Citizens for KPS

An April 15 letter to the editor of the Gazette stated that “Over the past three years, per-pupil school funding has increased 7.5 percent, roughly the rate of inflation.”
 

This letter reflects some misunderstanding of school funding issues. First, the quoted statement is not true: per-pupil school funding HAS significantly lagged the rate of inflation. Second, the argument in this letter confuses “trends” in real school funding per pupil with “levels” of real school funding per pupil. It IS true that over the past 3 years, real funding per pupil has not declined as fast as it did in the previous 2 years. Real funding for schools is not declining as fast as it had been declining. But that does not mean things are getting better. Real funding per student is significantly below what it was when the millage was passed in 2005. It is likely to deteriorate further in the 2008-09 school year. Therefore, the enhancement millage is needed even more today than it was when it was first passed in May of 2005.

Now, the details behind the previous paragraph.

The letter-writer does not explain what years he is comparing. He is probably comparing per pupil funding for the 2004-05 school year with funding for the 2007-08 school year. Over that three year time period, for 7 of the 9 school districts in Kalamazoo County, per pupil funding increased by 7.5%. (In Galesburg-Augusta, per pupil funding increased by 7.4%. More on the 9th district in a minute.)

However, prices increased during that three year time period by 9.8%. (See note below on how this increase was calculated using official data from the U.S. Bureau of Labor Statistics.) Therefore, real funding per pupil lagged 2.3% behind prices (7.5% vs. 9.8%). The increase in per-pupil funding has NOT been “roughly the rate of inflation”.

Furthermore, over this same time period, one district in Kalamazoo County received significantly less than a 7.5% increase. That school district happens to be the largest school district in the county, Kalamazoo Public Schools. From 2004-05 to 2007-08, the foundation grant per pupil for Kalamazoo Public Schools increased by 6.3%. This is 3.5% less than the rate of inflation over this time period.

If we look forward, to the 2008-09 school year, the foundation grant per pupil appears likely to increase by considerably less than the inflation rate. The School Aid budget passed by the Michigan Senate increased the foundation grant per pupil for 2008-09, compared to 2007-08, by 1.7% for KPS, and by 2.0% for the other 8 school districts in Kalamazoo County. Of course, we don’t know yet what inflation will be from 2007-08 to 2008-09. But it appears likely to be considerably more than 2%. Prices increased from February 2007 to February 2008 by over 4%. Even if the inflation rate slows down a bit, it appears likely that inflation from 2007-08 to 2008-09 will be more than 3%. Therefore, real state funding per pupil is likely to decline in Kalamazoo County by at least 1% from the current school year to next school year.

It IS true that the reduction in state funding, after adjusting for inflation, does not follow as bad a trend from 2004-05 to 2008-09, as it did from 2002-03 to 2004-05. During the two year period from 2002-03 to 2004-05, the state of Michigan did not increase the per pupil foundation grant at all. Over that two year period, prices increased by 5.3%. Therefore, the schools were losing over 2.5% per year to inflation from 2002-03 to 2004-05. On the other hand, from 2004-05 to 2008-09, it appears that school districts will be roughly losing 1% per year to inflation. Things are still getting worse with state funding for K-12 education, but not as fast.

 But this improvement from "very bad trends" to "moderately bad trends" in school funding does not provide students with a higher level of inflation-adjusted real funding per student, to better meet student needs. Let’s put it this way. In 2005, when the enhancement millage was first enacted, the real funding per pupil from the state for the 2004-05 school year was 5.3% below what it had been in 2002-03. The enhancement millage provides about 4 and one-half percent of the school foundation grant, so it made up for most but not all of that funding shortfall, and brought schools back up to close to what they were getting in 2002-03, after adjusting for inflation. So, the enhancement millage initially enabled local schools to buy about the same levels of real services for students that they could buy in 2002-03.

Recent state funding increases that have still lagged inflation mean that in 2008-09, real funding per pupil from the state will have deteriorated further to over 8% below its level in 2002-03 for 8 of the school districts in Kalamazoo County, and by over 9% for KPS. The renewal of the enhancement millage makes up only half of this “real funding gap” from the real funding level in 2002-03. Therefore, even if the enhancement millage passes, local schools will still be less able than they were in 2002-03 to provide services to students. If the enhancement millage fails, real services per student will have to be cut. 

Why do we need to worry about inflation when looking at school budgets? Because it affects the level of real services that schools can provide to students. For example, when the cost of diesel fuel goes up, school costs go up. Schools are forced to make some sort of budget cuts to adjust to these rising costs.  

This brings us back to the central case for the renewal of the enhancement millage. Funding per student from the state has become increasingly inadequate to meet student needs, during the time period before the 2005 enhancement millage, and during the time period since then. As a result, if the enhancement millage fails, although local taxpayers will save modestly on their taxes, there will be significant budget cuts in local schools that will damage the quality of educational services to students. That is the choice facing voters.

Note for policy data wonks on inflation calculations: the inflation calculations used here rely on official data from the Bureau of Labor Statistics on the Consumer Price Index for all Urban Consumers. This is the most commonly used consumer price index. To look at these data yourself, go to http://www.bls.gov/cpi/home.htm , click under “Most Requested Statistics” on “All Urban Consumers (current series)”, and then choose to display data for “U.S., All Items (1982-84=100)”. To adjust for inflation, we created a price index for each school year by combining the second half of one year’s price index with the first half of the next year, that is the price index for the 2006-07 school year would be the average of the price index for the second half of the 2006 calendar year and the price index for the first half of the 2007 calendar year. Of course, we don’t have data yet for the first half of the 2008 calendar year and beyond. To project price data forward,  we assume prices will increase by 3.1% per year, which is the price increase from the second half of 2006 to the second half of 2007. This seems to be a conservative prediction.

We could of course endlessly debate the accuracy of the Consumer Price Index. Does it adequately control for quality change? (Short answer: sometimes Yes, sometimes No.) Are price trends in Kalamazoo different from those in the U.S.? (Short answer: we don’t know). What if instead of using the CPI, we used a price index for what schools buy? (Short answer: probably prices on inputs purchased by schools have gone up faster, as schools are heavy buyers of health care.) But these details are unlikely to change the main point. Since the enhancement millage passed in 2005, the state has not come close to making up the damage that the 3-year foundation grant freeze from 2002-03 to 2004-05 did to real funding per student. Therefore, a local enhancement millage is still needed.