Category Archives: State of Michigan Policy

The Irony of Obama’s Kalamazoo Visit

First off, (graduation) hats off to the students and community of Kalamazoo Central High School.  What an incredible experience for them tonight to have the POTUS deliver their commencement address.

If you haven’t been following, President Obama promised to deliver a high school commencement address every year of his presidency.  It has become a contest of sorts, with students playing a lead role in developing promotional videos to make the case for their school.

1,000 schools applied and the President ultimately picked the winner.  Pretty cool – regardless of your politics.

The White House has already published excerpts from the President’s speech tonight.  Among the ultimate sound bites that caught my eye was this one:

“…meaningful achievement, lasting success – that doesn’t happen in an instant.  It’s not just about the twist of fate, or the lucky break, or the sudden stroke of genius.  Rather, it’s about the daily efforts, the choices large and small that add up over time.  It’s about the skills you build, the knowledge you accumulate, the energy you invest in every task, no matter how trivial or menial it may seem at the time.”

Said so many different ways and so many times in the history of man, the message is that there are no silver bullets.  “Meaningful achievement” is never easily achieved and never the results of gimmicks.

The irony is a little thick for me.  Look at Kalamazoo Central in context. 

They are being uniquely recognized by the President of the United States at arguably the height of the financial distress affecting Michigan public school districts.  Amidst Proposal A, charter school laws, NCLB and its equal time respondent, Race to the Top, Kalamzoo Central stuck to their vision statement: Every Child, Every Opportunity, Every Time. 

Sound familiar?  GPPSS’ vision statement is Each and Every Child, Each and Every Day.  Kalamazoo, Grosse Pointe, Anywhere, USA.  That’s the call to action for public schools.

The students and school community of Kalamazoo Central took responsibility for themselves to achieve what they have achieved – as will be the case for the scores of public school districts across the state with similar achievements – based on hard work, ingenuity, pride and determination.  If every school community did this, we’d hear a lot less about new state and national legislation promising salvation.

Amidst the veritable din of calls for the never-to-be-too-narrowly-defined “reform” Obama’s message is really “There is nothing new under the sun.”  Communities and students who dedicate themselves to excellence, however they choose to define that, will create that opportunity for themselves.

I agree.

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Retirement Reform Reality: Lansing Steps Up

Late last night, while most sane people slept, Lansing lawmakers took the step that really had to be taken to right the direction of the Michigan K-12 funding system.

Some have estimated this action, passed by the Democratic House and Republican Senate, could reduce costs by several hundred million dollars immediately and by as much as $3.1 billion over the next decade.  The non-partisan House and Senate Fiscal Agencies generally supported such estimates.

As I have written before, while these bills comes under the guise of a “retirement incentive” it is more aptly about retirement reform.  This was really the issue.  And that reform was not, and likely will not be, well-received by current school employees.

In short, the bill increases the retirement multiplier for those eligible to take advantage of it meaning the pension received will be greater than what would have been expected normally.  That’s the carrot.  There are some sticks – and some missing carrots.

Current employees who choose not to retire (or are not eligible) will be required to increase their personal contribution to the retirement system by 3% of their salary.  Recall that the retirement system, MPSERS, is predicated on a combination of employee and employer contributions that are a straight percentage of salary.  This year K-12 districts have been paying about 17% of employee salaries into MPSERS.  Next year it had been expected to go to 19.41%.  These are huge numbers when you recall salaries are our greatest expense.

So this bill will come at a price for employees who do not retire and this is where the spinning will begin.  The MEA has argued that the lawmakers are trying to fix the economic problems “off the backs of employees”.  This was essentially MEA President Iris Salters’ quote.  Others will argue that the incremental cost borne by teachers and other employees is for their own personal benefit given that this is their retirement fund.  Very few if any non-government employees receive a pension remotely resembling that of government employees.

The missing carrots, or what is noticeably absent from the bills, are any guarantees for public school employees regarding reirement health benefits.  This was the hangup over the late stages of this bill’s evolution.  The Michigan constitution guarantees the state employees’ pension benefits, but not their health benefits.  A recent House version of this bill took that action, which thereby increased the cost of retirement. 

As I have written before, when you break down why the MPSERS costs have increased as significantly as they have, rising retiree health care costs represent the greatest source of cost escalation.  So by taking this action, Lansing seems to be acknowledging this issue.  It is in this context that these bills are more aptly termed retirement reforms as opposed to an incentive.

And that’s the other very big news here.  The bill requires that new hires will be placed into a hybrid retirement system that is not exclusively a defined benefit plan, but more dependent on employee contributions – similar to 401k’s.

The net effect of all this on near and long-term school funding will remain to be seen.  There are lots of possibilities:

  • Our per pupil Foundation Allowance may still be reduced, but it is very unlikely that it would be anywhere near the $268 cut that has been often discussed.
  • The MPSERS rate may not got to 19.41%, but if it goes short of that I would predict a moderate Foundation Allowance cut.  Again, though, the net effect would not be NEARLY as harsh as the $268 cut AND the 19.41% MPSERS rate would have been.
  • This will undoubtedly spur many retirements not only of teachers but many other employees, including secretaries, custodians and others.  In the GPPSS this could mean that some of the people whose jobs were eliminated may be able to be hired back.

In the even bigger picture, this reform may well prove to be a catalyst for other Michigan budget reforms.  I don’t think Lansing lawmakers could even look cross-eyed at alternative revenue options without first addressing the MPSERS problem.  This was arguably the biggest puzzle piece.  One has to wonder for the House Democrats to have supported this whether there was some back room quid pro quo negotiated.  This action will go a long way toward addressing the School Aid Fund’s $400 million projected shortfall.  The state’s General Fund deficit is still $1.3 billion.  It will be interesting to see what’s next.

This action shows that Lansing lawmakers are finally getting serious about spending reform, which is welcome news for those who realize change had to come.

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Filed under Current Events, GPPS Budget Decisions, State of Michigan Finances, State of Michigan Policy

Memo to Lansing: Results Matter More than Ideology

Gov. Jennifer Granholm lamented in a quote the other day that it may be too late for state lawmakers to pass a statewide retiremement incentive for government workers including public school teachers.

“They should have gotten that retirement bill done last week,” Granholm says. “Frankly they should have gotten it done a month ago.”

Granholm’s reference to “they” speaks volumes.  Does SHE not have a role in “getting it done”? Does she think she can just unilaterally concoct a bill and expect it to sail through the legislature untouched?  If so, how naive.

The inevitable failure of this exercise to adopt a plan that might provide some relief to Michigan K-12 public schools speaks volumes about Lansing’s collective inability to get anything done.  This case is particularly disturbing.

Here you have all three players, the governor, Senate and House, all agreeing there is an opportunity here.  Yet each wants to get it done on their own terms with no compromise.  The end result?  We’ve seen it before. Nothing gets done.

How disturbing is this?  In a case where the three parties agree conceptually, they cannot deliver a solution for the benefit of the people they serve.  What about the majority of other issues upon which they cannot conceptually agree? 

Herein lies the problem of dogmatic devotion to political ideology.  When such devotion leads to the utter inability to deliver workable solutions to the people you represent, guess what?  Your political ideology has failed everyone.  Therefore as a policy maker YOU are a failure.

“Spare me the labor pains. Show me the child.”

I work in sales.  I’ve worked for some pretty tough sales managers in my day.  One particularly difficult manager had a message during sales forecast and results reviews.  He’d tell sales reps who blithered through a litany of excuses why the results were not where they should be, “Spare me the labor pains. Show me the child.” 

His message?  You are paid to deliver results.  Period.  Find a way to get it done and if you can’t, well, find a way to get it done.

Policy makers are elected to deliver results.  Results are the name of the game.  The citizens of Michigan are clamoring for results, yet we are getting none.  But political ideology?  Oh, we’ve got plenty of that!

An effective policy-maker finds a way to get things done.  If you cannot get things done but take refuge in spouting political ideology, quit pretending to be a policy-maker and go become a talking head.  Perhaps that would be more fulfilling for you.  I think both CNN and Fox are always looking for more.

For the people of the state of Michigan, the broken record routine in Lansing is undeniably unfulfilling – and frankly unacceptable.

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MEA Admits It: Spending Fund Equity is a “Band Aid”

The Michigan Education Association’s official position on spending Fund Equity in response to the K-12 funding challenge says it better than I could.  They acknowledge it is a “band-aid.”  The leadership of the Grosse Pointe Education Association would be well served by not cherry picking the position of the MEA and taking a long-term view for the well-being of the Grosse Pointe Public School System.

I’ve written about Fund Equity previously and we need to revisit the topic now.

The topic got statewide attention last week when the House Education Committee Chairman, Rep. Tim Melton, sponsored legislation that would not allow K-12 school districts to maintain fund equity levels greater than 15% of their budget.

To provide some context for Grosse Pointe Public Schools, our Fund Equity is about 17% of our $105,000,000 General Fund budget.  So this bill would require us to spend $2,500,000.  To put THAT into context, our projected budget shortfall for next year is about $7,500,000.  So this would amount to Lansing “helping us solve” 1/3 of our problem.

So in the grand scheme of things, is this that significant?  After all, we DID spend $2,600,000 of our fund equity in October 2009.  Did our problem go away?  Of course not.  Spending more to mask rising salary, health care, and retirement costs never solves the problem.  But here is the significance of these discussions:

  1. By taking this action, Lansing is acknowledging that 15% is an appropriate level of Fund Equity.  The leadership of the Grosse Pointe teachers union, the GPEA, disagrees.  They have publicly advocated that Grosse Pointe’s Fund Equity levels should be reduced to 7%.  This provides their justification to fund additional annual raises (on top of the standard steps and lanes) of nearly 6% over the next three years.  Why would they think this way?
  2. The GPEA is an affiliate of the Michigan Education Association (the MEA).  The MEA’s lead economist, Ruth Beier, testified in Lansing in support of this bill.  This is no surprise.  But what is more significant? The MEA thinks 15% is too high. They believe 5% is the right amount.  So the leadership of the GPEA is more fiscally conservative than the MEA…by2%.  So we’ve got that going for us.
  3. Of greatest significance is that the MEA acknowledged that even spending fund equity is not a long term solution.  The direct quote from Ms. Beier is, “While we (the MEA) support this bill, we know that this is a short term solution.  It is a band-aid rather than a cure.  We caution against relying on this one time fix, and urge the legislature to come up with a way to close the structural deficit in the School Aid Fund.”  Ms. Beier, you and I could not agree more on that point.

So the GPEA leadership is dutifully singing from the MEA hymnal locally, but conveniently ignoring the second leg of their proposed “strategy” – one that is dependent on Lansing  to solve the long-term problem.  The leadership of the GPEA wants the taxpayers of Grosse Pointe to fund nearly 6% of additional raises to those on the top end of the salary scale by using fund equity when the leadership of the MEA acknowledges that without other structural change from Lansing, spending Fund Equity is nothing but a band-aid.  How many taxpayers in Grosse Pointe want to buy a $10,000,000 band-aid?

Lansing politicians haven’t shown the skill, will, or resolve to address the K-12 budget problem.  The politically convenient solution for them is to kick the can down the road, as they’ve been doing for years.  I’m not willing to bet the future of the Grosse Pointe Public School System on a sudden transformation in Lansing.

I’ve asked before and I will ask again.  How many of the taxpayers of Grosse Pointe have any faith that Lansing will address the structural deficit in the School Aid Fund that the MEA acknowledges exists?  The fact is they either don’t know how to do it, don’t have the will to do it, or are content to let the local school districts solve it on their own.  Until I see a shred of evidence to the contrary, I’m betting we need to solve this on our own.

I’ve been saying this for my nearly five years on the Board.  This problem is real and it is all ours.  There is no back door.  There is no way to avoid it.  Ignoring it only makes it worse.  The responsible school board takes a long-term approach to this problem.  Spending $10,000,000 of fund equity to fuel escalating salary, retirement, and health care costs without a pre-identified and agreed upon long-term solution would be nothing short of irresponsible.  I believe the taxpayers of Grosse Pointe want the school board to take the long-term view. I’ve written about it before.  This is the New Normal. We had better be able to deal with that.

Kudos to my friend and Birmingham Public School’s school board trustee Rob Lawrence for raising this issue in his blog.  Rob was able to get the documented testimony on this bill and posted it online.  You can see it below with Rob’s comments typed in red within it.

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Filed under Contract Negotiations, Current Events, State of Michigan Policy

“It’s Hard Getting Poor”

Neither placing blame or ignoring the root causes of the current state budget crisis gets us closer to solutions.  Michigan must come to grips with the reality of our condition and get on with establishing a new level of economic equilibrium.

I decided to get a closer look at what was happening in our state’s capital and attended the Michigan State Board of Education meeting held on October 26th.  The state’s board, unlike local boards, has no authority over K-12 budgets, but they rightly see that the governor’s and legislature’s budget decisions  impact the service for which they are responsible, educating all of the state’s public school students.

mike-flanagan The state Superintendent of Schools, Mike Flanagan, presided over the meeting which was aimed at helping the state board get a better sense of the economic forces behind the state’s recent budget decisions.  Two economists presented loads of data, but this statistic made the greatest impression on me:

In the year 2000 Michigan had the 16th highest per capita income in the United States.  By 2006 we had fallen to 33rd.  By the end of 2010, we are expected to be in the bottom 10.

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