Even as West Michigan’s economy continues to improve, its public education system faces considerable uncertainty.
Since the mid 1990s, the state of Michigan has paid school districts on a per-pupil basis. Public education sources say that more than three quarters of that funding gets used for paying administrative and teacher salaries as well as other operational costs, leaving little left over for physical upgrades to facilities and technology.
That leaves public school districts few options for bolstering their infrastructure, other than going straight to taxpayers within their communities and asking for millage increases every few years.
Those school bond measures often are met with mixed results, according to Josh Szymanski, chief strategy officer at Owen-Ames-Kimball Co. (O-A-K), a Grand Rapids-based general contracting firm with a large portfolio of education work.
“I view bond issues across the state as a pretty good reader on consumer confidence,” Szymanski said. “They’ll vote for these things that are a couple hundred dollars a year in taxes if they’re feeling like their pocketbook can support it.”
Most recently, school districts around the state asked for a variety of millage increases or extensions in early May. According to the Michigan Department of Treasury, nine out of 22 bond proposals passed statewide.
The 41-percent success rate was actually down from previous years, according to Szymanski, who noted that 50- to 60-percent passage rates have been the norm in the last several rounds of bond proposals. During the recession years, the passage rate was far lower, he added.
School bond approvals often result in work for contractors such as O-A-K, as well subcontractors and architecture firms that work in the public education space.
Szymanski declined to give an exact revenue figure for O-A-K’s public education work, but confirmed the company derives more than $100 million from the sector when considered over a five-year period.
Proposal A, which was enacted by Michigan voters in 1994, raised the sales and use taxes in the state to 6 percent, allowing for the per-pupil school funding that’s now in place.
Funding varies by district, but most schools receive between $7,500 and $10,000 per student, according to the Senate Fiscal Agency.
While individual school districts will frequently turn to taxpayers to bolster their budgets, districts clustered within a region also have another option, as evidenced on May 2 with the Regional Enhancement Millages in Kent and Kalamazoo counties.
In Kent County, voters approved the Kent Intermediate School District request for a 0.9-mill increase for 10 years (or 90 cents on each $1,000 of taxable value) that will raise nearly $20 million annually and be distributed to all 20 public school districts in the region on a per-pupil basis. Meanwhile, voters in Kalamazoo County also passed a similar request for a 1.5-mill increase.
The decision to attempt the Regional Enhancement Millage came after years of consolidating services such as human resources and communications among the districts in Kent County, according to Ron Koehler, assistant superintendent for Kent ISD.
Despite the consolidation and attempts to create efficiencies, public school districts in the region still felt that they were falling behind from a fiscal standpoint, he said.
“We fear that the younger children we’re serving may not have the same opportunities their older brothers and sisters had, or the types of support that they had,” Koehler said.
The affirmative vote by Kent County taxpayers came as welcome news to leading public school administrators in the region.
“Thanks to the voters, we now have a steady, reliable source of local revenue that is 100% dedicated to the classrooms for teaching and learning,” Grand Rapids Public Schools Superintendent Teresa Weatherall Neal said in reference to the millage during her State of the Schools speech in early May, according to a readout of her remarks. “Despite significant uncertainty at the federal level and continued inequity and inadequacy of state funding, the district continues to demonstrate sound fiscal management.”
While the millage will benefit districts all around the region, Kent ISD should be cognizant of the increasing economic inequality present, particularly in Grand Rapids and other nearby suburbs, according to backers of the millage.
“It will be vitally important that the (Kent) ISD studies and provides public analysis about the impact of displacement (of citizens),” members of Equity Political Action Committee (PAC), a Grand Rapids-based progressive group, wrote in a blog post ahead of the millage vote. “It will also be important that it uses this analysis to be proactive about how to ensure that as our city changes, school districts are resourced and prepared for those changes.”
The Equity PAC’s concerns echo similar sentiment from many public school stakeholders.
In reviewing statewide millage results, O-A-K’s Szymanski pays attention to the size of the increase and the amount of money it would raise to get a better sense of a community’s tax base — or lack of one.
For example, Greenville Public Schools asked voters for a 1.44-mill increase. The measure failed, but had it passed, it would have netted the Montcalm County district nearly $52 million.
By contrast, voters in the largely rural Bessemer Area School District in the western Upper Peninsula shot down a larger 4.70-mill increase that would have only generated $6.9 million in funding for the public schools.
Sources point out that because millages are based on taxable property value, school districts — particularly in rural areas — still frequently struggle.
“If you look at this system as a way to get money for schools, you can see why some have what they have and some don’t,” Szymanski said. “I think there’s always going to be some disparity at the local level.”
Kent ISD’s Koehler told MiBiz that he still observes some disparities between school districts, but he believes the gap has narrowed significantly since the passage of Proposal A in the 1990s.
Nonetheless, sources say that as long as public schools can only rely on the taxable value of properties in their communities as a means of raising funds to maintain or build new facilities, there will always be disparities.
“These buildings largely haven’t been touched since (the 1950s or 1960s) and they’re trying to keep the lights and water on and educate kids,” Szymanski said of many of the rural districts that work with O-A-K. “Can you educate in a shelter from the 1950s? Yes. Can you compete with a neighboring district that has a brand-new high school? It’s tough.”