Wednesday, May 23, 2007

Why Michigan Schools Are In Financial Trouble

Michigan’s budget is in a full meltdown. Just a few days ago the reported budget for the current year ballooned to $800 million, that’s $200 million more than prior worst case estimates. The picture is focused on the poor revenue generation via tax collections and is exacerbated by a general malaise in the auto business.

The impact on schools is being played out through a proposal to cut funding (the political phrase is “proration”) to the tune of $122 per student (and that number may grow to $210 per student with the addition of $200 million to the current deficit). What does not get proper attention is why schools can’t stay ahead of cuts even as they announce record cuts in local school budgets. The reason is clear – it’s all about the healthcare and pension costs. Take a look at Birmingham’s numbers:

Change In Healthcare Cost

Change in Pension Cost

Total HC & Pension Change


HC/Pension Change/Student

Per Student Increase From State

Funding Shortfall

School Yr.

























State funding has not kept up with increases in two categories – Health Care and Pension costs. If the Legislature and the Governor take money away as predicted, the cumulative shortfall in state funding over the last three years will be $369 per student or about $2.9 million in Birmingham. Now, this does not take into account increased salaries, utilities, supplies, and other miscellaneous costs. All of these costs have increase at the rate of inflation or better (with utilities, it’s over 10%). We’ve been making cuts, $17.4 million over the 6 years (including $3.9 million in cuts for the 07/08 school year). Now is the time to call your state representatives and draw a line in the sand. Ask them to stop under funding education, ask them to help us legislation to control costs on healthcare, ask them to fix a broken pension fund that is killing schools with a $24 BILLION unfunded liability. Use the contacts below to urge action now. This week has been designated for citizens to call their legislators. Please pick up the phone and take action. Use this link to get a list of talking points ( Without your help, we can’t motivate change.

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