As the chair of the School Aid budget in the Senate, I take very seriously the impact that 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 $12.6 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.
The budget reduces the per-pupil foundation allowance by $300. However all schools will receive an additional $100 to address retirement costs and another $100 if they implement certain best practices, effectively making the Fiscal Year 2011/2012 reduction $100 or less than 2 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. To further demonstrate that school funding is a top priority, half of the additional revenue forecasted in the May Consensus Revenue Estimating Conference was put to our schools. Obviously we would have liked to increase funding for our schools, but when you look at the state of our economy and budget, the School Aid budget was prudent, responsible and structurally sound.
Even though the reduction is relatively small, it is important to note that we are working to give school districts the tools to alleviate the pressures that the reduction will 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 more than 80 percent of a school district’s budget. Shockingly, some districts pay upwards of $24,000 per employee for health care and according to the Kalamazoo Gazette, in the 2008/2009 school year, our state schools spent more than $4.4 billion on healthcare and retirement benefits alone; more than the higher education and Department of Corrections budgets combined! Any savings realized on the health care side 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 are just a few 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.
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.