Guest post: K-12 'increase' is actually a cut

By Mitch Bean

Compared to last year, this year's gubernatorial budget presentation was a bit boring. There were, however, a few interesting aspects worth mentioning.

Let's start with the way funding for K-12 was described. The description in the budget document is that the recommendation for FY 2013 is a 2.5 percent increase, and the "planning budget" for 2014 is a 0.8 percent increase. The problem with that description is, when you add up what the figures for this year, for FY 2013 and for FY 2014, total spending for K-12 declines from $12.74 billion in 2012 to $12.69 billion in FY 2013 -- and declines again to $12.6 billion in FY 2014.

So how is a recommendation to spend less an increase? Funny you should ask. When the budget was constructed last year, we (at the House Fiscal Agency) were asked to separate appropriations into two classifications, ongoing and one-time, in order to highlight that "one-time" spending wasn’t guaranteed.

There is nothing wrong with highlighting legislative intent, but that’s all it is – because all appropriations are "one-time." By law, the state budget is only good for one year, and a new budget must be passed each year. No one I know ever thought that the one-time funding for K-12 would really be one-time -- especially in an election year.

The recommendation for FY 2013 is described as a 2.5 percent increase because "ongoing" expenditures increase from $12.2 billion this year to $12.5 billion. However, what is labeled as "one-time" expenditures decline from $472.7 million this year to $150 million next year -- and there is a recommended supplemental for this year.

So when you add it up, total recommended expenditures, which are what schools are really concerned with, decline somewhat from $12.74 billion in FY 2012 to $12.69 billion in FY 2013, and in the planning budget (which is only intent and will be changed anyway) for FY 2014, spending declines again to $12.6 billion. That’s how a reduction can be characterized as a 2.5 percent increase.

It will be interesting to watch the reaction when the school lobby figures out that the recommendation for a "2.5 percent increase" in K-12 actually means a small cut in spending.

What Snyder didn't say

Also interesting from Thursday's presentation was what wasn’t discussed. There was only a passing, indirect reference to the package of bills that would raise the state's gas tax and increase registration fees by more than $1.4 billion. And there was no reference to the New International Trade Crossing (the second Detroit bridge). And there was no reference to a plan to eliminate the Personal Property Tax.

The improvement in Michigan's economy was front and center. The decline in the unemployment rate and the increase of nearly 80,000 private sector jobs last year (+79,600) is certainly good news, but net job growth was only 66,500 because the public sector continued to lose jobs (-13,100). Some will argue that fewer public sector jobs are a good thing, but the teachers and public safety personnel who are unemployed would see it quite differently.

It also will be interesting to watch the debate over the governor's fee proposals.

For three fees due to sunset, the recommendation is to eliminate or extend the sunset -- in other words, keep the fees in place. The proposal would increase or institute seven fees, and calls for revenue from more than 50 fees currently scheduled to decline to be maintained at current levels. The revenue generated by these fees is relatively minor; goes toward regulating various industries that pay them; and firms generally support them. However, the debate over some of them has been interesting in recent years.

Facts matter. Trust matters. Journalism matters.

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David Waymire
Fri, 02/10/2012 - 1:42pm
Emperor? Clothes? Anybody see my clothes? Nice job Mitch. Truth to power.
Fri, 02/10/2012 - 1:56pm
Great work again, Bridge. But the BIGGEST story not highlighted was yet another meteoric increase in the state mandated Public School Employee Retirements System (MPSERS) rate, which will exceed 31% in two years. That means $0.31 of every dollar public school districts (and NOT most charters, by the way) pay in employee salaries, they will send to Lansing. Just a few years ago it was $0.16. MPSERS costs increases, not matched by state aid to districts, is decimating budgets and Lansing keeps their hands clean all the while. And for charters to be exempt from this is simply irresponsible.
Denise Nash
Sat, 02/11/2012 - 12:34am
It is my understanding that the pension fund was either fully or nearly fully funded when Engler raided it some years back. I hope a teacher will chime in to comment and add details.
Mike Reno
Mon, 02/13/2012 - 9:27am
Brendan Walsh says, "And for charters to be exempt from this is simply irresponsible." Why? The fact that we maintain a Defined Benefit Plan is indefensible. Yet you want to add MORE people to it? You may argue that it's "not fair" that Public's are required to participate in the nonsense, while charters are not. But why aren't you advocating to drag Public's into reality, rather than drag Charters' into this bizarre parallel universe?
Tue, 02/14/2012 - 3:20pm
Mike, It may be indefensible, but it is state law. You and I may not think that law is good, but it is the governing statute. The state's laws and policies are at odds with each other. I, for one, don't think that makes sense. Policies that hasten the further demise of the MPSERS is not good for the state, or LEA's or PSA's. What I like about the Bridge and the Center for Michigan is that they take a pragmatic, not dogmatic, view of the issues. We need practical solutions to our collective problems. Exempting PSA's, or enabling loopholes, to avoid MPSERS costs while also passing laws to enable their expansion is not a practical approach to this problem. In closing, a brief comment in this issue should not be construed as a comprehensive statement on matters such as DB. I don't think a DB system is practical or affordable or appropriate. We need to ween ourselves off of this while still be cognizant of past obligations that our state incurred for decades. Brendan
Mike Reno
Fri, 02/10/2012 - 2:09pm
So what is the point of calling it one-time money, if what you really expect is that it will become an on-going entitlement?
Fri, 02/10/2012 - 2:10pm
I am wondering if Mr. Bean could be a bit more clear or specific, maybe with an example of what the "one time" expenditures cover. Also, can he do the same for the fees that would be affected. It would help me to get people to understand that this budget is just more smoke and mirrors and does not help the children of Michigan or the people affected by the fees. This seems akin to the Governor's no new tax promise, yet I am now paying taxes on my public school pension, which is affecting my monthly check enough that I am looking for part time work in order to make ends meet.
Mitch Bean
Fri, 02/10/2012 - 4:53pm
There are several documents on line but your best bet for something with no spin and that is understandable will be at this website (the agency I used to run). They will publish a preliminary analysis of the budget recommendation Tuesday, and a more complete one in a couple of weeks. You can also call them at 373-8080, and let the receptionist know what questions you have. They will get you to the right person who will explain things. You should read the preliminary analysis first. If you have any difficulties finding it, call them.
laura stark
Sun, 02/12/2012 - 1:51pm
This occured last year too. Last spring the Governor announced that the original amount to be cut from the public education fund was going to be reduced and called it a funding increase for public schools. I like to call it the Orwell trifecta: 1) double think. 2) doublespeak. 3) newspeak.
Fri, 07/20/2012 - 10:35am
its was great post and have great idea thanks for share with us. i have one suggestion that can i submit guest post here?