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School Funding |
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School Funding |
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School District of the City of Royal Oak School Funding Summary Information
Overview Funding for school districts changed dramatically with the implementation of Proposal A in fiscal 1995. A fundamental shift in how schools are funded took place at that time. With Proposal A, local property taxes were significantly reduced and the reliance upon the State of Michigan for the majority of operating revenue was put in place. Funding for all school districts is now tied directly to the number of enrolled students and the per pupil foundation allowance.
Student Enrollment The number of students in each district is determined on two official count days: a February count day and a September count day. The funded student count is called the “blended count” since it is a weighted average of 25% of the February count and 75% of the September count. A loss in student enrollment equates to a loss in funding.
Per Pupil Foundation Allowance The per pupil foundation allowance is the amount of revenue that can be generated for each student. This amount is different for each school district. The per pupil foundation allowance was originally determined for each district at the time of the implementation of Proposal A and represented the revenue per pupil that was generated by a district in the year prior to Proposal A. Districts that had “high” per pupil revenue in the year prior to Proposal A now have a “high” per pupil foundation allowance. Districts that had “low” per pupil revenue in the year prior to Proposal A now have a “low” foundation allowance. Efforts have been enacted to close this gap between high foundation allowance districts and low foundation allowance districts. The State of Michigan has increased the per pupil foundation allowance over the years, but only if sufficient funds were available in the State School Aid Fund. There have been years without an increase and years when money was taken away from districts by the State. This is referred to as a State Aid Proration. The increases in the per pupil foundation allowance have not kept pace with inflation. This has placed a significant financial burden on school districts across the State when wage, benefit, retirement, vehicle fuel and utility costs are increasing at rates above inflation. Under Proposal A, school districts are dependent upon the State of Michigan for their revenue.
Reliance on the State of Michigan Any increase in the District’s per pupil foundation allowance is based upon the growth in sales tax revenue, statewide property tax and other State revenue. This dependence upon sales and statewide property tax will continue to result in significant financial challenges for school districts in this current economic downturn. Because of this, the financial picture for school districts in Michigan continues to look bleak.
Composition of the Per Pupil Foundation AllowanceNot all of the per pupil foundation allowance is received from the State of Michigan. It is comprised of three components: a non-homestead millage of 18 mills levied on businesses, a hold harmless millage levied on homeowners that can only generate $851 per student and the State of Michigan. All revenue generated from these three components cannot exceed the per pupil foundation allowance. In Royal Oak, the current foundation allowance is $9,340. For us, the combination of the revenue generated from the non-homestead millage, the hold-harmless millage and the State of Michigan cannot exceed $9,340. It should be made clear that the more revenue that is generated locally through property taxes the less money the State has to pay to bring the district up to its per pupil foundation allowance.
Increased Taxable Valuation and New Construction Tax RevenueNew construction that increases taxable valuation within a school district does not provide additional operational funding to the school district. Additional funding will only occur if the new development brings additional students. Growth in non-homestead taxable valuation does generate additional tax revenue for a school district from the 18 mills non-homestead millage. However, more tax revenue that’s generated locally means less revenue from the State of Michigan. The State will only pay the amount necessary to bring the district to the established per pupil foundation allowance. From a State School Aid Fund point of view, increased taxable valuation means additional tax revenue to the State School Aid Fund in the form of the statewide property tax on all property (6.0 mills). The bottom line ….. school districts are funded based upon the number of students and their foundation allowance per pupil. More local tax revenue means less state foundation revenue.
As a side note, homeowners in Royal Oak pay a Hold Harmless millage that can generate a fixed amount of $851 per student. This is a component of the per pupil foundation allowance. This amount of $851 per student has not changed since 1995. This millage rate has dropped each year since 1995 from 7.5075 mills to the current rate of 2.6995 in 2008.
Cost ContainmentThe District has implemented many successful cost containment strategies in an effort to maintain and improve our instructional programs. Changes to health insurance plans have included higher deductibles, higher prescription co-pays, the move to PPO plans and the implementation of consumer driven high deductible plans. All of these health insurance plan changes were developed with the cooperation of our employee groups. The District has also successfully implemented a consolidation plan developed by a citizen based committee. This plan has reduced the number of elementaries, middle schools and high schools, basically to “right size” the District in light of the significant decline in enrollment. Since September 2000, the District has lost over 1,300 students. This equates to over $12.6 million less in revenue for the current year. Because of the many cost containment strategies that were implemented, General Fund expenditures were lower in 2007-08 ($61,094,793) than they were in 1995-96 ($62,060,115). This is a remarkable feat considering the rising costs of retirement, wages, health care and utilities.
We are also proud to say that at the same time, we have expanded our student offerings that now include All Day Kindergarten, International Baccalaureate Program and Elementary Foreign Language. -- November 2008
Letter from
Superintendent Tom Moline
Monday, June 01, 2009
Dear :
Starting with the 2009-2010 school year, the School District of the City of Royal Oak budget will be required to absorb $430,000 in additional insurance increase and $357,000 in additional pay increases for our districts school teachers. These are increases that the Royal Oak Board of Education does not agree to and cannot afford, given the dire condition of our state’s economy. The Michigan Employment Relations Commission (MERC) will expect these increases to be paid even though a new contract with our teachers may not be in place with the start of the coming school year.
MERC expectations, in direct opposition to the necessity of Michigan school districts to cut costs, make it abundantly evident that public school employee unions have little incentive to truly bargain in the present economic climate in Michigan. MERC rulings expect that even though master agreements in Michigan school districts expire and school districts move into protracted bargaining, health insurance increases and pay scale step increases must continue to be paid by public school districts.
There are many public school employees in Michigan today that are thankful to have a good job with benefits. Given our state’s record unemployment, simply maintaining present income and benefits is a fortunate condition recognized by many public school employees. However, being expected to pay for major increases in health insurance and salary (9% for health and up to 11% in salary for step-eligible teachers in Royal Oak) is untenable in Michigan today, especially when those increases are not the product of an agreement reached by way of collective bargaining.
On behalf of my school district (and I would expect many in our state), I ask for your leadership in working with our state legislature to immediately halt major increases in salary and fringe benefits when such increases are not agreed between public school employee unions and school district Boards of Education.
Starting with the 2009-2010 school year, the School District of the City of Royal Oak budget will be required to absorb $430,000 in additional insurance increase and $357,000 in additional pay increases for our districts school teachers. These are increases that the Royal Oak Board of Education does not agree to and cannot afford, given the dire condition of our state’s economy. The Michigan Employment Relations Commission (MERC) will expect these increases to be paid even though a new contract with our teachers may not be in place with the start of the coming school year.
Sincerely,
Dr. Thomas L. Moline Superintendent
* letter was mailed to State Senators John Pappageorge and Gilda Jacobs and to State Representatives Marie Donigan and Marty Knollenberg. It was also hand-delivered to Mike Flanagan, State Superintendent of Instruction.
The Pappageorge Perspective for the week of 10.23.09 By: State Senator John Pappageorge
Royal Oak Superintendent Dr. Thomas Moline hit the nail on the head when recently testifying before the Senate Appropriations Committee in support of my resolution urging an override of the governor's veto of 20j funding.
Moline said, "Royal Oak families send more tax money to Lansing every year than our school district receives back."
He added, "The governor's action on October 19 regarding 20j is a promise broken - a promise made to 40 public school districts that they would not be seriously harmed by the Proposal A funding system."
In addition to Moline, superintendents Dr. Steve Gaynor of Bloomfield Schools and Dr. George Heitsch of Avondale Schools and representatives for Birmingham and Troy Schools all traveled to Lansing to testify in support of my measure.
I'm relieved to report that my measure, Senate Resolution 88, was approved. It urges the House of Representatives to override the governor's line item veto of nearly $52 million in 20j funding that will affect 12 school districts in Oakland County and another 28 across the state. As the School Aid budget is a House-originated bill this cycle, any override attempt must start in that chamber.
The Senate passed a plan that protected this funding. It's time for the House to stand up to the governor and do what is right and in the best interest of school children across our state and override this veto.
The six schools districts affected in the 13th District are listed below with their per pupil reductions that incorporate the governor's veto cuts to 20j funding and the governor's pro-rata cut of $127 per pupil.
* Avondale School District - $596 per pupil * Birmingham Public Schools - $414 per pupil * Bloomfield Hills School District - $411 per pupil * Lamphere Schools (Madison Heights) - $469 per pupil * School District of the city of Royal Oak - $554 per pupil * Troy School District - $540 per pupil
SR 88 now advances to the full Senate for consideration.
The governor's extremely short-sighted actions will cripple schools in Oakland County and around the state, as they were counting on these funds to educate our children. I strongly urge the House to immediately override the governor's misguided line item veto.
Contact information Thank you for your interest in our current state issues. If you would like to discontinue receiving legislative updates via e-mail, or have any questions or concerns, please contact my office at SenJPappageorge@senate.michigan.gov or by calling 877-SEN-13TH (736-1384). In addition, my Website offers information on a variety of issues that may be of interest to you. Please visit it at www.SenatorJohnPappageorge.com.
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