Modest cuts to school aid put students first

May 15, 2011

Modest cuts to school aid put students first
By Howard Walker
As the chair of the School Aid budget in the Senate, I take very seriously
the impact that proposed budget cuts will have on schools. Our young
people are the future of our state, and we must ensure that when they
graduate, they have the tools and knowledge necessary to succeed in the
21st century economy.
The School Aid budget for Fiscal Year 2011-2012 totals in excess of $12
billion, which is more than 25 percent of the total state budget. This
fact alone proves that education funding is a top priority for Republicans
and Democrats alike.
Although the proposed Senate budget reduces the per-pupil foundation
allowance by $340, a reduction of roughly 4 percent, when you compare this
with reductions in other areas of the budget, it is quite modest. For
example, universities will see 15 percent less aid from the state, the
Department of Corrections will see a little more than 5 percent less
funding, and the Department of Agriculture and Rural Development must
function with 6 percent less.
Obviously we would like to reduce the cut to education further, and we may
be able to do so if additional revenue is projected with our May Consensus
Revenue Estimating Conference. However, it is important to note that we
are working to give school districts the tools to alleviate the pressures
that any cut would have.
For example, the Legislature is reviewing legislation to help control
health care costs for school districts, which when combined with school
employee salaries and retirement costs makes up on average more than 80
percent of a school district’s budget. Shockingly, some districts pay
upwards of $24,000 per employee for health care! Any savings realized
within health care will directly benefit local school districts.
We are also looking at possible changes to the retirement system for
teachers. In 1997, the Michigan Legislature changed retirement for all
state employees, including legislators. Everyone hired by the state or
elected to a state office after 1997 receives a defined contribution
plan, more commonly known as a 401K plan. However, because of strong
opposition from teachers unions, teachers were exempted from this
change, and as a result, they still receive a defined benefit plan
(traditional pension).
The cost to districts for that pension plan plus the cost to fund
guaranteed school retiree health care continues to soar. Next year, school
districts will see the rate they must contribute increase from about 20
percent of an employee’s gross pay to more than 24 percent for most
employees—an increase of 20 percent in one year! So, for every dollar
spent on school employees’ salaries and health care, an additional 24
cents is spent on retirement and retiree health care; this is
unsustainable. Reasonably addressing health care and retirement costs is
just one of the things that can be done to save local districts money and
minimize the impact of reductions in state aid.
As someone who is married to a retired teacher, I certainly understand the
hard work and dedication most teachers give to their students. No one
wants to deny a teacher a decent living and adequate benefits. But a
school district’s number-one priority should be educating kids and putting
students first, not putting an adult’s pay and benefits first. If all
school employees would give a little, whether it be in the form of less
costly health insurance plans or small reductions in pay, a few employees
(many of them younger teachers) wouldn’t have to give 100 percent in the
form of layoffs, and the services that our schools provide could likely
continue unaffected.
Our budget process is far from completed, but I assure you that we are
working to put a budget in place well before our school districts must
pass their budgets. I look forward to working with my colleagues and
stakeholders to pass a balanced budget and put reasonable reforms into
place that address the stresses on our local school districts.

Senator Howard Walker is the chair of the Senate Appropriations
Subcommittee on K-12, School Aid and Education. He serves the citizens
of the 37th Senate District.