Mich. Law Does Little To Change the Bottom Line

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Kalkaska, Mich.

Analysts watching the Michigan legislature last year hailed its work with dramatic words usually reserved for blockbuster movies: bold, revolutionary, ground-breaking.

With the attention of state residents and politicians across the country riveted on them, lawmakers here acted on a whim and outlawed the core of their school-finance program. Then, they reinvented the system.

Cutting $6 billion in taxes one month and passing a new $6 billion tax bill the next, a state that was one of the most reliant on local tax dollars to support its public schools became, in short order, one of the least dependent on those levies.

Now, everything is different; still, nothing much has changed.

Here in Michigan's most notorious school district--where local officials decided to end the 1992-93 school year in March rather than cut programs to finish out the year--school-finance reforms have drastically altered the numbers in the columns of the district's ledger. The bottom line, however, has risen only slightly, and the district still operates a bare-bones program on a fragile financial foundation.

"About the best that can be said is that we are maintaining our programs," said Doyle A. Disbrow, the superintendent of schools. "We are not going to be considering any dramatic cuts, but there is more uncertainty about what might happen next year and after that."

He said the state's school-finance overhaul seems far from bold or revolutionary in terms of what schools across Michigan can now offer children. "This year," Mr. Disbrow said, "most school districts are going to survive."

A Tax Tradeoff

The startling effects of Michigan's finance reforms may be far removed from the halls of the Kalkaska Elementary School. But change was more evident in the county equalization office, where workers last week were sealing the 18,500 property-tax bills that greet the residents of Kalkaska County each year at about the time their minds turn to revving up their snowmobiles and harvesting fields of Christmas trees.

Sandra Straksis, the county appraiser, said most residents will see their property-tax bills cut in half by the new finance program. For people who have vacation homes or businesses here, the decrease will amount to a minor discount.

The Kalkaska school district, which collected $7.3 million from local property taxes last year, will receive only $3.8 million from that source this year. The district will also raise $900,000 this year from a separate local levy that will pay for bus service, which the 2,100-student system abandoned last year.

That leaves about $2.5 million in property taxes that local residents will save this year.

In exchange for that cut, people in Kalkaska and across Michigan have been paying more at the cash registers of department stores, on ski slopes, and at other businesses; earlier this year, the state sales tax rose from 4 cents to 6 cents.

The tax shift has vastly changed the role of the state government in supporting the public schools. Last year, aid checks from the state capital accounted for, on average, 30 percent of a district's funding. This year, the state foots 80 percent of the bill.

And while the overall size of the pot has stayed almost constant, it is the state's new grip on the purse strings of school districts that is stoking the concerns of local educators.

Little Local Leeway

"If there is skepticism, it has to do with what happens beyond the first year or two, because funding is now really in the hands of the state," said Michael McIntyre, the superintendent of a regional service center that assists 16 school districts in five counties near Traverse City.

The new state law has limited the growth of the assessed value of property, virtually locking in the portion of school funding that can be raised locally. The finance law also allows a small "enhancement tax"--the levy that Kalkaska officials are using to run its buses--but makes that tax temporary, closing the option off after two more years.

With local options so limited, districts will rely largely on the money lawmakers pump into the state finance program. In its first year, it promises to supplement local revenue with enough aid so that every school district receives at least $4,200 per student over all. Districts that spent more than that last year will receive enough state aid to allow them to spend slightly more per pupil this year than they did last year, but no more than $6,500 per student.

In addition to moving away from the heavy use of property taxes, the state's new finance program was intended to close the gap between the state's highest- and lowest-spending districts, where per-pupil expenditures varied from $3,277 to $10,358 last year. A few districts can still raise enough local revenue to spend more than $6,500 per pupil without state aid, but observers contend that the finance law has made progress in closing the gap.

Mike Addonizio, an associate professor at Wayne State University who has worked in the state education department and the Governor's office, said the state this year took a "substantial" step toward equity. He and others note, however, that the law does not put further equalization of low- and high-spending districts on a fast track.

Beyond the equity questions, reports on the new finance system have raised questions about whether diminished local tax options will speed the alienation of local residents from their schools and whether the cap placed on high-spending districts will encourage parents in those areas to see private schools as a more attractive alternative.

"Any state that does something like this trades one set of problems for another," Mr. Addonizio said. "The question is which one is more tolerable."

Questions of Quality

School districts are also coping with a new set of problems. One commonly mentioned sore spot is the transfer of responsibility for paying employees' retirement and Social Security costs from the state to districts--a development that officials say saps any budget increases and makes contract negotiations a more difficult proposition.

"The state has bragged that it gave Kalkaska an increase of about 10 percent," Mr. Disbrow said. "Whoopee. They have added 22 percent to our personnel costs."

Mr. Disbrow and other Kalkaska school officials note they have had to make a series of painful cuts over the past few years as the state retreated from its funding commitment and local officials found persuading voters to approve tax increases an impossible sell.

Field trips, academic competitions, the wrestling team, and other extracurricular programs in this rural district operate on their own proceeds, parent fees, or outside donations. Teachers who have retired or moved away have not been replaced.

Now, they say they would also like to know if their benefactors in the state capital are going to help them find a way to recover from those cuts.

"We think quality is what should be the issue," Mr. Disbrow argued. "We made a choice two years ago to stand for quality over the state's 180-day requirement, and we still think the quality of Michigan's schools should be the main issue."

Beyond a program that pumps more state money into programs for disadvantaged children--funding that has led many school districts to hire elementary school counselors and beef up their early-intervention programs--many school leaders, even in more affluent districts, say that their challenge is now salvaging quality rather than building it.

At the 1,030-student Harbor Springs public schools, a district that serves a bayfront resort west of Kalkaska, the school board approved a $500,000 budget cut this year. The district had spent an average of $6,800 per student, but the state provided only $6,500 this year.

The cuts forced the district to eliminate its curriculum office and an assistant principal's position. Administrators said cuts in an acclaimed program that invites adults and senior citizens into the high school may also be in the offing.

"We're not through establishing a district that can live under the new financial rules," said James D. Cooper, the Harbor Springs superintendent. "Which means we're not through cutting."

Vol. 14, Issue 14

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