Editorial: Is Proposal A dead? Should you care?

May 22, 2011
RICK NEASE/Detroit Free Press

The answers to those two questions, respectively, are:
"Nearly" and "Yes."

Let's take these questions in reverse order.

Why you should care

The Free Press editorial board, led by longtime editor Joe Stroud, campaigned staunchly for years for a better school funding system that would reduce the then-intolerable disparities among school districts in Michigan. Districts with low property values -- which included many rural districts as well as some urban ones -- could barely scrape together enough money to educate kids. Districts with high property values could, and often did, spend lavishly on their children.

Meantime, voters everywhere were sick of being pestered for "yes" votes on increased millage rates. School officials were worn out from seemingly endless begging.

Proposal A was a complicated, but elegant, solution. The state would guarantee stable funding for all districts, even the highest-spending ones (some of which had the option to retain a higher tax rate to maintain their funding level), while also decreasing the disparities among them. Most homeowners would have lower property taxes, as local taxes were replaced by a 6-mill statewide tax on homesteads. To compensate, the sales tax would increase from 4 cents to 6 cents, with the additional revenue pledged to schools.

In turn, local districts would cede control over how much operating revenue they could raise on their own. In other words, except for millages for new facilities or other upgrades, they became wards of the state.

The constitutionally embedded changes to property and sales taxes were not, on their own, sufficient to fund schools. But lawmakers upheld their end of the bargain, too. They dedicated other revenue streams to schools via statute, and continued to contribute General Fund dollars to the School Aid Fund. During the second half of the 1990s, which were good economic years in Michigan, the gap between rich and poor schools closed substantially. The so-called foundation grant -- which is actually not uniform across districts, but has become the benchmark for measuring across the years -- also grew.

This was a huge achievement for Michigan.

It also reflected what seemed to be a priority shared by voters and lawmakers: that K-12 education would always come first in Michigan. Gov. John Engler's 2000 budget book touted the Proposal A achievements and said, "The key to Michigan's success is the quality of our schools."

But this strong history depended heavily on elected officials' commitment. The School Aid Fund is established in the Constitution, but it is elastic -- available for almost any educational purpose and dependent, even after Proposal A, on legislative and gubernatorial druthers. In other words, money can be moved around -- and it has been.

No one squawked, for example, when the School Aid Fund was used for increased preschool programs. Very few complained last year when some School Aid Fund dollars were "lent" to community colleges, a move made to maximize the impact of federal stimulus dollars.

And so-called categorical grants -- meant to help districts with higher numbers of at-risk children, or more bilingual students, or declining enrollment, or special projects boosted by their hometown legislator -- have gone up, down and sideways, been invented, vanished and otherwise gone all over the map.

So, should Michiganders still care about the logic used to devise Proposal A?

Yes. Despite the fact that the state's elected officials can legally do almost anything they want to move money around, the spirit of the 1994 vote remains important: Financial stability for K-12 students is a top priority; disparities among districts should continue to be narrowed.

Why Proposal A is dying

When the economy goes into a tailspin, no budget category is safe. It may be impossible to hold K-12 schools -- or, more appropriately these days, P-12 schools -- completely harmless.

Gov. Rick Snyder argues that school districts took one of the smaller cuts in his proposed budget for next year. The final budget negotiated last week narrows the cut even further.

But the gears set in motion when Proposal A was adopted suggest a different approach. The School Aid Fund, at least as it now exists, would have sufficient dollars to keep school funding steady next year.

To do otherwise is to suggest it is time to let go of the priority voters set in 1994.

Complicating matters are two of Gov. Snyder's goals. First, his pledge to change the business tax system undoes one of the funding streams for K-12 education -- a portion of the business tax that was dedicated to the School Aid Fund. Snyder's budget compensates for this by transferring some General Fund money to the School Aid Fund. But with the dedicated portion of the business tax removed from law, this temporary transfer could easily be eliminated in future years.

Second, the governor has an admirable vision of a seamless P-20 educational system -- birth to college diploma -- that makes sense given the increased demand for a skilled workforce. That does not mean the time is right to also blur the funding streams.

Last week's budget agreement calls for a 15% cut to universities, a 3% cut to community colleges and a smaller cut to K-12 schools. Even these cuts require using $395 million from the School Aid Fund for the colleges and universities.

Some of the newly restored money for K-12 will have strings attached, too, and the Legislature is moving quickly to mandate how much districts charge their employees for health insurance. These measures mean local school boards will increasingly have to dance to Lansing's tune on financial matters, as well as adhering to the curriculum constraints imposed by the need to prepare students for state tests.

For some people, this is the downside of Proposal A coming to full fruit. The state fails to live up to its end of the financial bargain even as it further diminishes local control.

Moreover, this is happening before the disparities between high- and low-spending school districts have been fully resolved. A statewide system, if that's indeed the direction Michigan is going, would presumably have equal money attached to each child, period, with other factors, such as additional help for children who live in poverty, addressed through grants.

What the future holds

Perhaps it is foolish to believe any budget "solution" can last for decades. At 17 years, the Proposal A school reform has had a good run.

But voters have long memories. Just as some still ask where the lottery money has gone (for the record, it all goes to schools but now constitutes less than 5% of the School Aid Fund), people will be asking for years, whenever schools come up short, where the Proposal A money has gone.

It is not wise to move away from one budgeting structure -- especially one approved in a statewide special election -- without setting a clear destination. Gov. Snyder has compounded the problem by laying out his vision of best educational practices while only hinting at how the financing would work (reduce bureaucracy and inefficiency, consolidate services and/or districts, etc.).

And the topic of the remaining funding disparities among districts never comes up at all.

No one denies that Michigan still has a steep road ahead. But if the governor and lawmakers can't provide a better roadmap for how schools are going to simultaneously meet their budget challenges and transform themselves, they are violating the trust Michigan voters placed in their elected officials when Proposal A was adopted.