The news from the May 15 Revenue Consensus is not optimistic. There is but a slight glimmer of hope on the horizon given that the economists are projecting a rebound in the economy in 2010. However, even with this rebound and even with $1.3 billion in federal stimulus monies, it appears that some form of reductions of State funding for K-12 education will occur if not in 2009-2010, then more assuredly in 2010-2011. Remember this, 2010 is an election year. We will be voting for a new Governor in November of that year. Many Senators and Representatives, including friends of education like Ron Jelinek, will be term limited. So, strange things may happen. Indeed, they are likely to happen.
Historical financial data in the Michigan Department of Education’s Bulletin 1011 shows that in 2002-2003, the total fund balance of Michigan’s 735 public school districts and academies totaled $2.0 billion or 14.7 percent of total annual expenditures. There were 1,752,000 children in those 735 school districts and academies that same year.
Some five years later in 2007-2008, there were 773 public school districts and academies. (Hint: all of the new schools were academies, not public school districts.) In 2007-2008, the total fund balance for these schools had been reduced to $1.47 billion or 9.5 percent of total annual expenditures. Michigan’s schools have lost over $500 million or one half billion in fund balance in five years. As we headed into what the economists are calling, “the worst recession since the Great Depression,” the fund balances of our schools had already been depleted. In addition, Michigan’s total enrollment of K-12 students, even though we had more not fewer schools because of all the new public academies, had dropped to 1,661,000, a decline of 5 percent of the total enrollment in just five years.
It is very clear that schools in 2008-2009 and 2009-2010 will dip further into their reserves. However, the economists are telling us that in 2010-2011 we will hit a funding “wall” when the federal stimulus funds dry up. That basically gives us one year to prepare, maybe less. Who is better to help our superintendents and boards understand the need for prudence and financial preparation than members of MSBO?
Now, I must confess my own school district has bucked the statewide financial and enrollment trends. Lakeshore’s enrollment increased from 2,867 in fall 2002-2003 to 2,941 in fall 2007-2008, although we have since declined and are anticipating further declines next year. At the same time, our fund balance increased from 9.7 percent of our annual expenditures to 15.8 percent of annual expenditures. I wish I could say that what happened in those five years was some sort of brilliant financial management. But the reality is that employers expanded their employment in Berrien County during this period. Whirlpool acquired Maytag, which brought hundreds of new employees and their families to the area. In addition, the Pokagan Band of the Potawatomi constructed a new casino in southern Berrien County, which also brought additional jobs and families to our area.
We, in education, are sometimes considered to be enemies of business. Often times at the State level, the education community lobbies for one thing, for instance, an expansion of the sinking fund rules, and businesses represented by the State Chamber of Commerce simply lobby against the educational community and for more tax cuts.
Somehow if we are going to progress as a State, the education community and the business community need to get on the same page. I have come to the opinion if it is ever going to happen at the state level, it must first happen at the local level. Many of you may already be participants in Rotary, the Lions Club, or your local Chamber of Commerce. If you are not, join one of these local organizations. I think it is important at the local and regional level that we build within the business community a grassroots understanding of the problems we face in public education. After all, local businessmen and women participating in these service organizations should be our allies. Many if not most of them send their kids to our schools.
At the same time, we in education need to be attuned to the concerns of business. The economists at the Revenue Consensus predicted that unemployment in our state could be between 15 and 20 percent within a year. Our colleagues in business are struggling to survive. We are all in the same state, the Great Lakes State of Michigan. As businesses struggle to survive and schools struggle to balance our budgets, please remember that.
