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Mich. Court Issues Mixed Ruling on Mandated Programs

By Lonnie Harp — October 14, 1992 3 min read

The Michigan Supreme Court has delivered good news and bad news to districts seeking more help from the state in funding mandated programs.

The court, on a 4-3 vote, ruled late last month that a 1978 constitutional amendment requires state lawmakers to maintain that year’s level of support for such mandatory programs as special education, school lunch, and driver training.

Analysts said the decision could lead to substantial new state funding for all Michigan school districts.

The court muted any celebrations, however, by ruling that employer contributions to Social Security, which have long been funded by the state, are not subject to the amendment’s provisions, since the retirement program is a federal effort.

School officials said last week that they had spent several days following the decision studying the 85-page opinion and were still not sure what its net impact will be.

“The issue right now is what is a mandated program, and that is not completely resolved yet,’' said Ray Telman, the associate executive director of the Michigan Association of School Administrators. “We’re not sure what’s in that pot.’'

‘Recapture’ Drive Targeted

Under the ruling, if the state paid for half of all mandated special-education programs in 1978, for example, it would be responsible for not allowing aid to fall below that level now. Officials involved with the case predicted that most districts would see funding jump because the state has reduced its share of spending for most programs over the last 15 years.

Observers are not sure, however, if the total will equal the more than $400 million that the state contributes to pay Social Security taxes for school district employees.

For that reason, officials are also unsure whether the ruling will hamper the state’s efforts to “recapture’’ funds from wealthy districts to aid poorer schools.

Fifty-one districts had filed the lawsuit as a challenge to the recapture effort, which skimmed state aid away from wealthy districts and forced them to use local funds for Social Security taxes. The suit asked that provisions of the 1978 amendment be enforced, thus requiring the state to provide additional funding for mandatory programs.

By eliminating payments for Social Security--which have gone disproportionately to wealthy districts, with their higher-paid teachers--lawmakers still may be able to channel funds to poorer districts even as they are forced to pay more for mandated programs, officials said.

Dissenting judges charged that the state’s recapture program creates a “budgetary dissimulation’’ that unfairly allows the state to skirt its equal-funding obligations. The program shifts “to relatively wealthy school districts the cost of additional state spending to provide aid to poorer school districts,’' according to Judge Charles L. Levin.

The supreme court sent the case back to the state court of appeals, which is expected to decide whether the state should have to repay shortfalls in mandated costs from past years.

In the meantime, school officials are trying to sort through the repercussions of the complex decision.

Paving the Way for Equity

Noting that the court did not linger on the Social Security issue, officials have speculated that the districts backing the case may ask the judges to reconsider that part of the ruling.

Otherwise, school officials said, they will wait to see how lawmakers will react to the decision.

Sen. Dan DeGrow, a Republican who has led legislative efforts to increase school-finance equity, said the decision will encourage stepped-up efforts to equalize school funding.

“At first people were talking about how the wealthy districts had walked away with a victory, but those people were missing the point,’' he said, arguing that the Social Security ruling will free up more money than the mandated-costs decision will require state officials to replace.

“There is some irony in the fact that the rich districts went to court trying to protect their dollars and added the Social Security issue to the case at the last minute,’' Senator DeGrow observed. “This paves the way for us to do more with equity.’'

A version of this article appeared in the October 14, 1992 edition of Education Week as Mich. Court Issues Mixed Ruling on Mandated Programs