Traverse City Record-Eagle

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February 12, 2013

School funding increase earmarked

Most of additional 2 percent destined for pension liabilities

BY MICHAEL WALTON mwalton@record-eagle.com

TRAVERSE CITY — Gov. Rick Snyder's proposed budget for next year raises K-12 school funding by 2 percent, but most of the increase is earmarked for public teachers' unfunded pension liabilities.

Revenue estimates from January predicted $200 million less funding for schools across the state in 2013-14 compared to this year.

Snyder announced his budget last week. It contained some good news in light of the earlier revenue predictions, Traverse City Area Public Schools Chief Financial Officer Paul Soma said.

"It appears at the very minimum we are going to keep what we got last year," Soma said.

But the 2 percent additional funding for K-12 districts is destined for the Michigan Public School Employees Retirement System, not classrooms.

"From my analysis of the governor's proposal, TCAPS will not see a 2 percent increase in funding," Soma said.

School districts' contribution rates for unfunded accumulated liabilities were capped at fiscal year 2012 levels. The state is required to pay anything over the cap, and Snyder's budget allocates more than $403 million to local districts for that purpose, according to his proposal.

The plan reduces long-term liabilities for the retirement system from $46 billion to $31 billion.

Snyder's budget increases foundational per-pupil funding by $34, but it simultaneously reduces "one-time" funding dollars.

"One-time" dollars reward districts that meet performances goals and adopt certain practices designated by the state.

Districts that met best-practice standards earned about $75 per-pupil in 2013. The 2014 budget proposal reduces best-practice payments to $16 per-pupil.

The reduction largely offsets any foundational funding increases for TCAPS, Soma said.

"We expect, at best, to break even," he said.

Kingsley Area Schools Superintendent Keith Smith said Snyder's proposal contains a bit of "the good, the bad, and the ugly."

The good includes plans to double funding for prekindergarten programs over the next two years. But districts like Kingsley still need to balance budgets with little additional funding and rising costs.

"We're just struggling to maintain what we have," Smith said.

Appropriations Committees from each house of Michigan's legislature will carve up Snyder's proposed budget and assign appropriations bills to subcommittees for hearings and analysis this month.

Meanwhile, local districts will use the governor's plan to start outlining their own budgets.

Soma was to present a budget report to the The TCAPS Board of Education during its monthly meeting Monday night.

The impact of Snyder's proposal on TCAPS' $85-million general fund budget was to be discussed.

"What we do with that, how we spend that, it's very important and people should pay attention," Soma said.

Districts need to approve balanced budgets for the 2013-14 school year by July.

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