Proposal A Giveth and Taketh Away — Brendan Walsh, Public Education Researcher and Advocate

Proposal A Giveth and Taketh Away

The landmark tax and school finance legislation approved by taxpayers in 1994 has been much maligned as of late, but there were less complaints when the state economy was healthy.  A review of the staffing, tax and compensation trends of the Proposal A era may help us make sense of the current challenges.

A Grosse Pointe South teacher’s quote in the paper may sum up the general feeling among his peers:

“The governor, the Republican Party and even school boards have made teachers their whipping boy.  I just don’t enjoy coming to work any more and looking toward that kind of a future.  It seems too many people care more about the cost than the quality of education.”

Was this said a couple weeks ago along the picket lines formed by current members of the GPEA?  Not quite.

It was said 16 years ago by my calculus teacher, the brilliant Frank Ford.  It is sad to think that Mr. Ford felt this way as his career came to a close just as it is sad to think this may be well how most our teachers feel now.  But was Mr. Ford’s dour outlook of the future merited?  Let’s take a look at what has transpired since then.

Using state of Michigan Bulletin 1014 data, GPPSS’ own data, and inflation calculators I compiled the following statistics comparing the GPPSS of 1993 to 2009, a tidy bookend view of the Proposal A era.

1993 2009 GPPSS Data Comparison

Here’s some things that catch my attention:

  • Enrollment is higher now than 16 years ago. Not by much, but higher nonetheless. Despite that, our elementary class sizes are smaller.  This is good data to reflect upon under the shadow of the growing trend to close schools.
  • Our per pupil revenue was 14th highest in the state and 16 years later we rank 49th – evidence of Prop A’s design to smooth per pupil funding differences among school districts.
  • Our average teacher salary in 1993 much more closely aligned with our revenue ranking - 12th in average salary to our 14th ranking in revenue.  Despite our drop to 49th in revenue per pupil, we now rank 1st in average teacher salary.
  • Our administrative costs per pupil ranking has dropped precipitously, down from 56th to 387th in the state.  So not all employee categories have enjoyed the same benefits as others. 
  • Despite being ranked #1 in average teacher salary, in inflation adjusted dollars, our average teachers salaries are 0.9% less than in 1993.  But…
  • In the same inflation adjusted dollars, teacher benefit costs (namely retirement and health care) have exploded by a staggering 76% and 28% respectively.  Prop A shifted the retirement burden to local school districts, a benefit employees enjoy but that comes at a price not always recognized for what it is – a very expensive compensation vehicle.
  • Teacher total compensation in inflation adjusted dollars has increased by 7.6%.
  • Factoring a more favorable student to teacher ratio, the GPPSS total inflation adjusted teacher compensation costs increased by 18.4%, outpacing the inflation adjusted 14.8% increase in General Fund budget.  This also means that other expenditures have dropped substantially to support this imbalance.
  • Teacher and Teacher Assistant staffing increased by 14.5%, a 3.5 multiple of our 4.1% increase in student enrollment.
  • Meanwhile all other employee staff levels decreased by 32.5% with secretaries, custodial/cafeteria, and other non-instructional staff taking the biggest hits.  Amazingly, the total number of employees is essentially identical to 16 years ago (with more students), but the distribution shifted more in the favor of direct instructional employees.
  • Local property tax millage revenues in inflation adjusted dollars have decreased 71%.  This was one of the primary objectives of Proposal A.

Like a gentle breeze at our backs for most of its existence, Proposal A has delivered substantial benefits to most parties – but now the breeze has shifted.

The data shows that no teachers in Michigan have fared better than Grosse Pointe teachers in the Proposal A era in regards to salaries, which in our case have basically kept pace with inflation. 

With no associated compensation reduction to offset the massive increases in other benefits, the compensation package is clearly more rich. In 1993 as now, teachers make no contribution to their health care premiums, despite its substantial cost increase.  By state law teachers do contribute more to their retirement, but this has done little to soften its 76% cost increase to the district.  Throw in more favorable student:teacher ratio and the working conditions, like compensation, have also improved in the Proposal A era.

From 1993 to 2009 no employee category added more jobs to their ranks than teachers.  In the same period of time staffing levels of many other employee categories were reduced dramatically.  Secretaries and plant/cafeteria staff are down 38% and 30% respectively from 1993 levels.  Yes, we will lay off teachers in 2010, but a greater percentage of other employees will lose their jobs as well.

What about taxpayers?  We can’t very well isolate the cost increases from higher sales and income taxes brought about by Prop A, but undeniably property tax burden has been massively reduced.  Meanwhile SEV’s have kept pace with inflation.  Generally these should be viewed as favorable outcomes by taxpayers.

What other reasonable outcomes might the teachers and taxpayers of Grosse Pointe have preferred?  Is it reasonable that teachers should want to be compensated at levels even higher than their current #1 ranking, particularly in light of our drop in our per pupil revenue ranking?  Is it reasonable that taxpayers could want tax relief even greater than what Proposal A delivered?  There’s a pretty good argument here that Proposal A has been a fair and effective piece of legislation…when times were good.

So why has Prop A become the scapegoat for the current K-12 funding crisis?

The Proposal A dilemma is this:  What happens when the same economic forces that enabled increases in revenue per pupil which in turn drove increases in total compensation begin to stall or even reverse?

That’s where we are now. 

Our per pupil revenue has declined yet we have structural expense commitments predicated on the revenue increases that were the norm for most of the Proposal A era.  Gov. Granholm’s renege on 20J funds, a core component of Prop A, only further disrupted the delicate balance.  That’s the problem in a nutshell. 

Proposal A wasn’t particularly maligned as compensation increased and property taxes decreased.  But it’s clear now that the revenue model is not able to keep pace with the established expense pattern, a direct result of the state’s well-documented loss of wealth.  As state wealth rose so did compensation.  State wealth has dropped, but no one wants to acknowledge that perhaps compensation (of varying forms) must shadow state wealth in both directions. 

The potential decrease in income is an unfortunate prospect, but we enjoyed the fruits of Prop A and now we don’t want to taste its vinegar.

The Frank Ford’s of today probably feel much as he did then.  In Mr. Ford’s day the school boards could (and did) go back to taxpayers for property tax increases.  Today we do not have that option.  Mr. Ford probably didn’t like Governor Engler, but at least that governor and legislature had the political courage to bring about sweeping change in 1993′s time of crisis.  And history has proven that Grosse Pointe teachers had more reason to be optimistic than Mr. Ford was.

In 2010, political courage is nowhere to be found in Lansing, tempered in no small part by the well known sentiment of the voters’ distatste for higher tax burdens.  The voters in the state of Michigan have essentially said “we like Proposal A just the way it is.  Thank you very much. Figure out how to make it work with what it delivers.”

The data comparison from 1993 to 2009 shows what Proposal A delivers under good to normal economic conditions.  2010 gives us a glimpse as to what happens when that which had been able to giveth now begins to taketh away.

Comments

  1. Dick Olson says:

    This is a very judicious look at the situation we find ourselves in. This is why we elected you Brendan Walsh to this position. I have a somewhat different analysis of the problem in Lansing. I don’t think splitting control of the legislature works: 80% of the states in the country haven’t done this. Voters in Michigan did not want Mike Bishop and the Republicans to run the state senate. I think the only reasonable answer to the state’s problems is a combination of tax hikes–maybe temporary–and budget pruning. But Bishop is incapable of being a responsible legislative leader.

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