17 Apr

Michigan Dems Strike Back As Snyder Tries to Raid $500 Million Education Surplus


by surelyujest, Sun Apr 17, 2011 at 06:05 AM PDT

The Michigan State Aid education fund expects a $500 million dollar surplus (which some are reporting to be actually be as high as $670 million) for the next fiscal year, according to the non-partisan House Fiscal Agency.  That is enough to provide a $260 funding increase per student capita across the state. So what’s the problem then?  If there is no deficit, why would Governor Snyder want to cut funding and potentially push Michigan schools into insolvency?  To funnel that money to for profit higher education and to hand a $1.8 billion tax break to businesses.

Michigan House Democrats are rallying for battle with the Governor and MI Republicans over drastic budget cuts to K-12 funding.  Snyder has proposed to reduce funding to public schools by nearly $900 million in the new budget plan expected to be adopted May 31st, a move that would be nothing short of devastating for Michigan children and school districts.

Snyder’s plan would cut funding by $300 per student, in addition to the $170 per student already in place from the prior year.  According to the Ludington News, this $470 will be much higher as districts also have to pay an additional $100 per pupil in state mandated retirement payments (the current rate schools pay into retirement is 20.66%, Snyder will raise it to 24.5%) and an additional $240 per pupil in retirement costs next year.  The total combined cuts will take a staggering $710 per student out of MI school districts, 150 of which are already on the brink of bankruptcy, with 43 schools and charters already there.  


Please take the time to contact your reps. and Governor Snyder’s office and tell them that this is UNACCEPTABLE.

Governor Rick Snyder
P.O. Box 30013
Lansing, Michigan 48909
PHONE: (517) 373-3400
PHONE: (517) 335-7858 – Constituent Services
FAX:(517) 335-6863

On April 12, 2011 MI Democrats tried to pass a bill that would have reduced those cuts by $270 million, but the bill was rejected by the Republican majority.  On his website, Representative Brandon Dillon (D-Grand Rapids) said:

“We need to restore education funding now instead of using it to finance Governor Snyder’s massive business tax cut next year. There is more than enough money in the balance sheet at the end of the fiscal year to restore these cuts that have hampered our students for the past two years; cuts which would never have passed had lawmakers expected such a surplus. An overwhelming majority of Michigan’s residents know that this vital school funding should go toward our children’s education, not to subsidize tax cuts for corporations. It’s too bad House Republicans don’t agree.”
Instead of using the half billion in surplus money to boost Michigan k-12 schools, Snyder will move that money to higher education to community colleges and universities.  Higher education facilities in the state of Michigan are funded out of the general budget, but Snyder wants to move them into the State Aid fund and shift a total of more than a billion dollars to higher education away from elementary, middle, and high school education, which are funded through the State Aid fund under Proposal A.  

This shift is part of Snyder’s plan to gift Michigan business with an 86% tax decrease, which offers no guarantees of job creation once enacted.  Yet, as Peter Spadafore of the Michigan Association of School Boards put it, these cuts “are guaranteed to cause teacher layoffs”, which many districts are already facing.  Detroit Public Schools under EFM Robert Bobb announced last week that layoff notices will be given to the entire DPS staff of about 5500 teachers, Lamphere Public Schools gave pink slips to 100 teachers, Monroe Schools gave layoff notices to 343 teachers and 21 administrators—just to name a small few.

There is a battle going on in MI as to whether Governor Snyder can legally touch those funds and MI Senate Democratic Leader Gretchen Whitmer of East Lansing called the diversion of funds an “outright theft that violates the principles of Proposal A, the 1994 school finance change that traded higher state-collected sales taxes for lower property taxes.”  Proposal A was enacted in March of 1994 under former Governor John Engler (R).  This measure fundamentally changed Michigan school funding and was meant to protect those monies from other uses.  A 6-mill property tax, cigarette tax, and sales taxes were earmarked for K-12 funding and Whitmer says, “The money intended for education should actually go to our schools because that is where the people wanted, expected and demanded that is where their tax dollars be spent,” She continued, “That’s why they dedicated and restricted the fund from the Legislature’s grasp.”

But the language of the law does not actually specify that funds must be limited to K-12 education, and therein lies the  difference between its intent and its use.  The highly controversial Proposal A was a change in Michigan’s Constitution that overhauled the state’s system of funding public schools.  At the time of it’s enactment in 1994 taxpayers and educators were skeptical but were eventually sold on the idea as it was presented as a “lockbox” style of protection for school funding.  Former Governor Engler told Michiganders that it would provide a guaranteed revenue stream for K-12 and would prevent politicians or legislators from having the authority of going back on the deal.  

In reality, as we now see, that is not the case:

Article IX, Section 11 of the Constitution says, “There shall be a state school aid fund which shall be used exclusively for aid to school districts, higher education and school employees’ retirement systems, as provided by law.” In 1994, when Proposal A established this fund, virtually all discussion surrounding the proposal was to resolve K-12 funding issues. But the inclusion of “higher education” is clear.
This is where things get really tricky, because of how revenue is generated for the State Aid fund.  

Here’s the breakdown of revenues for the SAF for 2009-10: Sales tax, $4.8 billion; income tax, $1.8 billion; 6-mill school tax, $1.9 billion; lottery, $723 million; proceeds from six other tax categories (real estate transfer, tobacco, liquor, industrial facilities, casinos and other) about $1 billion total.  source
And what about those lottery proceeds, you ask?  What about that boondoggle that was going to save us all forever and ever?  Julie Mack of the Kalamazoo Gazette breaks it down nicely in her article below, in which she uses information from the September 2010 report from the  Citizens Research Council of Michigan.  She says that even though the State Aid fund does get lottery money, it is only a small amount.  “Yes, lottery money does go into the School Aid Fund. But it’s a small percentage of SAF revenues, averaging about 6 percent of the SAF revenues since Proposal A.”

Despite the  popular misconception that the lottery contributes  significantly to the funding of public education in Michigan, it actually amounts to a relatively small  piece of the state contribution and an even smaller  component when local operating revenues are incorporated and the entire funding picture is considered.

Net lottery revenues contributed $741 million to school operational funding in FY2008.  These statutorily-dedicated revenues have grown at an average annual rate of 2.3 percent, about equal to inflation from FY1995 to FY2008.  This average rate,  however, hides considerable year-to-year variation. …  

In recent years, inflation-adjusted lottery receipts have increased modestly; however, the inflation-adjusted FY2008 amount re- mains below the FY1995 level following a number of years of flat or negative growth. Unlike the annual growth of major SAF taxes, lottery proceeds do not mirror changes in Michigan economic activity as measured by personal income. Year-over-year lottery sales increases (and therefore profits) tend to occur with the introduction of new  games.  In recognition of this, the State of Michigan continuously introduces new gaming opportunities to maintain interest and sales. source
Michigan Democratic legislators have come out swinging in response to demands from educators, parents, and many other concerned parties about the outrageous and devastating shift in funding.  On Monday March 28, 2011 Senator Whitmer and Senate Democrats announced a proposed constitutional amendment that would exclusively limit that fund to K-12 use only. From the press release:

Lansing – Senate Democrats announced today that they will be introducing a constitutional amendment to guarantee money from the state’s School Aid Fund is dedicated to K-12 education. The amendment comes in response to Governor Snyder’s budget proposal which would divert money from the School Aid Fund to pay for other measures of the Governor’s budget, including corporate tax giveaways.

“Governor Snyder recently said ‘It’s not about politics. It’s about doing the right thing,’ and his budget is far from it,” said Senate Democratic Leader Gretchen Whitmer (D – East Lansing). “He wants to cut school funding so the state can afford corporate tax handouts that have no guarantee of creating jobs. I ask what corporation would want to locate in a state with the failing school systems his budget would surely create.”

When citizens voted in 1972 to create the Michigan Lottery and again in 1994 to pass Proposal A, they did so with the understanding that the funds generated by these measures would be dedicated to supporting public education. The Governor’s proposal to divert that money to fill a deficit in the state’s General Fund budget is a clear strike against the intent of the voters.
The proposed amendment would guarantee the money from the State Aid fund is only used for K-12 schools and keep the promises to MI voters made by Proposal A.  The amendment has the support of retired Midland teacher Senator Charles Brunner (D-Bay City).  “The school aid fund was created to support K-12 schools, and that’s what it should be used for,” Brunner “said in a statement. “It’s sad to think that we need a constitutional amendment to stop politicians from robbing our kids of the money that’s set aside for their education, but apparently that’s what it’s going to take.”

Dems truly have a battle ahead as they fight to protect these funds:

The proposed constitutional amendment would require a two-thirds majority passage in both the state House of Representatives and Senate to be placed on the November 2012 ballot, a difficult task for Democrats as they own minorities in both chambers.

From there, the proposal would have to be approved by the public. source

If passed, this amendment would go before Michigan voters in the November 2012 election.

In the meantime, MI House Dems are battling these cuts on a different front, through an online petition drive and town hall meetings.  The House Dems have created an Educational Task Force to educate voters and rally the troops.  On their website  they have an interactive map that allows you to see how the proposed Snyder budget cuts will affect your district and a video (below) which shows school superintendents listing line by line the drastic, painful cuts they have already had to make, and how the new cuts will decimate our schools.  On the site is a link to sign the online petition or go to it directly here petition.

The Michigan House Democrats will be holding an Educational Task Force meeting in Warren, MI on Tuesday April 19th and urge parents and educators to come to learn more about Proposal A and the constitutionality questions regarding it in Governor Snyder’s proposed budget, and specific budget items and their impact on your schools.  Info. is as follows:

4:30 p.m. to 6:30 p.m. this Tuesday, April 19, in the Library Conference Room at Warren Woods Tower High School, 27900 Bunert Road in Warren.

The event, hosted by State Representative Jon M. Switalski (D-Warren), aims at hearing your concerns about how the Governor’s budget proposal will affect Michigan schools, our children and our economy. We will also discuss constitutional issues concerning the budget’s impact on the original intent of Proposal A.
State Representatives Lesia Liss (D-Warren), Marilyn Lane (D-Fraser) and fellow member of the House Appropriations School Aid Subcommittee Jim Ananich (D-Flint) and I will join Rep. Switalski on Tuesday to let the Governor know that this proposed budget is unacceptable.
All residents are highly encouraged to bring a written copy of their statements, questions or concerns to submit to the task force.

For more information, contact 27th House District State Rep. Ellen Lipton toll-free at (888) 347-8027 or send an email to, or visit her website at  Ellen Lipton House Dems
These unthinkable budget cuts will affect each and every child in Michigan, as our schools are already struggling to survive.   I find it unconscionable that Snyder and his Republican legislators would even consider making cuts to K-12 funding at a time like this, and absolutely untenable when there is a half billion dollar surplus!  For my district, the largest per capita district in the state, we are already tied with two other districts in our county for the lowest funding and are facing a $17 million dollar shortfall for 2011-2012.  Under all of the new budget measures we stand to lose $932 per student, or $15 million.  We have already fired 27 janitors, dozens of teachers and other staff, and cut over $24 million from our budget.  This new hammer on our heads will break us, and I will not let Gov. Snyder steal from my child’s future to give an 86% tax cut to corporate business interests and funnel funding into for-profit education.
If you are in the Metro-Detroit area, won’t you please join us Tuesday?  If you are not, please take the time to contact your reps. and Governor Snyder’s office and tell them that this is UNACCEPTABLE.

Governor Rick Snyder
P.O. Box 30013
Lansing, Michigan 48909
PHONE: (517) 373-3400
PHONE: (517) 335-7858 – Constituent Services
FAX:(517) 335-6863

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