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  • Michigan
  • Brett A. Geier

State Issues Affecting P–12

Reduced Tax Revenue

In the mid 1990s, the “Detroit 3” (General Motors, Chrysler, and Ford) had 72% of all light-vehicle sales in the nation. The Detroit 3 saw a steady decline over the next several years to a low slightly below 44% in 2009. The free fall of this share stabilized but remains around 45%, significantly below its peak in the mid 1990s. The decline in the automobile industry is representative of the effects of the recession on other industries, which have translated into lower business sales and lower state tax revenues. [End Page 260]

Employment and Wages

Michigan has lost 862,000 jobs since its April 2000 peak. Forecasts predict moderate growth through fiscal year (FY) 2015 with wages continuing to rise, although they will remain below the national average.

Declining Enrollment

Michigan has seen a decrease in student enrollment, which is directly attributable to a weak economy forcing individuals to seek employment elsewhere. Two-thirds of all school districts are experiencing declining enrollment. Pupil enrollment peaked in FY 2003 at 1,714,705 and has declined to 1,537,400 in FY 2013.

Common Core Rejection

The legislature included an amendment in the Public School State Aid Act, which forbids any state funds from being used for Common Core implementation. Schools may still use their revenues (Smith, 2010).

Funding Priorities for P–12

Preschool

Providing state-funded preschool education to four year olds previously not served became a primary focus for all branches of state government, educators, business, and parents for the FY 2014 budget. Michigan will increase funding for preschool by 60% by adding $65 million, increasing per-pupil funding from $3,400 to $3,625. The state predicts it will be able to enroll 10,000 more students this coming year.

LEP/Bilingual

The state restored $1.2 million for LEP/bilingual programs (Michigan Department of Education 2013, 1).

Changes to the Funding Formula for P–12

Foundation Grant Increase

The minimum foundation grant increased slightly to $6,966 in FY 2013. In FY 2014 there will be a modest increase of $60 per student for the lowest funded districts, making the total $7,026. In addition, to close the equity gap [End Page 261] with the highest funded schools, the state will provide an equity payment of $50 for all districts that have a foundation amount lower than $7,076 (Michigan Department of Education 2013, 1).

Best Practices

The state provides $52 per pupil if a district meets seven out of eight best practices determined in FY 2013. The majority of these practices are business services (Michigan Department of Education 2013, 1).

MPSERS Rate Stabilization Payment (147c)

In a school aid supplemental (HB 4228), $160 million in state funds will be appropriated for payment to the Michigan Public School Employee Retirement System (MPSERS). Section 147c funds are an appropriation to help stabilize the statewide unfunded actuarial accrued liability. The Office of Retirement Services bills the local district for the total rate charged, but 4.65% is offset by 147c funds appropriated directly to the local education agency. The net effect of section 147c on the budgets will be nothing as districts will record an equal amount of revenue and expenditure.

Impact on School Districts

Deficit Districts Rise

Fifty-five of 549 school districts are now deficit districts, representing approximately 10% of all public schools. Two districts, Saginaw Buena Vista and Inkster, brought the issue of deficit spending to a climax in the spring of 2013 when legislation was passed to dissolve both districts. In response to the growing number of deficit districts, State Superintendent Mike Flanagan has suggested the legislature consider moving from the local to countywide school districts (Flanagan 2013).

Reduction in Force

Budget reductions have required school districts to decrease teaching faculty. Since 2004–2005, school districts have reduced faculty by 9% or roughly 10,000 teaching positions.

Brett A. Geier
University of South Florida

Sources

Flanagan, Michael. July 8, 2013. Michael Flanagan to Senator Harold Walker and Representative Bill Walker, Lansing, MI.
Michigan Department of Education. State School Aid Update 21 9(June 2013). http://www.michigan.gov/documents/mde...

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