Review of Section 81 Funding Issues: Preliminary Discussion of Findings

1. Review of Section 81 Funding Issues: Preliminary Discussion of Findings Douglas C. Drake October 31, 2008

2. Overview • Review of Section 81 and some related funding issues • Preliminary but nearly final • Today’s handouts: • Handout of some color graphics, with Dcode list at back for convenience • Legal size sheet summarizing Sec 81 history • Some slides not in handout…longer more formal report coming

3. Looking at history… • Next 10 slides are similar in structure • They begin with the six lowest funded ISDs under Section 81 before Proposal A • Each succeeding slide is the next group of ISDs

4. Change and Similarity • Note that in each group, districts start out relatively close together, then jump when “A” funding fully kicks in • Note also that all seem to grow at same rate thereafter. • Difference is amount of “bump” at start of “A”

15. Some Equity Measures • Look at funding pre-A based on: • Sec 81 funding per pupil • First order by Sec 81 $$/pupil • TV per pupil as % of state average to show relative differences; Sec 81 pp as % avg; & ftes as % avg • Next by straight D Code order (blue bars) • Next by relative fte size (red bars) • Next by TV (green bars)

20. Pre and Post A • The 94-95 slides we just went through would look very similar today—perhaps even somewhat less even • One reason: the next slide that depicts the very uneven growth of Taxable Value in the ISDs over the period 95 to 08

22. Other equity issues • Enrollment changes were uneven across the state • Some districts have had growth • Some declined more than others

23. Some history of ISD funding • The legal size sheet in the handouts is a very quick summary of Section 81 funding since 1970 • The very limited number of shaded lines indicate a significant structural change in the formula • Note that most years have been a simple ATB % increase (or occasionally a decrease) • FY 82 last “sort of” formula & even that was offset by guaranteed amounts

24. Key Issues from “A” Transition • FICA and Retirement payments for ISD employees..rolled into Sec 81 in FY 96 • Certain other categoricals rolled into Sec 81 effective in FY 96 (not full list) • 21a School Improvement • 23b Schools of Choice • 46 Dropout pilots • 48 Juvenile Rehab • 83 media centers • 93.1 7 .2 school age parent pilots • 98 professional development

25. Key Issues of “A” transition • All ISD’s got FICA/Ret $$ • All but 7 had at least one of the other categoricals

26. Key issues of “A” transition • FICA & Retirement should not be an equity issue if employees are still on the ISD payroll • If the ISD is still operating the categorical, or some alternative form of the categorical at about the same level, it’s probably not an equity issue • This study is not addressing those internal practices

27. Steps to the final report • Neatly formatted data tables to accompany some of these graphics • Some more statistical analysis of the funding trends to make sure the correlations are what they seem to be • Some work to make the graphics clearer • Narrative to weave the data and graphics together

28. In pursuit of equity? • ISD’s haven’t had true “needs-based” or even “needs-related” funding for a generation or more • Some degree of inequity of resources is probably inevitable

29. Are There Viable Action Options? • Near term, the answer is no • The era of declining resources will continue for several years in the face of: • Global and national recession • The implosion of the auto industry in Michigan • Dramatic drops in property values and increases in foreclosures • Our seeming inability to control Corrections costs • Our seeming inability to explain the need to reverse at least some of the tax cuts already made over the last 15 years since Proposal A

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