded $2 million in salary hikes for Treasury Department investment specialists. And let’s say he cut $2 million in spending that went to his cousin’s business for new furniture. That’s a $4 million savings when compared with a nearly $12-billion budget for K-12 schools.

The issue of executive pay and the circumstances surrounding George Snyder’s communications with Gov. Snyder’s office are certainly fair game during an election campaign. The implication that those controversies sunk state investment in public education is ridiculous and misleading.

There are legitimate concerns about the adequacy of K-12 funding for Michigan schools, but it's a dilemma with complex causes that has been in the works for more than a decade. Voters deserve honesty in this debate over school funding. They won't find it here.

Facts matter. Trust matters. Journalism matters.

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Shane Jacobs
Wed, 09/17/2014 - 11:41am
I call a regular foul on the truth squad. It is absurd to think to think that we would just take away 1 billion in school funding just because we lost federal money that we knew was going to go away. It is also fair to ask why we are taking away from education and giving huge raises and giving Snyder's cousin huge contracts.
Wed, 09/17/2014 - 1:13pm
It is always interesting how states received money for education from the federal government for a period of time and then the state is suppose to replace the funding which the federal government provided. I worked on a project on education, called, Race to the Top. We did not make the list to get federal funding and I am now glad. No state should have to fill in the gap that the federal government created. I do not agree with the raises for the financial personnel in the state. You know what you will be paid when you accept the position. My feeling is that financial personnel in the private sector get paid too much.
Thu, 09/18/2014 - 10:08am
I agree. There were numerous layoffs of state employees along with reorganizations of state agencies. Civil Service claimed that they could no longer afford the 4% that state employees were receiving and that state employees were forced to move from the defined benefit that they were hired in with to the defined contribution plan. Then Governor Snyder gives his staff 80-90% raises? After we fight for a 1% raise & watch our co-workers laid off? That's a HUGE slap in the face. & he dares to make the statement that THESE people were WORTH IT. I do not agree with the raises for the financial personnel. You know what you will be paid when you accept the position. I've worked for the state for over 30 years. I've NEVER received a raise of more than 4%. & I've been nominated for the award of excellence almost every year.
Tue, 10/28/2014 - 11:04pm
Curious if your job entailed managing 70 billion? What skill set / education /experience did that state job entail? Do you believe private sector equivalent jobs are equal to state salaries and compensation?
Wed, 09/17/2014 - 12:19pm
This is like the Poor Rocky ad also. Rocky is once causing surprise a teacher, retired fromnAnn Arbor schools and nowbruns a photography business. Don't worry about Rocky , he'll be fine. Kim for that matter too, she's probably enjoyed up north river cottage this summer, her family rippin up the terrain on their ATVs. The ad talks about one person making $ 300,000 on Synders staff, while cutting and taking away $ from the school kids as kids are exploitive pawns shown in commercial, do I like that -- big N O, isnhe worth it? But news flash Kim, what about almost a hundred superintendents making over $200,000 per year and several making $300,000 compensation packages? That tax payers will support while they will be long gone basking in paradise possibly in some other state. Aren't they also taking away from the kiddies and us taxpayers? Giving his cousin a contract, yes he said, "here cousin here's a fat noncompete contract"-- right, he's not that stupid. Did he have an inside track, maybe, who knows, wouldn't be the first time in any dem or repub ran governing.
Thu, 09/18/2014 - 7:22am
Comparisons of financial data is difficult at best. As your article points out if you define things narrowly, or broadly, you can prove anything with the same data. But here's something to think about. The foundation grant paid to schools annually was reduced about a billion however the Snyder administration points out they put $440 million of that directly in the pension fund. What is different is the $440 million is not an annual amount. When the economy is good and those "well paid" money managers are investing wisely the pension fund grows and less State contributions i. e. the $440 million is necessary. To recap schools experienced an decrease to their ANNUAL revenue but the Snyder administration IS NOT putting $440 million in the fund every year. In addition the Snyder administration made changes to the pension plan that requires greater contributions by employees and lessor benefits for new hires. Two changes that lessens the need for State contributions.
Fri, 09/19/2014 - 12:10pm
In the 1960 the lottery money was voted for the school budget. POtholes: where is the money going from the office of Sec.of STATE> autos are being sold everyday .so this is a good cashflow? Any STATE employees from nOW on have to be in Michigan and have to live in Michigan ,No more cashbeggares fro out of State / WE have all the educated people here in michigan with UoM and MSU,EMU etc etc..Same goes goes for out of State landlords.etc.keep michigan amoney in Michigan!
Tue, 09/23/2014 - 11:02am
First, it was not "all of Synder's staff" that got huge pay raises. Do you really want someone who may have failed in the private sector and is willing to accept $150 to $175 K (while very successful fund managers make over $1M) to manage $70 billion! Good investment helps the State's credit rating -- less interest fees for the State; generates more interest/dividend income -- increasing revenues and minimizing the need for potential tax increases. I personally want someone, and their team, who have a successful track record handling the State's -- OUR -- investments. Second, regarding school funding, why does no one point out that while people are focused on how much total revenue has gone in, or been taken from education, the student population of public schools is down over 100,000 students since 2005. Less students should translate into lower variable costs and potentially lower fixed costs -- schools have closed. I agree with the comment regarding what District and County Education Supervisors get paid -- for what, essentially a totally administrative position. And finally, I like a governor who upsets members of both parties -- tells me he is really representing all the people of Michigan, and not just Republicans.
Tue, 09/23/2014 - 11:12am
Bill, It's obvious that YOU didn't lose YOUR job so that one of Snyder's staff could get a 90% raise. If you had, you would feel differently.
Tue, 09/23/2014 - 1:31pm
Oh, but I did and have been out of work for a while. But I do understand finance and how having the right person managing finances is quite important. And as one person noted above, the actual cost if put into education would not impact any of the local school budgets given that the amount involved is a miniscule percentage of the total education budget. I take it you would rather have someone less competent handle $70 billion and if the result is higher taxes due to less investment income and a poorer credit rating, so be it. And then with higher taxes, lets see if local school millages pass as easily as many have.
Tue, 09/23/2014 - 2:37pm
Maybe I'm missing something? How did Snyder and the Republican legislature increase school aid funding by almost $1B? The School Aid fund (SAF) is made up of statutorily dedicated taxes to the fund and an approx. $184 M transfer from the State's General fund/General Purpose (GF/GP). The $1B suggests the transfer from the GF/GP was increased by an estimated $816M. That is not true. What is really going on is the SAF revenues are up because of changes in the economy not because Snyder and the Republican controlled legislature increased the funding. You could have vacated the Governor's office and the legislature, and those revenues would still be there. The only thing that Snyder and the Republican controlled legislature did was take the existing resources in the SAF and reshuffle the funds to other programs and services. There is no increase in funding that wasn't a result of the dedicated taxes to the SAF. Snyder and the Republican controlled legislature should get no credit for dedicated taxes to the SAF. Those taxes were dedicated by the electorate.