News Story

Slight Reduction In Education Funding Did Not Lead To Doomsday Predictions

Fewer districts are in deficit than before cut

In 2011, when Gov. Rick Snyder proposed cutting $300 per student for K-12 public education, Michigan School Business Officials Executive Director Dave Martell said as many as 160 schools could go into deficit if the cuts stood.

In 2010-11, the year before Gov. Snyder's first budget, there were 48 schools in deficit. If Martell's claim were accurate, that means the number of districts losing money would have more than tripled.

However, nearly two years later the Michigan Department of Education's report shows that fewer schools fell into deficit in 2011-12. The MDE report stated 46 districts were in deficit last year, two fewer than in 2010-11.

"Doomsday never arrived, apparently," said Michael Van Beek, education policy director of the Mackinac Center for Public Policy. "Some of the credit for this goes to the state for nudging or compelling school boards to adopt smarter fiscal policies, but it may also be the case that local school boards managed these small revenue cuts effectively on their own, too. Hopefully they moved to permanently reduce their cost structure instead of just eliminating services for students."

In April 2011, the Michigan Education Association stated that school districts were facing as much as a loss of $1,000 per pupil, and blamed Gov. Snyder for the predicted loss. Gov. Snyder proposed a $300 per pupil cut in his first budget. He chose not to restore a $170 per pupil cut instituted by then Gov. Jennifer Granholm that had been temporarily replaced for a year by federal funds. Those cuts reduced the minimum per pupil foundation allowance from $7,316 to $6,846.

Gov. Snyder's critics gave little recognition to what efforts the state made to help districts make ends meet.

The state bailed out school districts by helping them make their mandatory payments to the Michigan Public School Employees Retirement System. The MPSERS contribution rate increased to 24.46 percent of total salary in 2011-12. The state of Michigan gave $155 million in 2012 to help the districts make those payments.

The state's reforms — such as incentivizing districts to get more cost sharing from public school employees for health insurance — saved school districts about $315 per student, said John Nixon, director of the state budget office.

In his latest budget, Gov. Snyder proposed a 2-percent increase in funding for public schools. The MEA responded by calling the 2-percent a “small increase.”


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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.