In Blog: Factually Speaking

It is election season again, and with it we get the same old campaign clichés about cutting taxes. What candidates are not telling their would-be constituents is that tax cuts have been partially coming out of their children’s public education.

The first budget under Governor Rick Snyder, in 2012, included a $1.6 billion tax cut for business. As the Michigan League for Public Policy explains in a recent report, A Hard Habit to Break, part of that money was made up through a budget shell game:

  1. Take money out of the School Aid Fund, which is primarily intended for the state’s K-12 public schools.
  2. Use it to fund a portion of the operations funding for universities and community colleges that usually comes from the General Fund.
  3. Use the General Fund savings to pay for tax cuts.
  4. When a legislator objects to this shifting of funds out of the public schools and into higher education, reply that there just isn’t enough money in the General Fund for community colleges and universities.
  5. Repeat steps 1-4 during the next seven years.

Using School Aid Fund money for postsecondary education was done just once before Governor Snyder’s tenure—under Governor Jennifer Granholm in 2010—as a one-time budget fix during a year when the state budget was ravaged by recession. However, that was written into legislation as a loan and legislators who voted for it understood that it was not intended to set a precedent and become regular practice. Unfortunately, the next Legislature and governor decided not to pay back the loan, and opted to make shifting the fund a regular practice.

What started as a one-time fix has turned into a habit: the raiding of the School Aid Fund has not only been done year after year, but the amount used has become steadily larger and the dependency greater. The most recent budget takes a record $908.3 million from the fund, and three of the last five budget fund 100% of community college operations out of the School Aid Fund. That budget uses a whopping half-billion dollars of School Aid Fund money for universities, more than twice as much as any previous budget.

This raiding of K-12 funds has had consequences. The School Finance Research Collaborative, a bipartisan panel of finance and education experts, has concluded that to adequately serve Michigan’s students, schools should receive at least $9,590 per pupil. The latest budget only provides $7,631 per pupil, and underfunds programs to help prepare children with developmental delays for school and to help children at risk stay in and graduate from school. In short, we are neglecting our schoolchildren.

Breaking any bad habit requires serious reflection. The next governor and the next Legislature must work out a way to responsibly address the revenue shortages that have led past governors and Legislatures to dip into the School Aid Fund. The only real way to do that is to modify the tax system to increase revenues. If tax cuts keep costing upward of $1 billion per year while our schools remain underfunded, then we are doing it wrong. For the sake of Michigan’s children and its future, it is time to get it right.

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