Or, “Harry and Louise tackle school funding.”

OK, I’ve tried to be neutral so far, but now I’ve been pushed over the edge by radio ads against Proposal 5 that I’ve been hearing in heavy rotation on my contractor’s incessant radio. Remember Harry and Louise, who helped torpedo health care reform back in the ’90s? Well, their clones are back, complete with a background soundtrack of kitchen noises.

What they are really hammering on is the “fact” that all the money will go to teacher pensions, decorated by the claim that it is all a money grab financed by the NEA (Nat’l Education Assn, the parent of the Michigan teachers’ union). The ads say that there is “nothing in there about reducing class sizes, hiring more teachers or raising academic standards.” The most recent ad raises the specter of Detroit teachers getting a raise.

Hmm. Yes, we all know that the fine teachers at Burns Park went into education because it was a way to get rich quick. Get real!

What the proposal does do is cap the burden of increasing pension contributions paid by local districts, passing the remainder on to the state. That means that school districts will have more money left over to hire more teachers, reduce class size, and help make sure that all children can meet the rising academic standards.

Of course, the rapid increase in the cost of retirement funding and health care is an issue for our schools, just as it is for the rest of our economy. But the costs have already been rising – all Prop 5 does is shift the burden of who pays for future increases, from the school districts to the State budget.

Does it concern me that this legislation specifies spending without identifying where the money will come from? Yes. Am I worried that the leaders in the legislature would rather gut spending for other programs than consider any tax increases to pay for quality schools? Most definitely.

But in my view, our current school funding system, put in place by Proposal A in 1994, was poor policy. The real goal of the changes was to cut property taxes – which succeeded – but education funding was tied to things like the sales tax which go rapidly up and down with the economy. The state has already warned Michigan schools that they’ll be getting less money than they were originally promised for this year – in our case, possibly over a million dollars less. This is no way to run a railroad, much less our schools.

So while I’m uncomfortable with Prop 5 as public policy turned into a game of chicken, I have a “Vote for 5” sign in my front yard and will be voting for it on Tuesday.

One of the red flags being waved about Proposal 5 is that most of the added cost to the state will be for pension funding. It’s true that the pension obligation portion of the proposal will be the biggest bill for the state to pay. It’s also true, says our Superintendent, Todd Roberts, that the cap on pension payments by local districts will be, by far, the most help to Ann Arbor.

At the budget forum last night, he went on to say that this change was in a small way returning things to how they had been before Proposal A in 1994. Until then, the state government was responsible for most pension contributions for local school systems. When Prop A was enacted, the entire responsibility for making pension contributions was handed to the local districts — just as the amount of money they had available to pay them was now being determined by a state formula. (In other words, pension contributions had to come out of the same pot as all other operating expenses — that being the foundation allowance provided by the state.)

State officials continue to set the requirements for the pension program, though the state is not responsible for funding it. Backers of Proposal 5 say that this is a small step towards putting responsibility for additional pension costs with those who set the rules for the program.

Steve Norton
parent of Jamie (2) and Alida (1)
PTO info tech co-chair

While Proposal 5 does make significant changes to the school funding system, it leaves most of the provisions created by Proposal A (in 1994) in place. Prop 5 does not change the fact that school funding is calculated at the state level, nor does it directly change how school aid is funded (most of the sales tax, a direct state property tax, a mixture of other ‘transaction’ taxes, and limited local property taxes).

What it does do is to insulate school funding from the ups and downs of revenue collection—especially the sales tax, which is sensitive to economic conditions. It also addresses some of the stronger criticisms of the Proposal A system by softening the blow for districts which are losing students and taking further steps to narrow the spending gap between districts.

Proposal 5 does not specify how these new guarantees will be funded, and this is the source of most of the opposition to this ballot proposal. The major coalition opposing Prop 5, comprised mostly of business groups, claims that the funding guarantees would require new taxes, which they oppose. This kind of opposition is to be expected; more unusual is opposition by public-interest groups such as the League of Women Voters. These groups worry that, in the current political climate, the legislature will not choose to raise taxes to fund these guarantees but will instead cut funding for unprotected social service programs. The coalition supporting the proposal, comprised of groups representing school officials, teachers and parents (including MEA, the teacher’s union), argues simply that education deserves secure funding and that it is the legislature’s responsibility to find the necessary revenue.

Estimates by the state legislature’s House and Senate Fiscal Agencies place the additional costs to the state budget for fiscal 2007 between $550 and $700 million, of which about half represents pension spending. The precise figures depend in large part on how the legislature would implement some of the law’s requirements.