Guest column: State must clearly define role of School Aid Fund

By John T. Hargenrader

In order to solve the annual School Aid Fund budget debate, we must clearly define the function of the SAF, K-12 operating structures and funding sources for them.

The constitutional language for the SAF allows funding of community colleges and universities, as well as K-12 education — a choice the governor and Legislature have made for the coming year. However, using SAF funds for higher education is a recent change to the K-12 budget paradigm.

John Hargenrader

In 2009-10, $208.4 million was redirected to community colleges. Some related programs such as school lunches, bus inspections, hearing and vision screening, adolescent health centers also have drawn on SAF funds in the past. With the recent budget just signed by Gov. Rick Snyder for the 2011-12 school year, approximately $400 million will be used for community colleges and universities from the SAF. These costs are being shifted to help balance the general fund.

The lack of specific constitutional or statutory apportionment of SAF funds creates an open debate for each legislative session. This trend should not continue without a conscientious public debate on the fundamental purpose of SAF.

In 1994, most voters understood SAF to be used exclusively for K-12 education, equalizing per-pupil spending and improving the quality of lower funded districts, without compromising functional districts. It is arguable that, in many districts, equality of funding has not been achieved. Nor were key trouble spots addressed.

We have three options to clarify the fundamental purpose of SAF:

* Redefine the SAF as K-12 funds only. Create other funds for community colleges and universities from other revenue sources.  This would require a constitutional change.

* Define the SAF as apportioned among K-12, community colleges and universities, with fixed targets. This could be done via statute by the Legislature.

* Use the SAF to fund K-12, community colleges and universities, allowing the allotments to be negotiated every budget cycle willy-nilly, (i.e. maintain the status quo).

But for SAF funds to be most effective, structural changes are needed in K-12 education. Michigan schools must manage structures, maintenance, rolling assets, consumable goods purchasing, personnel and contract support more efficiently. Some options to consider are

consolidation of districts and reduction of non-classroom overhead, bus operations and non-core curriculum resources. Look at scaling districts by student demographics and geographic expanse. Look at developing transportation standards for purchase, maintenance, and operating costs. And look at creating uniform standards for executive and management staffing. 

In the same vein, we can consider creating uniform standards for employee/teacher compensation, health care and retirement benefits. Standardize computer information and records systems. Establish construction standards for schools and administration buildings. And establish which common standards charter schools must adhere to.

The big key in efficiency, of course, is consolidation. A county school corporation footprint, with special districts for large cities, would reduce the number of local districts from 500+ to fewer than 100. This would also reduce the state Department of Education costs for administration.

The valid complaint against using SAF to fund higher education is that this was not part of the historic revenue model. The funding structure includes 10 major sources scaled to fund SAF for K-12.

The sales tax is still the largest source of SAF income, per the property tax reform of 1994. However, in recent years, federal funding has ballooned to 18 percent — more than $2 billion for 2009-10 — roughly equivalent to the portion contributed by the income tax allocation. As federal funding has risen, transfers from the general fund to the SAF have declined from $600 million in 1995-96 to only $18 million for 2010-11.

Clearly, the funding structure is fluid. Further, if the SAF is to be used for higher education and other related programs, appropriate revenue sources need to be defined for the long term. A reasonable target to for achieving public school reform is 2014, the 20th anniversary of property tax reform commonly known as Prop A. This will allow sufficient time for open public debate on long-term solutions for how Michigan will fund public education.

John Hargenrader is an electrical engineer and “lifelong political observer” living in Brighton. He presently has children in grade school, middle school, high school and college in Michigan. He has four older children who have graduated from Michigan public universities and private colleges.

Editor’s note: The views expressed in this column are solely those of the author and do not necessarily reflect the views of the Center for Michigan.