It appears Governor Snyder will meet his commitment and get a School Aid Fund bill passed in June. When you consider this bill is actually a two year bill, despite their painful effect, this is indeed quite the departure from years past when one year deals were done, and often in October or November. At least give The Nerd his due on that.
This bill has lots of moving parts:
- It delivers the largest cut in K-12 spending ever, at $470 per pupil for next year. However, districts do have the opportunity to chisel that down via other carrots and sticks relating to shared services, transparency requirement, health care spending practices, and competitive bidding of non-core services. By my estimate, Grosse Pointe Public School’s reduction will actually be $238 per pupil. At our enrollment level, that’s about $1.4 million. (Since we are likely to see enrollment drop a little more, maybe 45 students, next year, the reduction is a little greater than that.)
- It cranks up the MPSERS (retirement) rate significantly next year, moving it from 20.66% to 24.46% – and then in the next year to 27.37%. This amounts to additional cost to GPPSS if about $2.5 million next year and another $1.8 million the next. Yes, the bill DOES soften that blow by $138 per pupil in GPPSS case (that gets us to the $238 above), but as I wrote in my Free Press Op/Ed, retirement costs are the root source of almost all of the state’s K-12 budget problems.
- BUT, again to the state’s credit, the oft-discussed School Aid Fund carryover was, in part, used to pay down some of the massive unfunded retirement liability – about $288 million worth. To put this into context, that’s about $180 per pupil. Painful, but smart decision.
- Schools will receive full per pupil funding even for half day kindergarten students next year, but in the next year the foundation allowance will be prorated. Kids go half day, school gets half the state aid amount. We’re already in front of this one locally.
As I wrote way back when Gov. Snyder first laid out his budget vision, the overall plan is to drive down business income taxes to spur job and therefore economic growth. As the economy grows, jobs are expected to follow, and so should tax revenue as income tax rates are higher. So while it’s great that a two year budget will be passed, albeit one that is not as painful as first projected, it also contemplates no new revenue to schools not only next year, but the year following as well. We need to keep this in mind as we move forward.
My fairly quick estimate, factoring everything, is that our local projected shortfall in the Grosse Pointe Public School System should be around $3 million. Considering we were originally contemplating a cut twice that size, this counts as “good” news.
Translated to our budget, I expect we will continue to look at largely a “rollover” budget where we will not need to rely on cuts to programs or raising class sizes. Again, all things considered, pretty good news as we can rely on a healthy fund equity to balance the budget, with ever an eye on our overarching contract language.
We’ll take action on our 2011-12 budget at the June Board meeting. I’m sure we’ll be preparing other materials to meet our high transparency requirements, but call this a sneak peek. Thanks for staying buckled in and paying attention on this roller coaster ride.
Brendan