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Education funding 3 ways: the math behind the rhetoric

September 8, 2014

Gov. Rick SNYDER in his State of the State address this year attempted to “set the record straight” on whether he’s increased or decreased education funding, but that effort appears to have been unsuccessful.  “I don’t know that there’s a consensus,” said Craig THIEL, senior research associate with Citizens Research Council (CRC). “The Democrats are still saying that he’s singing from a different choir book than they are.”  

And the numbers, frankly, can go in anybody’s direction. Did school funding increase, decrease or stay the same? In sort of an ode to choose-your-own-adventure novels, we’ve got whichever answer you’re looking for.  

The Case For An Increase

The Governor last night came out with a number — since he’s been in office, per pupil funding has increased by $660.  “We need to invest in our students to achieve student growth,” Snyder said. “It’s critically important. This is a topic that has a lot of misinformation out there on it, so I’m here tonight to set the record straight.”   Kathryn SUMMERS at Senate Fiscal Agency (SFA) crunched the numbers, and here’s how the calculation goes: take the total state spending per pupil and divide it by the number of pupils. In FY ’11 it comes out to $6,884, and in FY ’14 it comes out to $7,545. The difference between those two numbers is $661.  But dig a little deeper, and only $439 of that is due to state spending. The other $222 is due to a decrease in the total number of students.  Either way, it’s a net gain.  But there’s an important point here: the foundation allowance and “per pupil” funding are no longer synonymous.
 
When former House Fiscal Agency (HFA) Director Mitch BEAN was crunching the 
numbers, per pupil funding was just another way to talk about the foundation allowance. Now, that’s not the case. “You never used to count per pupil funding in that way,” said Bean.  Now, instead of just the foundation allowance being sent to schools, people, including the Governor’s number crunchers, are rolling in spending on things like the Michigan Public School Employee Retirement System, MPSERS.  “I think it’s critically important we stand up and we properly fund our pension plans,” said Snyder during his speech.  He pointed to $1 billion invested into MPSERS, saying, “It’s the right answer and we need to keep it up.”  CRC put out a report on the MPSERS increase in May 2013. The Legislature has included MPSERS cost offsets for local districts, created a MPSERS Reserve Fund, and capped employer contribution rates for unfunded accrued liabilities at 20.96 percent of payroll.  

That last part is the largest — it means that school districts know they have to pay up to that amount, but after that the state will cover the costs directly through the School Aid Fund.  So for planning, this is helpful to districts. “It’s definitely helped districts in terms of budgeting, there’s no doubt about it, because this rate cap is predictable. Previously, they didn’t know what was going to happen,” said Thiel.  So if you roll MPSERS in to that total per-pupil number, the total amount of money going to schools divided by the total number of students going to schools has indisputably increased from FY ’11 to FY ’14. But what if you don’t?  

The Case For A Decrease

“There are a lot of different ways to look at this. If you just look at the foundation allowance, that is lower than it was in FY ’11. There was a significant cut in FY ’12, and then a little bit of that has been restored,” said summers. Shortly after the Governor’s speech, people were already panning his math. According to the a chart produced by the SFA in August, the minimum effective foundation allowance was $7,146 in FY ’11 — when Snyder was in office, but hadn’t set that budget.

In FY ’14 it is $7,026, a $120 decrease.  FY ’12, Snyder’s first budget, saw the only drop in minimum effective foundation allowance under his tenure, but it was a big one. It went from $7,146 in FY ’11 to $6,846, a total of $300.  But the drop was due at least in part to a drop-off in American Recovery and Reinvestment Act (ARRA) funds, which had previously been infused into the state’s education system. A total of $2.76 billion of the $11.4 billion in ARRA funds Michigan received went into education.  When those funds disappeared, the state couldn’t completely make up for them.  “The federal stimulus arguably was one-time money that lasted a couple years. It was from the school districts’ perspective indistinguishable from the state dollars,” said Thiel. So to schools, it seemed like the foundation allowance money had dropped off. And it had.  

The Case For Flat Funding

Not up for the peaks and valleys discussed heretofore? Here’s a flatter finding.  
The House Fiscal Agency (HFA) in a background briefing released earlier this month pointed out that in terms of gross School Aid Fund (SAF) appropriations, there’s not been a ton of movement.  “Total School Aid appropriations have remained fairly flat over the last ten years,” notes the document.  In FY ’14, gross appropriations were at $13,367 million. The lowest they’ve been in the past 10 years was in FY ’05, at $12,467 million. In FY ’14, gross appropriations were 7.2 percent higher than in FY ’05. There was some fluctuation between those times, but it stayed right between those two numbers.  “Excluding federal funds dedicated for specific purposes, total FY 2013-14 funding for schools is at the same level as FY 2005-2006 (not adjusted for inflation),” notes the House report.  
In other words, when you pull back to look at a decade-long trend, education funding may not be trending much of anywhere.  

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