Contemplating the “New Normal” on Michigan’s Darkest Day

Michigan’s communities are engaged in a high stakes game, wrestling with the lethal combination of rising costs and falling revenues.  Despite the urgency of the situation, a long-term view is critical for long-term health.

New reports surface daily chronicling how communities are responding to the financial trauma plaguing Michigan public schools.  Here is a sampling of articles from Dearborn, Saugatuck/Portage, WyomingWayne-Westland/LivoniaBloomfield HillsAllendale, Coopersville, Grand Haven, Hudsonville, West Ottawa, Spring Lake, Charlevoix, Grand Ledge, Hemlock/Saginaw/Chesaning, Escanaba, Fenton/Holly/Linden, Lansing, Utica, Northville, Three Rivers, East Jackson, Adrian, Muskegon, Detroit, Walled Lake, and Birmingham.

welcome to MI What’s the point?  The list runs the gamut of the wealthiest districts to those that receive the lowest per pupil revenue.  Some are very large and some are very small.  Some are urban, some suburban, and some rural.  Some were previously receiving section 20J funds and some never received them in the first place.

The point is that if you’re a school district in the state of Michigan you are certain to be experiencing financial distress.  There are no exceptions.

Welcome to Michigan -  a great state, but great times?  Not so much.

The state’s financial health is the primary determinant of local school district funding.  We were once a wealthy state, but the events of the past decade have rendered us a poor state.   Yes, some districts could be charged with financial mismanagement, but only very few.  The challenges facing local school districts have been brought about primarily by state level financial issues, not local ones.

Consider these Michigan tax revenue sobering factoids compiled by the House of Representatives Fiscal Agency:

- In actual dollars, general fund revenue has dropped from $9.79 billion in fiscal 2000 to $6.95 billion this year, a 32% reduction. In inflation-adjusted dollars, revenue is down nearly 43%.

- General fund revenue has fallen $2.4 billion in the past two fiscal years alone, a drop of nearly 27%.

- School Aid Fund revenue (the predominant source of per pupil funding) is nearly $1 billion lower than it was two years ago, a fall of about 9%. In inflation-adjusted dollars, net school aid fund revenue is down nearly 14% since fiscal 2000.

- General fund spending is at its lowest level since 1996 in actual dollars — and its lowest level since 1969 in inflation-adjusted dollars.

In the same breath that we acknowledge state issues and decisions are the source of most of the problems, we must also accept the need to respond locally.  The problems are not of our doing yet they are real, serious, have long-term implications, and are now in our backyards.

Economic forecasters from Moody’s Economy.com said they do not expect Michigan to see another peak in its business cycle during their entire 30-year forecasting horizon. (Source: The Pew Centers’ “Beyond California: States in Fiscal Peril”

The excerpt from The Pew Study referenced above is critical to comprehend.  We must analyze each budget decision as permanent because it will take decades for Michigan to recover from the revenue losses of the last ten years.  This is why the phrase “the new normal” is so appropriate.  Local school district responses to state level woes will define their service offerings for years to come.

Considering the importance of schools to the residents within the  Grosse Pointe Public School System that “new normal” had better be more than just acceptable.  It had better be able to delight the consumers of this public service.  Use the high school day schedule as an example.  Yes, the seven period day is a more expensive schedule, but is going to a six period day a decision we want to live with for the next couple of decades?  Does going to a six period day address the root cause of our financial problems?  If not, by the same logic, is the next step a five period day?

I receive a great deal of feedback from community members on these matters, which I always appreciate.  But as is always the case, it will be difficult to agree on all of them.  In my four plus years on the Board I have worked very hard to improve the process whereby we can make these evaluations in an organized and transparent fashion.   I developed the document below to summarize the process and it was agreed upon by the full Board:

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As we have followed this process and timeline we are now at the point where the Board will approve the guidelines we will require the administration to follow in their development of the budget.  Our next Work Session (tentatively scheduled for Jan. 11th)  will use the document below to guide that discussion.  Each one of the items listed will be evaluated individually and then in the context of the whole.  Each member of the Board will be asked to take a position on each of the items and the final product will serve as the official direction of the Board to the administration.

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This is where the lens of the long-term view, the new normal, must be applied.  I will be asking myself many questions before I reach my decisions, among them:

  • Is the outcome of this decision something I am prepared to accept as permanent for the Grosse Pointe Public School System?
  • Is the funding and/or staffing requirement supported by valid business and decision logic?  Is the cut supported by the same?
  • Does the decision correlate to the trends I see in our various financial reports, such as the Budget Modeling Utility, the Benchmarking Report, and the Financial Transparency Series?
  • Does this decision impact the root cause of recurring shortfalls or does it treat the symptom?
  • Is the function under review represent a service that is fundamental to the role of a public school system?
  • What alternatives exist if I don’t support this?

When it’s all said and done, as I have said for years, decisions will be made that  will be unpopular.  That’s just the way it’s going to be.  But to end where we began – looking at all the districts across the state – the vast majority of them have flourished with less revenue than Grosse Pointe Public Schools.  This is why I value benchmarking so much.  It shows us precisely how other districts have done this.

There’s no reason GPPSS cannot flourish with less revenue than what we have had until now.  As I testified before the State Board of Education, this is a lesson we can take away from the Proposal A experiment.  It has demonstrated that per pupil revenue alone is not the primary determinant of success.  If that were the case, it would have been reformed years ago.

winter-solsticeIt just so happens that I will publish this blog on the day of the Winter Solstice – a day with less sunshine than any other day of the year.  The sun has not shone so brightly, figuratively, for the state of Michigan and its public schools as of late.  But as I have written before, acknowledging and coming to grips with our reality, the new normal,  is the first step towards recovery and a brighter future.

Comments

  1. Ranae Beyerlein, Ph.D. says:

    Let’s stop with the doom and gloom scenarios and focus on being grateful for our abundance. The citizens of Grosse Pointe have provided a wonderful education for the children, who reside in the district. We are thankful for the light that our district shines as leaders in the state and in the nation in excellence in education, today and tomorrow. To listen to all of the chicken little rhetoric, one would begin to think that we are not going to be able to provide that excellence in education next week.
    We have the quality educational system we have because of the district’s excellent teachers, support staff, and families, who Value Quality Education. If we fail to include teachers’ voices in this discourse about the “new normal,” then what might result is mediocrity for today and tomorrow.
    During the last round of lay offs, our district lost a few excellent educators in which it had invested, who left for the security of a stable income with better benefits in districts with far fewer tax dollars being hoarded in their coffers. Total compensation, job security, and professional respect are factors that quality teachers consider when deciding where to work. Passion, dedication, and commitment are what call us to the profession. We are not lured by things that entrepreneurs find enthralling, but instead strive for meaningful work that makes a difference in kids’ lives.
    The teachers in Grosse Pointe are Checking the Facts. We know that the district has done an excellent job with its treasury of school aid. We know that our taxpayers have done an excellent job by paying their taxes and voting for fiscally responsible leadership, and by raising their children to Value Quality Education. We have done our excellent job in educating your children. Please support our efforts by honoring our professionalism and by respecting our roles in providing excellence in your children’s education. We Value Quality Education, today, tomorrow, to infinity.

    • Dear Dr. Beyerlein:

      Having spent the bulk of my career in the investment banking sector, with a specialty in municipal finance (I lead the refinancing of the 2003 GPPSS bond issue in 2006, worked for over twenty Michigan k-12 public school districts, including Bloomfield Hills SD, which is the only Moody’s rated “Aaa” rated school district in Michigan), I found your reply to Mr. Walsh’s article stunning in its complete denial of the new reality he so articulately outlines, that I could not help but to realize you had not read any of the supporting reports he cited. No one is doubting the quality of teachers we have in the Grosse Pointe Schools, nor is anyone, other than you, asserting the teachers voices are not heard–the MEA ensures they are heard.

      When Mr. Walsh describes the current economic environment today, the terms “doomsday” and “chicken little” have no place in this discussion, as they belittle the reality school boards across Michigan face as our property tax values plummet, and as the governor cannot or will not deal with the structural budget deficit of $2,000,000,000. Why are these factors important? Because they are the two most important variables necessary to fund our schools, as the state aid per pupil formula as well as the current operating millages based on property taxes are the principle funding sources of our schools. I ask you what do you suggest the board do when its annual revenue plunges 20 to 45 percent in two years?

      You seem to also be stuck on the fact that more teacher pay translates into higher tangible student results. I suggest the MEAP scores don’t bear this out (I don’t believe South was in the top 50 and North was in triple digits-although my memory could be in error), and I can point to many, many Grosse Pointe students whom are products of our fine parochial and private schools doing just fine resulting from much lower compensated teachers.

      As for these “coffers full of money”, the fund balance in the GPPSS is barely enough to cover one operating quarter of expense, and should the district require the financing of a capital project or similar, this fund balance would certainly place the district in a negative light, as its reserves, due to continual cuts in programing, services, mandated remedial classes (essentially, everything non-MEA related) have caused the reserves to drop year by year. Assistant Superintendent Fenton has been cutting approximately $1 million per year for many years just to keep the millage levies approximately the same for each homeowner. What does this mean? He can only cut what is not contractually obligated by the teachers union (these are my views, not his).

      Finally, you state that we “lost a few excellent educators”, but I will submit you will lose many more if you cannot, very quickly, come to grips with the fact the average non-union worker in the US contributes 17.5 percent of his health care cost, compared to the paltry amount of the teachers union. Further, if you review the line-by-line P&L of the district, and begin to filter out the “non-mission-critical items”, you will find the only expenses that far exceed both core inflation and the district’s ability to generate reliable revenue are those related to human resources, specifically, the teachers’ health insurance, prescription drug coverage and the pension plan. The cost curve for each is far above that of the average taxpayer and they know it, and it must be brought under control.

      Finally, Dr. Beyerlein, your comments are largely based on history, versus looking forward. Each of the Grosse Pointes is facing this same reality, and I believe Mr. Walsh has gathered and accurately presented the facts. The data are indisputable. Further, I have worked for over 300 varying municipal units, and I have yet to meet a board member at any level who has done the amount of research he has. Going forward, the district cannot rely on any state aid, as the state is on life support. Further, and perhaps most important, both the Headlee Amendment and Proposal A didn’t contemplate the situation of negative property valuation growth, hence the rapid, double digit decline. Even if the state, which has lost nearly 1 million jobs over the past decade, could rebound, the recovery of taxable value is capped at 3 percent per year, which means we are operating at early 1990 levels of revenue, with an expense load based on today. Mr. Brieden is correct that the days of “free” benefits is over, and now it is up the the MEA to embrace this new reality if we are to save our schools.

    • Ranae Beyerlein, Ph.D. says:

      Mr. Watson,

      I appreciate your expertise in your profession. Please consider that I have a doctorate in K12 administration, in which I studied school finance. I have of course read Mr. Walsh’s reports. I will not take offense at your not knowing me well enough personally to know that I am as prepared as Mr. Walsh in all of my affairs and perhaps more respectful of his work than you are of mine.

      We are working for a fair and equitable contract in a climate that is tough for all of us. What is fair and equitable for some is not fair and equitable for all. If you and others care to publicly share your complete compensation for the past twenty years, in addition to the health care costs you’ve paid, then we might be able to get down to talking about apples and oranges.

      As you know, things are contextual. This economic context is a tough climate. We are checking our facts and we value quality education. Thank you for the work that you do for the districts of our state. Perhaps we can work together to accomplish a stable funding solution for all public schools in Michissippi.

    • Ranae Beyerlein, Ph.D. says:

      Mr. Watson,

      In re-reading my previous response, I noticed I neglected to respond to your thoughts in the paragraph regarding compensation and performance. I have worked in two places with “merit pay.” The first was as a research assistant at the University of Michigan in the Department of Oral Pathology. The second was in one of the two Catholic High Schools in which I worked before I came to teach in Grosse Pointe. In both cases, I found the theory of merit pay to be misapplied in its application.

      Trained as scientist, having studied learning theory and motivation as an undergraduate, like you, I believe in using data. Your reference to data in this context is common among Tayloristic followers. Please take my body of writing about compensating teachers as a whole, not in its separate parts. You will not hear me advocate for paying teachers based on their students’ standardized test performance. To reduce the profession as such would be analogous to paying medical doctors only for cases in which a cure is rendered. Need I expound by stating: who would then be treated by doctors other than very healthy people? Which students would teachers pick to teach other than the most motivated, and least troubled students? And what kinds of teachers would be called to our profession if their only incentive for pay were based on their students’ performance?

      South is the best performing public high school in the state if you consider two things: One being that any of the high schools above it in our state are magnet schools, and aren’t subject to accepting anyone within the district lines. Two being that you consider the one measure of a school’s success as the measure that Newsweek makes. Nevertheless, you diminish the good work that North educators do when you dismiss their achievements by citing a national statistic. Again, when you throw out all of the high schools that are magnets, North is probably in the top 5% nationally, and is very high in the state in the measure you reference. That South is above North is like saying that K2 is easier to climb than Everest.

      Please do not lump teachers with the lady who writes the parking tickets. Nor would we like to be considered with the ilk that trim the dead tulip leaves from the Shores’ landscaping. I do not say that to diminish the good work that they do.

      When you work with numbers it is sometimes easy to forget about people as human beings, the jobs we do, the people we serve, and the commitment we make. As teachers, we must be lifelong learners, have patience, humility, and be able to create enough tension to promote learning, but not enough to frustrate. Our skill set and talents are as individual and unique as those of the 30-200 children with whom we connect on a daily basis. You trust us with the best children you have and we do the best we can with them.

      We ask that you trust us enough to allow us to be able to speak for ourselves about what it is that we do, and what kind of compensation is fair for our work. My Pointe is that we deserve your trust and your support in that endeavor, and that we value quality education. We are checking the facts, just as you check yours.

  2. Geoff Brieden says:

    Ms. Beyerlein,
    You cannot be serious.
    Mr . Walsh prudently points out the economic realities of a very serious financial crisis for our state and our schools, and you refer to this as “doom and gloom”, and “chicken little rhetoric”? Should we just bury our heads in the sand and not address the VERY real problems in front of us?
    You acknowledge the “excellent job” the district (including Mr. Walsh) has done, employing “fiscally responsible leadership”, yet you then refer to the same district leadership as having “tax dollars being hoarded in their coffers”. What exactly would you have the district do, run a deficit like the City of Detroit’s school board? We expect fiscal responsibility, and planning for down times.
    You mention how during layoffs, teachers “left for the security of a stable income with better benefits”. I find this comment remarkable for so many reasons, but I’ll ask just 2 questions: 1.) How do equate the district laying off teachers under a fiscally responsible plan with teachers leaving for a better position? That’s just pure spin, and not true. 2.) Where exactly did they go to get these fantastic jobs for better pay, better working conditions, and more respect than they get here?
    And as for all the wonderful teachers of Grosse Pointe, of which there are many: They teach here because of the fantastic facilities, the vast contributions and involvement of the PTA that make their experience and job easier (and more fulfilling), as well as the competitive compensation. While I don’t want to see the great teachers of our district go anywhere, economic reality is what it is, and we may have to make cuts. If that makes teachers feel unappreciated, then so be it. They can take one of those other wonderful jobs around Metro Detroit of which you speak so fondly. There are plenty of quality teachers that we can attract here – we offer a pretty good experience and quality career for our teachers, and we don’t apologize for that.
    As a Grosse Pointe taxpayer, with three children in this district I have a truly vested interest in the quality of the education that my children receive. But I also know that we have to be fiscally responsible. And that means facing reality, and planning for future.
    You say you want to include “teachers’ voices in the discourse of the “new normal””? Great! Let’s start by having teachers pay their FAIR share for healthcare. Teachers currently pay NOTHING, or next to nothing, for healthcare, yet the rest of the employed world (except other government workers) must pay a fair share. Why not teachers? If we just brought teachers to within a normal range on this JUST ONE THING, we would not have the financial crisis that faces us today. But no, teacher’s don’t want to hear that. Must be because you’re not concerned about, as you say, “things that entrepreneurs find enthralling”? (that’s code for “money”) Well the rest of us are forced to deal with reality, even as you try to keep teachers in their economic vacuum.
    You say they want teachers to be part of the solution, but when the rubber meets the road, what you’re really saying is “leave us out of it!”
    Well, sorry, but the taxpayers and the School Board must face reality, and by trying to change the focus away from these realities, you do a disservice to all teachers, and expose the hypocrisy of a unionized force that is only interested in “hoarding” everything they have, and not as a group who wants to be in this with the rest of us and find real solutions. If you represent the leadership of the teacher’s union, then we now know that your agenda is clearly not in the best interest of preserving the high quality of education – just in preserving what you have. That type of entitlement attitude is part of why we are in this mess to begin with.
    Mr. Walsh, I commend you for your work, and for asking the hard questions. I know you’re hard at work on the solutions, and we are 100% behind you and the Board’s efforts to address these most serious issues. Do not let this person, with an obvious agenda for preserving the unrealistic status quo, move you from your necessary work.

    • Ranae Beyerlein, Ph.D. says:

      Mr. Brieden,

      Surely between the City of Detroit and the Grosse Pointe Public Schools there is quite an array of functional school finance?

      To respond to your questions:

      We currently have 18 teachers on lay-off. I know that because I am in contact with each of them because one of my jobs is to serve them as non-paying members of our educational association, the GPEA, of which I am the president. You may call that a union if you are respectful of the purpose a union serves. It is a professional organization that serves our members by negotiating the terms and conditions of their employment under current Michigan law, known as PERA.

      That you doubt the veracity of my word in a public forum, makes me wonder whether any experience I could relate responding to this would be convincing to you. Here’s a sampling of many anecdotes: just last week I saw one of the teachers on our current lay off list, who secured a teaching job at another school in August, and he said that he may not return to GP. He likes it there. He is not required to travel between two buildings, as he was in our district. He has his own classroom and it is state of the art. At least four of our other teachers were hired by districts on Mr. Walsh’s benchmarking list. Why would you be surprised that they would stay in those schools?

      Four years ago we lost a well-regarded Physics teacher to a suburb in Milwaukee as a result of a lay off. When he was re-called, he declined to return. This year we have a Math teacher teaching Physics in one of the high schools.

      Specifically, the districts in which our teachers are teaching and are happily employed, are Troy, Bloomfield, Plymouth Canton, Harper Woods, Utica, Milwaukee suburb, and more. Will they return when re-called? We shall see. When teachers are laid off and hired by other districts, we lose some of them. It’s a reality that is born out by experience. I am not making that up, nor should you be surprised by that.

      If teachers receive something for which an entrepreneur has to pay, teachers are disrespected as being greedy. If the auto companies go through hard times and have to reduce benefits to their white (or for that matter, blue) collar workers, we are disrespected when people make equal demands of us. Because we are a profession of primarily women, because we are publicly funded, because of the transparency of our salary and benefits, are all cause for consideration of respect. Compare the profession of teaching in our country to it in other countries. For some in this community, it is merely enough that we are in a union that garners disrespect.

      Respected in our profession also means that we have voice about policies that impact the children’s learning. I’m not feeling the respect in your reply.

      Let me write about teachers’ benefits. We have no stock options, no year end bonuses, no profit sharing: EVER, in good times, or in bad. Our annual raises for the past 20 years have not kept pace with the rate of inflation, which means that most of our raises have been between 1-3% each year. Couple that with the non-refunded, mandated educational costs we pay for keeping our licenses.

      One might think that taxpayers would see value in keeping their teachers healthy. Good health care benefits could be seen as essential for people, who have personal contact with 30-200 less than hygienic youth on a daily basis. In fact, even though teachers have more coverage than many employees, teachers have one of the lowest costs for coverage. We are, as a group, one of the cheapest to cover for health care, because we are, as a group, one of the healthiest. Providing good health care for teachers reduces substitute teacher costs. When teachers are sick, there is an expense incurred to replace them.

      Teachers basically have two perks: our calendar (which is negotiated in part and partly mandated) and our health care benefits. Some people diss teachers because of both.

      Our salaries are not commensurate with other professionals. For example, our district compensates its attorneys $180 per hour and its teachers $25 per hour. Being disrespectful of teachers means thinking that we don’t deserve to be compensated like other professionals. In this case, both are being paid from tax dollars. Both have equivalent degrees. This is just one of many professional disparities in pay.

      Mr. Walsh and I both do our homework for the good of the boys and girls in the Grosse Pointe Public Schools and we work together for the common mission of providing excellence in education, every day for each and every child. The GPEA respects the work of the Board and vice versa. That I am responding to his posts in a public forum is only occurring because of the frustration we have as a result of bargaining in this climate in these tough times. The teachers in GP value quality education. They deserve your respect and they deserve fair, equitable, and competitive compensation.

      The work or the service you provide for the good of our community is probably not as transparent as that of my profession. Given that, if you would like to share your salary, compensation, and benefits for your work over the past 20 years, perhaps we could look at it and see if your employer or our taxpayers are getting better value for their dollars.

      People, who are informed about GPPSS employee benefits, would know that we have reduced benefits when compared to other school districts. There is only one district in the state that spends less per teacher on health benefits than GP, and it is not one of the benchmarked districts. In the last contract, we took major, unprecedented, and unreplicated health care benefit cuts. In our profession, along with an offer of employment, might make a laid off, un-tenured person, prefer to teach in a different district for the rest of her career.

      As a tax-payer, I would be annoyed that the district accumulated $7-8 million over the past five years in this economic climate rather than using it to decrease class size. I would be annoyed that we are losing teachers to other districts when by following other options, we could have kept those teachers, reduced class sizes, and been fiscally responsible as well.

      You may dismiss what I have to say as being union rhetoric but what we do agree on is that we must work together to resolve the problem of educating our youth. Our future depends on it. We believe we are doing that and would like your support and trust in the process.

  3. Dr. Beyerlein:

    Thank you very much for not just one reply, but two. You insinuate I don’t value your education or experience. I’m not sure where you are getting that impression from, as I don’t know you, nor did I state either. However, the fact you possess advanced degrees serves as not only a nice diversion from the debate, but it is also off-point. What you are saying IS union rhetoric, and the simple fact remains we cannot sustain paying teachers $3,000 to $4,500 above the cost of a private sector employee, nor can we afford paying for your deductibles. Our board is duty-bound to ensure that it live within its means, and given the fact our district is reliant on the state for a substantial bulk of its revenue, with the rest coming from a property tax base that is worth 25-30 percent less than it was two years, I plainly ask you, again, how can you possible support a continuation of unsustainable costs? If this situation occurred within your own household, I would imagine you would reduce your spending by the correlating amount. The fact remains that the bulk of school district expense is tied up in unsustainable collective bargaining agreements, and they jeopardize the ability of our school to fulfill its mission.

    gw

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