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Curtain Goes Up on Proposal To Overhaul Michigan Schools

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Gov. John Engler of Michigan last week proposed a radical solution to the state's self-imposed school-funding crisis under which the state would provide grants to students to use to attend any public school.

Mr. Engler described his student-centered funding plan as a long-overdue answer to a "monopoly'' system that had been carelessly managed by public education administrators. He also proposed a "charter school'' plan to expand the options available to parents.

"Parents and children deserve a more flexible system, a system with schools that respond more to the educational needs of the family than to the bottom line of the system,'' the Governor said in a speech to a joint session of the legislature.

Michigan lawmakers put themselves in the position of having to rebuild the school-finance system when they voted in July to terminate property-tax funding of schools beginning next year, thus creating a $6.3 billion shortfall in school budgets across the state. Lawmakers expect to draft a new system by the end of the year. (See Education Week, Sept. 8, 1993.)

To close that huge funding gap, Mr. Engler's plan calls for winning voter approval for an increase in the state sales tax to 6 cents from 4 cents. In addition, he would restore the property tax on businesses and certain other owners.

The Republican Governor, who is up for re-election next year, argued that his plan would both expand parental choice and at the same time provide taxpayers with a net cut.

While expanding enrollment options, the plan does not include the far more controversial step of providing vouchers for private schools. But some observers noted that the charter-school option could open the door for some private schools to opt into the state system.

"I propose the state not fund the system, but the students,'' the Governor said. "To those who fear school choice, I ask, 'What are you afraid of?'''

"Are you afraid some parents will make a bad decision for their child?'' he asked. "I would sooner trust parents who love their children than bureaucrats who love their paycheck.''

Student Bank Accounts

Under the Governor's proposal, the state would provide at least $4,500 for every child. State aid could go as high as $6,500, with grants higher than the minimum distributed to children based on the per-pupil costs in the district where they live. The grants could then be used to attend another school or cross district lines.

In the 35 districts that currently spend more than $6,500 per pupil, residents could vote to reimpose property taxes in order to provide additional local funding.

In addition to the portable grants, parents would receive new information about state funding and school performance.

Mr. Engler proposed creating a Student Education Bank Account, which would update parents each fall on the amount of money the state is spending on their child and inform them of their options. If parents chose to send their child to a less-expensive district, money would accumulate in the child's account for use for summer school or tutoring.

In the case of students who finish their high school requirements by the end of 11th grade, an extra year of state funding could be spent at a state university, community college, or technical school.

In addition to the state financial statement, Mr. Engler's plan would also require performance reports that would show achievement levels for each school in the state. The report cards would serve both as an accountability mechanism for educators and as a shopping guide for parents looking beyond their neighborhood school, backers say.

Charter schools could be proposed by any university, community college, nonprofit organization, or group of teachers.

The proposal also would relax many state regulations, allow competitive bidding for all nonacademic services, and encourage cuts in administrative costs. Further, the plan orders immediate expulsion for any students carrying weapons or drugs to school and specifies that teachers not be required to join a union.

Sales-Tax Linchpin

One potential weakness of Mr. Engler's proposal is that its fiscal linchpin, a sales-tax increase, has run into strong voter resistance in the past.

A ballot measure calling for an identical tax hike, coupled with property-tax reductions, was defeated in June, despite backing from the Governor and a broad coalition of education and business groups. (See Education Week, June 9, 1993.)

Officials estimated that the proposed increase, if approved in a February election, would raise $1.8 billion annually.

Some critics of the plan said that instead of revisiting the sales-tax issue, the Governor should consider raising the state income tax. Lawmakers have also argued that an alternative should be in place in case voters turn down the sales-tax option.

Other funding in the Governor's proposal would include more than $1.2 billion generated by reinstating a property tax of $16 per $1,000 of assessed value for businesses, owners of second homes, and out-of-state residents. The average school property tax currently is about $37 per $1,000.

Additional funds would come from a transfer tax on home sales, an increase in the state business tax, and a 50-cents-per-pack increase in cigarette taxes. The new taxes would total at least $300 million less than the local property taxes they are replacing, the Governor told lawmakers.

'The Michigan Way'

Officials in the Governor's office estimated that the new plan would save the average Michigan family $356 a year.

Critics attacked Mr. Engler for being too harsh on educators for the current state of Michigan's schools. They also argued that before pushing a choice plan, which would pit schools against each other, the Governor should seek ways to improve the entire system.

"These proposals really do very little to talk about what's happening in classrooms to help kids,'' said Kim Brennen Root, a spokeswoman for the Michigan Education Association.

Ms. Root and other observers predicted that lawmakers would leave a strong imprint in modifying the Governor's program. But Engler aides reported strong public support for the changes outlined.

"There is a lot of excitement from people out there with kids in schools about what we're talking about,'' said John Truscott, a spokesman for Mr. Engler. "The people who are not so excited are mostly people in education who say, 'Give us more money and let us teach kids like we always have.'''

Mr. Engler wasted no time in cranking up a campaign on behalf of his reforms. Last week, he appeared on several Detroit television programs, held a town meeting, and made visits to editorial boards of some of the state's biggest newspapers. A spokesman said Mr. Engler also plans a personal lobbying campaign with lawmakers.

Republicans control the Senate, while the House is evenly divided between Democrats and Republicans.

Officials overseeing the political maneuvering in the finance-reform debate are working toward a November vote on the Governor's plan, which will first be considered by special committees in both chambers.

"I am asking you to support a comprehensive, far-reaching plan of education and school-finance reform, a plan that is bold, innovative, and, frankly, risky,'' Mr. Engler said in his speech. "The customer decides. That's the American way, and that will be the Michigan way.''

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