Large Deficit Looms for Schools Across the State

Board President Carol McGlinn and Superintendent Dr. Michael Rice wrote the following letter to all state senators and to locally elected representatives to underscore concerns about the governor's budget and the enormous cuts that would result from the budget for children in grades pre-K-12 if the state legislature were to approve the budget as introduced. This letter also appears in the April edition of the Excelsior.

March 7, 2011

Dear Elected Official:

When and where a child is born should never determine the quality of his or her education. Yet if the governor’s budget in some substantial measure is approved by the state legislature in the coming months, that will in fact be the case: children who had the misfortune to be born just a few years ago in the state of Michigan will pay the price in the form of diminished education resources—and educational quality, given the enormity of the cuts in question.

On behalf of the Kalamazoo Public Schools community of 100,000 residents, we are writing to express our strong concerns about the governor’s recently released budget, which calls for the following:

• A $470 per pupil foundation revenue decrease.
• A $230 per pupil expenditure increase associated with the increase in state retirement contribution rate from 20.66 percent this year to 24.46 percent next year.
• A $200 per pupil revenue decrease associated with the elimination of the state small class size grant for grades K-3, funding to help address the adverse effects of poverty on education achievement in some of Michigan’s poorest districts.

In sum, the aforementioned actions would require gap-closing measures of $900 per student. For Michigan school districts that have been cutting their budgets for the last ten years, levels of cuts of this approximate size are particularly unsustainable, given that there are many actions—including contracting out of various services, consolidations, cuts to programs and services, and health insurance plan changes, among many others—that have already taken place and cannot be re-tapped for savings. Kalamazoo Public Schools, for example, has cut $23 million in the last decade in areas that cannot be re-cut.

The governor has stated that the simple action of employees paying 20 percent of the cost of health insurance would result in addressing 60 percent of the deficit created by the above elements in the governor’s budget. This is inaccurate. Many districts, including Kalamazoo, already have contracts with employee groups that require payments toward the cost of the health insurance plan. Indeed, there are districts in the state that have already negotiated with their associations the payment of 20 percent of the cost of health insurance.

Let’s look at the math. The elements above sum to an approximately $11 million gross budget deficit for the Kalamazoo Public Schools (KPS). Our health insurance costs approximately $15 million annually. Assuming unrealistically that employees do not already pay a share of the cost of the health insurance plan and that the plan does not rise in cost on an annual basis, 20 percent savings off a base of $15 million is $3 million, roughly 27 percent of the budget gap in question premised on two overly optimistic budget assumptions.

The governor has also suggested cuts in "non-instructional areas.” The governor recommends a 10 percent cut in this broad area, which includes but isn’t limited to electricity and natural gas over whose prices we have no control. This idea is neither particularly original nor especially helpful, given the cuts of the last decade. While we will certainly look at every area of the budget for potential savings, we have been through this exercise many times. What makes this experience different is the extraordinary level of cuts to public school children.

By blurring the line between the School Aid Fund and the General Fund as well as decreasing taxes dedicated to the School Aid Fund, the governor’s budget would transfer $1.1 billion away from pre-K-12 public education to help close a General Fund budget gap and to provide substantial business tax relief. The reality is that the School Aid Fund, which has historically funded pre-K-12 education in the state, was never intended to support other services, including community colleges and universities. The discussions around Proposal A were clear: there would be a dedicated funding stream to pre-K-12 education to protect funds for Michigan school children. Indeed, in spite of the financial challenges of the last 16 years, the School Aid Fund was largely protected until last summer, when the legislature “borrowed” $208 million from the School Aid Fund for community colleges. What we now know is that this “loan,” without repayment date or repayment terms, was in fact not a loan at all but a grant. The governor’s budget for the coming fiscal year exacerbates this unacceptable trend.

If approved, the governor’s budget would require profound cuts in education to Michigan’s 1,500,000 public school children. While Kalamazoo is blessed to have the Kalamazoo Promise, rising enrollment unlike most districts in the state, a range of academic accomplishments over the last few years, and state and national recognition in the last year for our progress, we continue to be challenged with 69 percent free or reduced-priced meal eligibility, rising poverty, and a population of young people who are striving to be the first ones in their family to go to college. If the governor’s budget has the potential to adversely affect a district that has done so relatively well in the last few years, imagine the tremendous, negative impact that it will have in districts in counties across the state.

Pre-K-12 education is an investment, not simply an expense. If Michigan is to rise from its current status, it will require improved public education, not diminished public education. Such an improvement, at a bare minimum, requires stable funding, not a series of never-ending cuts to our youngest and most-vulnerable citizens. We brought our young people into the world. It was the right thing to do. We have a responsibility to care for them in a markedly better way than the governor’s budget would allow.

Thank you for your consideration of this communication. If you have any questions, please feel free to contact us at (269) 337-0123.

Sincerely,

Michael F. Rice, Ph.D.
Superintendent

Carol McGlinn
President of the Board of Education