February 5, 2013
Earlier today Governor Snyder introduced his proposed $52.1 billion FY ’15 state budget, which is the starting point in the annual legislative process to determine overall state spending for the fiscal year that runs from October 1, 2014 through September 30, 2015.
The single largest area of the state budget is the proposed $13.8 billion FY ’15 School Aid Budget, which includes $11.7 billion in state funds; $1.9 billion in federal funds; and $180 million in general fund revenues. This is a $431 million increase (3.2%) when compared to the current fiscal year. The following are key issues within the FY ’15 School Aid Budget:
The Governor has proposed an increase of $150 million (1.6%) for the per-pupil Foundation Allowance, which represents roughly $9.0 billion, or 77% of state funding for K-12 education. The per pupil increase will be distributed in two forms—a $55 per student increase for every student and an additional $28-$56 per pupil distributed through the “2x” foundation allowance formula that provides a greater increase to districts at the lower end of the 157 different foundation grant levels currently in the School Aid budget. The results of the Governor’s proposal would be as follows:
At the same time, the Governor’s recommendation doesn’t do much to narrow the nearly $1,000 per pupil funding equity gap between the minimum and basic foundation allowances. In the alternative, GLEP recommends the legislature follow the 2x formula for the entire $150 million proposed increase here, which would result in a minimum foundation allowance of $7,206 per pupil (up $130) and a basic foundation allowance of $8,114 per pupil (up $65). This would reduce the funding equity gap to just over $900 per pupil. GLEP will continue advocating to narrow the funding equity gap and provide fair funding for all kids.
After the latest round of legislative reforms, the overall cost of maintaining the state’s mandatory teacher retirement program (MPSERS) is roughly $3.0 billion per year. Local school districts pay the bulk of the cost through an assessment against their payroll, which works out to a cumulative $2.0 billion annually, or $1,300 per pupil. But since the legislature recently capped the cost for MPSERS at 21% of participating districts’ payroll, this means the additional cost of nearly $1.0 billion per year must come “off the top” of the School Aid Fund.
To that end, the Governor is proposing $784 million be used from the School Aid budget to cover this shortfall in FY ’15, an increase of $270 million from the current year. This represents $500 per student for all K-12 enrollment in the state. Please note the School Aid portion is expected to increase to just over $1.0 billion in FY ’16, or $625 per pupil, and remain steady for the next 25 years.
For most charter public schools, which don’t participate in MPSERS, the combination of the original foundation grant inequity ($950 per pupil) and the lost opportunity of $500 per pupil used to pay the MPSERS bill has resulted in a funding equity gap of $1,450 per pupil for most charter schools when compared to many traditional public schools. GLEP is working to address this inequity.
To top it off, the Governor is recommending an additional $50 million investment into the MPSERS reserve fund for FY ’15. Now you know why we consider MPSERS the “Zombie that ate the school aid budget” and why it’s such a bitter bill to swallow for districts that choose not to participate.
Other issues of note in the FY ’15 School Aid budget are as follows:
We’ll be working hard and reporting our progress on the FY ’15 School Aid budget in the coming weeks and months, and please contact me if you have any questions or comments.