Unprecedented State Action Transfers from School Aid Fund

I am deeply concerned and distressed by actions taken in our state capitol over the past several days that transfer $250 million out of the School Aid Fund and places this money into the state’s General Fund to be used to cover a budget deficit unrelated to K-12 education. These unprecedented actions represent a dangerous trend where the School Aid Fund – the fund established in the Michigan Constitution by voters in 1994 to support K-12 education with the adoption of Proposal A – continues to be used as an ATM to siphon money away from the education of our kids.

The Michigan House and Senate voted over the past two weeks to approve this immediate transfer of a quarter-billion dollars that would impact the current year budget and prevent these funds from being used in the development of the budget for the upcoming school year. These bills (referred to as “negative supplemental appropriations” bills) are now moving to the Governor’s desk for his approval and signature. This historic transfer of dollars away from our children’s education, assuming the Governor signs these bills, will affect the current and upcoming budget year. You can contact the Governor’s Office at 517-373-3400 to share your opinion about this important matter.

Looking to the upcoming fiscal year, the Governor began the annual state budget process a few weeks ago by submitting his budget proposal to the Legislature. The good news is revenues in the School Aid Fund are up 3.1% when compared with the previous year. However, the Governor is recommending only a 0.18% increase in unrestricted funding for Forest Hills Public Schools and similar fractions of less the a half percentage point for the vast majority of Michigan’s public school systems. If revenues are up 3.1%, what is happening to the rest of the money? The answer is that this money is being transferred out of the School Aid Fund and into the state’s General Fund to be used to cover growing costs related to business tax credits. State finance officials estimate the impact of these credits to continue to grow with time. For the current year, these credits have produced a deficit in Michigan’s General Fund of $330 million. For the upcoming budget year that begins October 1, 2015, these credits are estimated to push the General Fund budget deficit to $550 million. Furthermore, the remaining potential fiscal exposure of still unclaimed business tax credits exceeds $9 billion and the exposure lasts until 2032.

Many families, while their children are still young, create an educational fund to cover costs of college and post-secondary schooling for their kids. Families work hard and sacrifice to put money into these accounts and, during challenging economic times, look to tighten every other expenditure before they would ever think of tapping this account and using the funds to pay for non-education-related costs. These funds represent a child’s and a family’s future and families treat them as sacrosanct. In many ways Michigan’s School Aid Fund is similar to a family’s education fund for their own kids. It is our state’s investment in our children and in our future. We need our state leaders to treat the School Aid Fund the same way that you would treat a fund where you set aside hard-earned dollars for your child’s college education. If the General Fund is in deficit, let’s tighten state spending in the General Fund. Reducing costs is exactly what Forest Hill Public Schools and school systems across Michigan have been doing for several years now. It is hard work, but it is necessary work. Sadly, these recent actions in Lansing represent a dangerous and all-too lazy trend of raiding resources intended for our state’s future to pay for unrelated costs related to our state’s past. If Michigan must honor these previous obligations, let’s do so. But let’s not deprive our state’s future and the future of our children in the process. We can do better.

The budget process for the state’s upcoming fiscal year and our school year is beginning. The Governor’s proposal amounts to a net increase of $15 per student for Forest Hills. (Yes, the Governor proposed a $75 increase in per pupil spending but simultaneously reduces $60 per student in other categories of his budget.) Unfortunately, even modest inflationary pressures will consume these new dollars and our school district will once again be faced with making difficult decisions to reduce expenditures that support programs and staffing. If the revenues that are currently in the School Aid Fund are left undisturbed, enough resources exist to provide K-12 education with an increase that matches inflation and perhaps allows schools to begin to restore services cut over previous years. The budgeting process now moves to the Legislature where the House and Senate will craft their own spending proposals.

Unfortunately, school funding has become a very complex issue with dozens of legislative line items, mandates, and competing interests. This reality makes it difficult to explain these issues in brief and succinct communications. Consequently, it is my intention to provide at least two more letters to you in the coming weeks regarding the budget process for funding Michigan’s schools. The next letter will explain how the May 5th statewide ballot proposal to fix Michigan’s roads will, with either passage or failure of the proposal, have a significant impact on school funding in Michigan. It may be difficult to imagine how a proposal to improve the safety and quality of our roads and bridges could possibly have an impact on school funding, but it does and it will.

In the meantime, if you have questions or wish to discuss these important matters with me, please do not hesitate to call me at 616-493-8800. Also, our state legislators who have been and will be voting on these budget bills can be reached at the numbers below. Thank you for considering this information and remaining an informed citizen.

With deep respect,

Dan Behm

  • State Senator Dave Hildenbrand – 866-305-2129 
  • State Representative Chris Afendoulis – 855-347-8073
  • State Senator Peter MacGregor – 855-347-8028 
  • State Representative Lisa Posthumus Lyons – 855-596-6786


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