Mich. School Funding Measure Goes to Voters

Published November 1, 2006

Michigan voters will decide November 7 whether to approve Proposal 5, a statutory change to guarantee annual funding increases for elementary, secondary, and higher education institutions at the rate of inflation.

On August 25 the State Board of Canvassers approved ballot language that included the Michigan Senate Fiscal Agency’s projected first-year cost of $565 million for the proposal.

Supporters of the measure initially balked at including the $565 million figure.

At the August 25 hearing, Sandra Cotter, an attorney for Citizens for Education–a committee formed by the Michigan K-16 Coalition, a league of pro-Proposal 5 groups representing education employees, agencies, and officials–said the cost estimate was “speculative.” But an opposition group of organizations that represent businesses, taxpayers, municipal governments, and health care providers felt including the cost was necessary.

“It isn’t a policy statement, it’s an appropriations bill. And people need to know what the appropriation is,” said Dave Doyle, spokesperson for the opposition group, Coalition to Stop the K-16 Mandate.

Estimated Costs

Though generally cheered by the Board of Canvassers’ decision to approve including the price tag in the ballot proposal, opponents of the measure pointed out the cost figure is a conservative estimate. A September report by the nonpartisan Citizens Research Council of Michigan tagged the first year’s cost at anywhere from $565 million to $707 million.

Ken Braun, a policy analyst for the Mackinac Center for Public Policy, a nonpartisan policy research group in Michigan, said the lower figure assumes that as much as $142 million in education spending unprotected by the ballot measure, including adult and vocational programs, would be cut.

Advocates of the proposal would have preferred to omit the cost from the ballot, but Michigan K-16 Coalition spokesperson Ken McGregor hopes including it will persuade voters to see the amount in a broader context. He said the proposed figure represents only 3.6 percent of the state’s $14 billion budget.

Investment Call

Proposal 5 supporters say the measure is needed to prepare the state for a changing economic and employment climate.

“We are trying to make Michigan a place for employers of the future,” McGregor said. “To do that, we’re going to have to make a steady investment in our education system from kindergarten to graduate school.”

Supporters argue the funding mandate is necessary to compensate for prior shortages. According to the K-16 Coalition Web site, K-12 school districts received no increases in state aid from 2001 to 2004, while budgets for community colleges and universities were cut 15 percent during the same period.

“Our funding level has dropped, and [Proposal 5] would provide a steady stream of funds to our schools to prepare the workforce,” said McGregor.

But Braun said there is no funding shortage: “The state’s basic per-pupil foundation allowance to local school districts remained substantially unchanged in fiscal 2003, 2004, and 2005.”

Spending History

Braun said the rate of spending growth merely slowed during the recession of the early 2000s, and he pointed to the state’s long-term trend of generous education funding.

“Michigan is a big-spending state when it comes to education. This is primarily because whenever money is around, the legislature has not been shy about sending it to education at all levels,” Braun said.

Braun also cited the absence of a relationship between high spending and student outcomes. According to the federal government’s National Center for Education Statistics, Michigan’s per-pupil spending in 2003 was ninth in the nation. The state’s fourth and eighth grade National Assessment of Educational Progress (NAEP) test scores placed it near the national average at 31st.

Funding Sources

Opponents of the spending plan are concerned about who will pay for Proposal 5.

“The $565 million either comes from tax increases or cuts to other areas of the General Fund–corrections, health care, the money that goes to cities to pay for police and fire protection,” Doyle said.

McGregor disagreed.

“There is plenty of revenue available,” McGregor said. “Legislators are going to have to look to close tax loopholes. And of all of our services, education is essential.”

Doyle said the only specific loopholes that could be remedied were sales tax exemptions on groceries and pharmaceutical products, and voters would not support eliminating those exemptions.

The anti-Proposal 5 coalition also believes the measure is being advertised inaccurately.

“In no place in the proposal does it mention student achievement, classroom improvement, smaller class size, or anything to do with education,” said Doyle. “The only thing it mentions is that it shifts a portion of the cost of teacher retirements to the state of Michigan.”

Focus on Pensions

Both the Michigan House and Senate Fiscal Agencies indicated that two-thirds of the projected cost ($385 million) of Proposal 5 would be used to shore up the Michigan Public Employee Retirement System.

Braun said the benefits available to teachers are much more generous than almost any given in the private sector. “It’s an old-line pension system that’s just not sustainable anymore,” he said.

McGregor argued it’s time for the state to reassume neglected responsibilities.

“The legislature has passed off the pension costs to all the local districts, colleges, and universities,” McGregor said. “The state should pay these costs like it used to. The [non-pension] funding, when it goes to the local districts, actually enhances what they are doing in the classroom.”

Dissenting School Board

While most local school district boards either voted to support the measure or had not issued their official position at press time, on September 19 the board of Michigan’s third-largest district voted 6-2 against Proposal 5. The Grand Rapids Press on September 20 reported many members of the Grand Rapids Board of Education questioned automatic funding mandates as state policy.

“I’m just amazed,” McGregor said of the unexpected dissent.

Braun said state law allows school districts to use official mail to inform voters of their positions on ballot proposals.

Throughout the summer and early fall, public opinion polls consistently showed broad support for Proposal 5. A late August survey of Michigan voters by the Iowa polling firm Selzer and Company identified 64 percent in favor of the funding mandate, with only 25 percent opposed–results McGregor said meshed with his group’s internal polling.

Doyle said when voters are provided with “a little information,” the percentage of those who express opposition climbs to 60 percent or higher.

At press time both sides planned to produce media campaigns to advertise their claims.

Ben DeGrow ([email protected]) is a policy analyst for the Independence Institute.

For more information …

“Proposal 2006-05: Educational Funding Guarantee Law,” Citizens Research Council of Michigan, http://www.crcmich.org/election/index.html#05

“An Analysis of Proposal 5: The ‘K-16’ Michigan Ballot Measure,” by Ken Braun, Mackinac Center for Public Policy, http://www.mackinac.org/article.aspx?ID=7924

“School Board Blasted for Not Backing Ballot Measure,” by Dave Murray, Grand Rapids Press, September 20, 2006, http://www.mlive.com/news/grpress/index.ssf?/base/news-32/115876390545780.xml&coll=6

“Voters Are Torn over Tax Dollars,” by Dawson Bell, Detroit Free Press, September 4, 2006, http://www.freep.com/apps/pbcs.dll/article?aid=/20060904/news06/609040340