The Badger State has become the standard of comparison as the majority of states in the nation grapple with historically high projected budget shortfalls. Michigan Governor Rick Snyder has been forced to respond to related questions and just this week claimed “Michigan is not like Wisconsin,” not interested in the added drama the comparison implies. But how are they different? Let’s take a look.
Snyder’s right on one count. Wisconsin Governor Scott Walker’s plan to strip many (but not all) public employee unions of certain collective bargaining rights is undeniably different than anything contemplated by Snyder. But it begs the question, why is Walker willing to not only grab this third rail, but indeed sink his badger-like teeth into it?
Walker is clearly not a “workers of the world unite” type of guy. But undermining collective bargaining rights in and of itself doesn’t help his budget problem. Taking this step is clearly a means an end that is almost identical to what Snyder plans to do in Michigan, my research from a K-12 education perspective shows.
Walker is proposing significant reductions to tame Wisconsin’s budget problems. So is Snyder. As a percentage of their total budget, Wisconsin’s problems are actually worse than Michigan’s (13% to 9%. Advantage: Michigan). But Walker’s strategy to execute these cuts as quickly as Snyder takes a couple extra steps. Take away many collective bargaining rights and state and local agencies can simply implement the high impact changes they need.
Michigan’s case is a bit different. Snyder’s not as bold as Walker, but is he any less shrewd? He learned quickly, as his predecessors did, that Proposal A allows him to simply cut the K-12 per pupil funding knowing that the the locals have no choice but to swallow it. Politically what’s in it for Snyder to take on the unions when he knows the locals will have to?
In Michigan local school millage rates, on account of Proposal A, cannot be increased. There’s no true way to increase revenue. 85% of costs are allocated for employee contracts. Once Snyder makes the per pupil cut, his work is done. Have fun, locals – is effectively what Snyder is saying.
In contrast, Walker is taking on all the unions at once. So again using Wisconsin as a foil, let’s look at the tale of the tape comparing the Badger and Wolverine states.
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Statistically both governors propose, minimally, a 7.5% or 7.4% cut in the state’s portion of the K-12 per pupil spend. In actuality both cuts are steeper. But there are some other things going on worth noting.
The data shows Wisconsin spends more per K-12 pupil than Michigan, yet their state portion of that spend is lower than Michigan’s – betraying a greater contribution by the locals (undoubtedly through higher local millages in Wisconsin). On a proportional basis, however, the proposed state cuts are identical.
But note the other major plank of Walker’s strategy. A read of his Executive Budget proposal shows he also plans to reduce the local district’s capacity to increase millage rates. He realizes that if he reduces the state’s portion of the contribution the locals would typically resort to raising their local millage.
The tax purists certainly care about that and this aspect of the Walker plan should satisfy them, but this further highlights the importance of the collective bargaining plank of Walker’s strategy. If the local millage option remained, the local political pressure would be to increase the millage rates rather than implement compensation reductions that are traditionally collectively bargained. Walker is eliminating all options for the locals.
Sound familiar, Wolverines? It should. Proposal A reduced and capped local millage options some 15 years ago – driven by some of the very factors plaguing Wisconsin today. But in Michigan’s case collective bargaining rights remained – and the statistics show we’ve done a better job in Michigan of containing education costs than Wisconsin.
The bottom line is this. In both state’s, should the Executive Budget proposals stand, proportionally equal cuts are coming for K-12 education. One way or another they will be absorbed in both. Wisconsin is behind Michigan in terms of their ability to curb local millage rates, so Walker is playing catch up there. Snyder’s already got some of the main planks that Walker wants. But otherwise, I’d say Michigan is an awful lot like Wisconsin from a financial perspective.
Politics are different. Walker’s plan makes him the lightning rod. He’s chosen to wear the black hat, from the unions’ perspective. If Snyder’s being genuine, he should avoid reaching for the white hat. His plan will ultimately have the same net effect. It’s inevitable. He’s just forcing the locals to do the dirty work in the trenches – as they’ve had to do for years now.
This isn’t a commentary on whether the amounts and proportions of the proposed cuts in either state are fair. This isn’t a commentary on whether public employee unions are necessarily wholly good or wholly evil. It is a commentary, from a purely financial perspective, that the Executive Budget proposals for Wisconsin and Michigan are incredibly similar in terms of their ultimate effect on K-12 funding.
Sources:
- Washington Post, “States in Crisis”
- State of Wisconsin, Dept. of Public Instruction, “School Finance Data Warehouse”
- State of Wisconsin, Dept. of Administration, “Executive Budget”
- State of Michigan, Dept. of Education, “Public Schools Ranked by Select Financial Information”
- State of Michigan, State Budget Office, “2012 and 2013 Executive Budget Proposal”