By: Mike Hagerty, CFO, Asst. Superintendent, Administrative Services, Kent ISD
Raise your hand if you have been in education less than 15 years. If your hand is raised, then your district is about to see the largest dollar increase in the foundation allowance since you started in education. That’s certainly a reason to celebrate!! The $120-$240 per pupil is welcome news for all districts, especially the higher funded districts that have received between $30 – $70 the past five years. We can all thank a strong economy and record automobile sales for the School Aid Fund growth.
Of course, those that didn’t raise their hand, remember back to the good years when it was nothing for the foundation allowance to increase $300 – $400 per pupil each year. At that time, the retirement rate was in single digits as well. Back to reality though, as we are living a new normal in education these days.
As I write this article, the Governor and Legislature have decided on budget targets, which is the first step in getting the budget completed. Besides a few differences regarding funding for shared time, this is probably the simplest and cleanest budget we have seen in the past ten years. As most districts put the final touches on their budget before presenting to the Board for approval, all the key budgetary assumptions are pretty well set. We should take a minute to thank the Governor and Legislature for putting a priority on finishing the school aid budget by the end of June. It wasn’t long ago that this process drug out into fall, always leaving districts guessing on revenue.
Since this is the Governor’s last budget, I decided to analyze his K-12 spending priorities during his eight years in office. During the last eight years, the school aid budget has grown nearly $1.9 billion ($12.7 billion to $14.6 billion). So what were his priorities, and where did he spend the money? Here are the top five spending categories:
- Paying down pension system unfunded liability = $970 million or 51%
- Increase in foundation allowance = $449 million or 24%
- Community college/university funding = $395 million or 21%
- At-risk funding = $190 million or 10%
- Special education = $1.9 million or .1%
You may have noticed those five add up to 106%, which means he made cuts in other areas. What this says to me is approximately half the new money the past eight years went to secure the pension system, a quarter went into the classroom, around 20% was diverted to the general fund, 10% went to at-risk students, and special education funding was flat. Now I’m certain if you put ten people in a room, they would all have a different idea of how the dollars should have been spent. It’s really not important at this time to spend much energy debating where it should have been spent, but we should focus our attention on helping decide where the next $1.9 billion is going to be spent.
In summary, no matter the position you hold at your district, the completion of the budgeting process marks the end of one year and the plan for the next. There doesn’t seem to be any funding “unknowns” at the state level, which is good. I hope everyone is able to finish their budgeting process in the next few weeks, enjoy the beautiful summer that Michigan offers, and gets to spend some needed time with family and friends. Cheers to a safe and enjoyable summer!