Schools face more financial challenges as state wrangles with funding

EDITOR'S NOTE: The annual school election is set for May. We begin this week a series of articles looking at the issues voters are being asked to consider on that ballot. This week offers an overview of the financial challenges faced by Harbor Springs and schools around the state.

By Kate Bassett
HARBOR LIGHT NEWSPAPER

Sitting in the office of Harbor Springs superintendent David Larson recently, the mood changed from festive to disheartened as chatter drifted from recent school events to finances and the state budget. As Larson and district business manager Pam Gibson began describing the current school revenue crisis, deep sighs and furrowed brows replaced the light banter and smiles of minutes earlier.

"It's tough. There is no way else to describe it. It's like we're in no mans land," Larson said as he reviewed the depressing– and somewhat confusing– reality of Proposal A and public school funding.

"It has been well documented that there have been over 70 changes made to Proposal A since it was passed, resulting in over $500 million a year that schools are losing in funding," he said. "Go back a few years and add that up, and it accounts for a few billion dollars that have been taken out of schools. Legislators avoid talking about that, but it is the reality every district in this state has been facing."

Larson went on to say the "very political" issues with school funding do not seem to be getting better with time.

"We don't even know what our per-pupil funding for this year is going to be yet," he said. "With term limits in the legislature, it takes years to get everyone to understand school funding and Proposal A, and by the time they get it, there are new faces in office and the whole process starts over without any positive results. It's really a quandary. There is a $900 million hole they haven't filled this year, and next year the numbers are coming in at something like $3 billion."

Legislators are quick to point out how much money schools have received since 1994, Larson said, but he added that they fail to mention how much operational costs have increased as well.

"They like to talk about how schools have gotten 'X amount' of money, but that's like saying I used to pay $1.25 for gas in 1994. Guess what? Gas has gotten more expensive and so has running a school district.

"We are a human enterprise and that is where we put our money. It's not like we are cranking out widgets and can just replace personnel with robots. We don't want to be more efficient than 18-20 students in a classroom. We could have a 40-to-one ratio, but what kind of education would we be providing our children? I mean it when I say the only way for the state to get out of its current situation is to invest in education. That is our future."

As of now, the state has promised $8,385 per pupil to the Harbor Springs School District. However, Gibson said that money– while already being spent– may not all come through.

"The latest proposal I've heard is that the state is going to cut $34 per pupil. You have to realize that district's were promised an increase this year, and that money has already been spent (the state's last pay out to districts for the 2006- 2007 school year happens in August and the funding cuts would be reflected in the months remaining). Schools will have to use part of their fund balance to meet their budgets, and there are a lot of districts in this state that don't have that luxury. It is a mess," she said.

If the state does cut funding, Gibson said it will mean $40- 50,000 less than expected for the Harbor Springs School District.

The uncertainty of school funding has left Gibson in a continual quandary when it comes the district's budget. She said she has tried to present the board with very conservative revenue numbers each year in order to keep the district running in the black regardless of what the state does– or does not– opt to provide.

"We have a list-serve," Gibson said of communicating with other district business managers around Michigan. "Everyone talks about what we are hearing coming out of Lansing. It helps keep us on the inside tract, and it helps to know that we are all in the same boat."

A boat, Larson added, that is sinking, and sinking fast.

"The economic forecasters in Michigan– who have been too generous with their outlooks– are already saying 2008 is supposed to be worse than 2007. That alone challenges our legislators even more to step up to the plate. We had 16,000 kids leave the state this year. Most Intermediate School Districts are flat or losing kids, especially in the metro areas. It makes it so difficult for public schools to succeed. It is a cycle that must be broken."

The state's budget deficit has caused a lot of concern here at home, Larson said, and has resulted in the district "trimming the fat" for more than five years. With support staff, bus runs, and classroom materials all at bare minimum, the superintendent looked away when asked what, exactly, was left to cut.

"We are taking it a year at a time," he said with a sigh after a moment's pause. "It's all we can do. The saving grace for us is that we have a fund balance and so if we must, we can maintain our programs by deficit spending. The thing is, that's like a family living on its savings for a year. We are spending on people and programs, and those costs will go up again, even if our funding from the state gets cut. There is only so long a savings will last."

Once a district is without the safety net of a fund balance, students really begin to suffer.

"The only other option at that point is to cut programming, increase class sizes, and reduce course offerings," Larson said. "We are very mindful of that fact, but because of the work the board has done in previous years, we are still at a point where we are not only able to maintain, but invest in, our programming."

With the biggest part of the district's $10.2 million budget being personnel costs, Larson said the board has been conscious to only grant one year contracts to teachers and support staff members, in order to avoid "making promises we might not be able to keep."

The growing financial woes and increasing costs of health care and retirement came to a head in the district last year when contract negotiations dragged on for almost eight months, and battle lines between the school board and teachers were drawn over fair insurance packages. In the end, the two sides agreed to move to a PPO insurance package– a cost savings for the district– and to create an insurance task force comprised of members of both sides of the bargaining table to deal with the very real problem rising costs are creating.

"We saved the district about $100,000 thanks to last years agreement," Larson said. "We have unofficially heard that health insurance premiums are coming in lower (still an increase, but a single digit one) this year, and that's really a big break. Unfortunately, retirement rates are expected to go up again 10-12-percent, and there is no negotiating that fact."

Still, Larson said he feels good going into contract negotiations this year, and that both sides worked well together in the task force, which reported to its respective bargaining teams before disbanding earlier this year.

"We all want the best for this district, and there is no doubt that people are our greatest resource," Larson said.

Looking at Michigan as a whole, Harbor Springs still continues to sit in a much better position than most. There are 550 districts in the state– probably one of the highest number of districts in ratio to student populations in the country– and another 150 charter schools.

Now that the state has taken local district autonomy and moved to a centralized model of education, Larson said having so many districts to spread state funding across is difficult. He emphasized what he sees is an issue with charter schools.

"There are empty seats in quality public schools, and charter schools are costly to run. Anytime you offer more choices, it can actually dilute the quality, because it spreads out the funding. Charter schools can't run the gamut of programs public schools can, and while the competition has helped districts be the best they can be in terms of quality and customer service, the negative is that it is diluted the dollars."

Larson said when the local charter school, Concord Academy, first opened its doors, Harbor Springs Public Schools lost about 20 students. Since then, he said, the districts premier band, growing choral, and top notch drama programs have expanded to the point that most students remain here.

He said legislators who blame school finance problems on districts needing to be more efficient are "talking out of both sides of their mouths when there are more than 100 charter schools in this state that are being funded with public school dollars."

Getting back to the havoc created by Proposal A, Larson said the bulk of school funding in that proposal was based on projecting a growing economy, which is obviously not the case.

"We already know things will likely be flat next year, and we've seen two years of flat funding and one year of cuts already. Four times a year we receive a revenue consensus, and in the last three years, 12 out of 12 have over-forecasted revenues. Whatever they promise, we know 2008 is going to be a rougher year than this year was, and we know we will not be getting an increase."

"We are a human enterprise and that is where we put our money. It's not like we are cranking out widgets and can just replace personnel with robots. We don't want to be more efficient than 18-20 students in a classroom. We could have a 40-to-one ratio, but what kind of education would we be providing our children? I mean it when I say the only way for the state to get out of its current situation is to invest in education. That is our future."

This is part of the April 11, 2007 online edition of Harbor Light Newspaper.

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