Opinion: Pensions suck up school tax dollars

Thomas Albert

A recent study about K-12 funding published by Michigan State University triggered alarm bells last week.  Some headlines went as far as to claim Michigan is dead last in education funding growth nationally.  As a state we recently invested over $14.8 billion hard-earned tax dollars to educate our children. Yet somehow it’s still not enough to cover the costs.

Albert writes: "Today’s school revenue not only pays our current bills, but also the bills unfairly passed on to the next generation."

I believe tax revenues aren’t the problem. The study failed to highlight two critical factors that have stretched our education budget thin.

The authors used some interesting mathematics to derive results that were shocking.  While their math was not wrong, the parts of the study that have generated headlines have been misleading. Their overall claim is that the state does not spend enough to educate our children. The biggest cause of this problem, they contend, is that taxes have not been high enough to keep up with inflation.

Michigan’s overall school funding revenue has recovered to pre-Great Recession levels in recent years. Since 2007, on an inflation adjusted basis, funding has increased by .32 percent. However, the funding that reaches the classroom has steadily fallen for some time, and it’s not a lack of taxes that is causing this problem. 

The recently released study fails to fully address two gaping holes in school funding: retirement and post-secondary costs. K-12 funding has declined by roughly 18 percent as a result of these added costs.

Retirement costs in the form of pensions and retiree healthcare have skyrocketed.  From 2002 to 2017 those costs increased 164 percent.  The total pension and retiree healthcare costs for public schools in 2017 was nearly $3.2 billion, or $2,150 per student.

Today’s school revenue not only pays our current bills, but also the bills unfairly passed on to the next generation. Even worse, these costs are expected to rise to $5 billion by 2027. The next 8 years are sure to be a bumpy ride.

The second flaw in the study relates to a School Aid Fund line item the authors ambiguously described as “activities formerly funded by the General Fund.” The activity they are referring to is spending School Aid Fund dollars on public universities and community colleges.

In 2019 alone, this amounted to nearly $900 million in total, or $620 per student.  For decades the School Aid Fund was only used for K-12 education. However, this changed in 2009 during a budget crisis, and it has been a tool used to balance the budget ever since. This is a practice that is decried by people on both sides of the aisle, myself included.

Michigan residents keep asking how school funding continues to fall short while they keep paying their fair share of taxes. In large part, a badly broken pension system and cost shifting have diverted a substantial amount of money from the classroom. 

I am very open to fixing these structural funding problems. We have a responsibility to our kids to find lasting solutions.

Rep. Thomas Albert, R-Lowell, represents Michigan’s 86th district in the House of Representatives.