Funding Information all Stakeholders should know…..

How are schools funded in Michigan?

Tax reform (Proposal A) in 1994 created a dependency on the state for approximately 90 percent of a district's total revenue.  Before that time, schools mainly relied on property taxes from the community they serve.  Specifically, Clarkston district homeowners were paying 38 mills towards school taxes that remained in Clarkston.  After Proposal A, all homeowners in the State were reduced to 6 mills for school taxes that are sent to Lansing.  These funds are distributed to each school in the form of a foundation grant per student by the State of Michigan.  Proposal A, also included a sales tax rate increase.

 

Why are schools across the state in crisis?

When the state experiences significant financial difficulties, it affects their ability to properly fund schools.  In general, the state's financial difficulties fall into four areas:

 

  1. A slow economy results in less tax collection for the state.

·   Sales tax is the main source of State revenue for school aid.

  1. Tax cuts since school funding reform in 1994/95 has reduced annual tax collection by $600 million per year.
  2. The state has used one-time funds and stimulus dollars from the federal government to balance budgets in prior years, but no new funds are available in the future.
  3. Retirement and health care for state employees continues to rise.

How will this financial crisis affect Clarkston Community Schools? The state has not provided adequate funding for several years.  The per-pupil foundation allowance has remained relatively flat for many years, and the state has made mid-year reductions in funding in 2002/03, 2003/04 and in 2008/09.  The state has cut this year's budget $165 per student, which equates to nearly $1.4 million impact on the budget.

 

What happened to the Lottery money?

Lottery money has not been used as additional revenue for schools.  Instead, appropriations for education have been reduced by roughly the same amount the lottery generated.  In fact, the lottery accounts for only four percent (4%) of the total funding for Michigan public schools.

 

How did the problem become so big so fast?

Over the past 5 years, the district has cut the budget over of $16.7 million. Repeated years of nominal or no revenue increases coupled with increases in all expenditures prompted these cuts.  Additionally, as a service industry, our largest cost is salaries and benefits (more than 85% of our budget). Salaries and benefits, which are decided locally, have been adjusted to ease budget reductions.  In fact, all Clarkston employees have taken a reduced health care package saving the district approximately $800.000.  However, retirement costs, which are controlled at the state level, have increased each year. 

 

Does the district have any money in the bank that it can use to solve the problem?

The district has about $12.9 million in cash reserve (fund equity), which represents about 15% of the total budget.  Since the 2006-07 school year, Clarkston has used Fund Equity to preserve educational programming.  The current approved budget includes using over $6 million in fund equity for 2009-2010.  The Board approved budget does not include any State funding reductions; therefore, we are anticipating using additional fund equity dollars to offset current funding shortfalls.  It is recommended that districts should have between 10 and 15 percent fund balance.   These are one-time dollars used to meet emergency or unplanned expenditures.  Once used, they are gone.  Clarkston has conservatively used these funds over the years to help balance the budget and to offset cash-flow problems and mid-year state aid reductions, which traditionally come late in the school year after the school district budget has already been committed.

 

How will the budget impact class size/programs and will layoffs occur?

An $8 million budget reduction will have a significant impact on the district.  Since school districts are "human" organizations, it will be very difficult to make the magnitude of cuts without impacting class size and instituting staff layoffs.  Our strategic budget process includes reviewing every program and service to determine direct and relative costs and the impact each area has on our student learning.  This process is underway and a recommendation for reductions will be made to the Board of Education by late February 2010.

    

Why is this important for me to know?

It is important for you to know because these are your tax dollars.  The elected officials in Lansing control the vast majority of the dollars you pay for schools, and they are the only people who can change the way schools are funded.  You can help by contacting your legislators and ask them to fully fund our schools.  When the Governor and legislature passed Proposal A in 1994, they promised to fund schools properly.  They have not lived up to that promise.  Make sure they know how you feel by contacting:

 

Who Represents Me?

Independence and Clarkston are represented in the Senate by Senate Majority Leader Mike Bishop, R - Rochester Hills. Contact Sen. Bishop at (517) 373-2417 or SenMBishop@senate.michigan.gov   

Springfield and Waterford are represented by Senator Deb Cherry, D- Burton. She can be reached at 866-305-2126 or sendcherry@senate.michigan.gov  

Most of Clarkston is represented in House District 44 by Eileen Kowall, R - White Lake. Eileen can be contacted at (866) 334-0010 or eileenkowall@house.mi.gov

 

Waterford residents are represented by Gail Haines, R - Waterford in House District 43. Ms. Haines can be reached at (888) 737-4043 or  gailhaines@house.mi.gov  

All of us are represented by Governor Jennifer Granholm, D- Northville. Contact the Governor at (517) 373-3400 or http://www.emailyourgovernor.com/michigan-governor-jennifer-granholm.html