Wednesday, May 20, 2009

Harsh Realities: School Funding

From Oakland Schools and Judith Allen, the Director of Government and Community Services: the estimated short fall in the school aid fund for the current year (2008-09) will be $420 to $450 million (or about $258 to $277 per student). Next year (2009-10) things get worse with a shortfall of $800 million to $1 billion (or about $492 to $615 per student). To put that in perspective, over the next TWO YEARS school aid funding will be short between $750 to $892 per student measured against the baseline of projected 2008-2009 funding. That range equates to approximately 8 years of foundation allowance increases.

Typical of Lansing the funding gap will reportedly be filled with the $1.3 billion State Fiscal Stabilization funds (ARRA - a/k/a American Recovery and Reinvestment Act) while very little or no consideration is given to necessary reorganizations required of systemic costs and revenues. What Judith’s memo highlights is the need for districts to “apply” through MEGS (Michigan Electronic Grants System) for the ARRA State Fiscal Stabilization dollars” to get the funding. So while the state funds will not be there to fund the current foundation allowance, districts will have to apply to the grant making bureaucracy to request money to just make up the difference -- any bets on how that process get manipulated?

What happens when the “stimulus money” is gone? School budgets will be faced with massive funding gaps; remember nearly 90% of school funding goes to salary and benefit costs so much of that funding gap will negatively affect staffing. Think of it this way, if funding vaporizes after the “stimulus money” trick, school aid allowances will revert to a level equal to a ZERO percent (0.00%) increase since 2001-02. Dramatic cuts will be required in the 2010-11 school years.

Compounding matters is a loss in special education funding that will happen at the local ISD level. Projections show that funds available will fall by 12% in 2010 and by a total of nearly 20% by 2011.

For Birmingham that equates to a funding gap equal to $6.1 to $7.3 million, and up to $8 million or more with the ISD PA 18 cuts. Any school district can do the same basic analysis, take the expected per student shortfall of $750 to $892 per student, and multiply by projected enrollment in the year 2010-2011. It’s an ugly picture but it is the reality all districts must plan for going forward.

No comments: