'Survey of Pain' Says Taxpayers Need to Hurt More
The Michigan School Business Officials and a tax-increase advocacy group called "Save Our Students, Schools and State," have released results from a canvass of 300 school districts, dubbed the "Survey of Pain." Tax hikes are proposed to alleviate the pain, but official data on the economy and Michigan's tax system cast considerable doubt on Michigan's ability to afford their remedy.
The survey passes on district reports that show 86 percent are expecting layoffs in 2011 and 85 percent project that class sizes will grow. And 21 percent of districts say they'll likely close at least one school building this year.
This comes after a 2 percent reduction in state aid this year and with a larger cut looming in 2011. Compounding the challenges is the end of federal cash that began flowing to schools in 2009 as part of the stimulus bill. Most school districts used this money to avoid making layoffs.
Save Our Students, Schools and State favors expanding the sales tax to services to raise more revenue for schools. Tom White, chair of the group, said at a press conference on March 8 that Michigan residents can afford to pay more taxes.
James Hohman of the Mackinac Center for Public Policy disagrees. He points out that over the last decade, Michigan's gross domestic product growth has been stagnant, and that the state maintains the nation's highest unemployment rate at 14.3 percent.
Additionally, Hohman holds that Michigan's tax system works relatively well compared to the rest of the country. Even though Michigan lost more jobs in the first three quarters of 2009 than any other state, its tax revenues declined by only 9 percent, whereas the national average tax revenue decline for states was 13 percent.
"This shows that the state's finances have been more sheltered from the poor economy than the taxpayers' finances have," said Hohman. "It's unfair to ask the private sector to contribute more to the public sector when the public sector has been — comparatively speaking — unharmed."
White also believes that schools are worse off financially than they were in 1994, the year Michigan enacted Proposal A and significantly changed the way it funds public schools.
Yet revenue generated by the Proposal A funding system is up 16 percent since 1994, after adjusting for inflation. Moreover, inflation-adjusted total federal, state and local revenues for schools are up 33 percent since then, meaning schools have $3,000 more per pupil today than they did before Proposal A.
Other surveys of this type were conducted in the past by the MSBO and show districts making similar predictions. In 2005 and 2006, about 60 percent of districts predicted their class sizes would increase, and about 80 percent said they'd have to spend down their fund balance.
One school official claimed in 2005 that "schools have moved past the fat and are down to the bone." Another predicted in 2006 that they'd have to close their doors in three years if trends continued.
However, school finances were different in those years compared to today: The foundation allowance, a per-pupil state appropriation, increased in 2005 by $175 and by another $233 in 2006.
Although the fiscal climate may be different from year to year, the results of these surveys consistently show districts expecting to lay off more employees and increase class sizes.
School statistics tell a different story, though. For instance, the National Center for Education Statistics tracks class size data, and the teacher-pupil ratio in Michigan remained at about 17 from 2003 to 2007. The Center for Educational Performance and Information reports that the number of full-time equivalent staff slightly increased over the same period.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.