By: Mike Hagerty, CFO, MSBO President, Asst. Superintendent, Administrative Services, Kent ISD
About a month ago, MSU Professor David Arsen, along with College of Education graduate students Tanner Delpier and Jesse Nagel, released a report titled “Michigan School Finance At The Crossroads: A Quarter Century Of State Control.” At 87 pages in length, I’m guessing a number of you either read through the first few pages in hopes of finishing later or saved it in your inbox with plans to review once things “slowed down.” If either of those apply to you, good news, I’ve summarized the high points below. The first section identifies the financial problem since Proposal A, the second section is the impact it’s had on kids, and the last section is a potential solution. Here goes…
The Financial Problem
Consider these two excerpts from the study:
- After adjusting for inflation, total K-12 education funding declined by 30 percent between 2002 and 2015. Seventy-four percent of this decline was due to declining state support for school.
- Since Proposal A, the inflation adjusted decline in the maximum foundation is 39.8%, basic has fallen by 18.5%, and the minimum declined by 25.6%. Below is a chart illustrating the decline.
Just think about that for a minute. Inflation adjusted education funding is down by 30% over that 13-year period. How in the world, with this disinvestment in education, did we ever expect student achievement to increase or even remain the same? If the above information wasn’t startling enough, take a look at the chart below. For some reason, I thought all states must be facing the same issues as Michigan. Unfortunately, that isn’t the case. This chart shows total education revenue for each state, adjusted for inflation, as a percentage of the state’s education revenue in 1995. It includes all sources of revenue. Between 1995-2015, Michigan was dead last in revenue growth – 50th out of 50 states. Michigan’s 2015 education revenue was only 82% of the state’s 1995 revenue. Equally striking is the gap between Michigan and the next lowest state, West Virginia, where 2015 revenue was 97% of their 1995 level. In every other state, inflation adjusted revenue in 2015 was higher, often much higher, than in 1995.
One last chart on finances shows something we are all aware of. In the early years following Proposal A’s passage, the Legislature transferred over $600 million annually from the state General Fund to the School Aid Fund. In recent years, however, transfers have gone in the other direction, as the Legislature has devoted over $600 million of SAF revenue to activities formerly funded by the General Fund. This represents a net decline of over $1.2 billion annually or more than $850 per pupil. If adjusted for inflation, the $1.2 billion is $1.6 billion today.
The Impact on Kids
Obviously, the disinvestment in education spending will have an impact on student achievement. Consider for a minute this one statement in the report and it’s generational impact on our schools:
When Proposal A passed, MI students performed above the national average on the NAEP. In recent years, however, MI’s NAEP performance has fallen to the bottom tier of states. U of M professor Brian Jacob found that MI ranked last among the 50 states in student proficiency improvement between 2003 and 2015.
Michigan ranks 50th out of 50 states in proficiency improvements from 2003-2015 and not surprising, also ranks 50th out of 50 states in growth of inflation-adjusted K-12 education revenue over the same period of time. Do either of these statements in the report hit home for your district?
1. MI’s extraordinary slide in K-12 education funding is all the more striking because it occurred simultaneously with the state’s establishment of ambitious curricular and achievement standards for children. The standards-based accountability movement has brought historic and fundamental change to US public schools. But, while most other states have accompanied increased outcome expectations with increased resources to meet them, MI policymakers have reduced resources.
2. The consequences of MI’s funding neglect can be observed in schools and classrooms across the state. Services have been gradually reduced even as state outcome standards and the share of at-risk students have increased. Many schools have been forced to increase class sizes, reduce course offerings, and cut spending for teacher PD, instructional coaches, and textbooks and supplies.
A Potential Solution
There is hope for a solution, assuming there is legislative support. Below is a chart showing the long-term decline in “tax effort” in Michigan and states nationwide. While Michigan’s tax effort surpassed the national average for most years before 2002, it has since fallen substantially below the tax effort nationally. The sharpest drop in Michigan’s tax effort has come since 2010.
Consider this…if Michigan’s tax effort only increased to the 2015 national average, it would generate an additional $3 billion in revenues per year, an increase of more than 15 percent above 2015 total revenue. To put that in perspective, Professor Arsen calculates the additional money needed to fully implement the recently completed School Finance Adequacy Study is $3.63 billion.
Let me finish by giving a shout out to Professor Arsen and his team. This document is well done and researched. It is a “must read” for all in education. I’d also suggest for those of you serving as business managers that you summarize the report for your Board or maybe even do a Board presentation at your open meeting. The results of this body of work must be widely shared and discussed if we have any hope of making the current system better.