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Getting resources to classrooms: the critical importance of the state school aid budget process

All districts — The conclusion of the 2020-21 school year marks the end of the first full year under the COVID-19 pandemic. And while it’s been a tumultuous period for students, parents and educators, the work of schools is far from over.

In the coming weeks, district and school leaders will be finalizing their plans for the fall. A vital component in planning is crafting school budgets. Among other things, budgets lay out the services and programs students need to be successful. 

It’s important to note that the pandemic’s impact will not magically disappear overnight with widespread adoption of vaccines. Several of our students experienced trauma or abuse during this time. Between 2019 and 2020 alone, mental health-related emergency room visits among adolescents grew by an astounding 31 percent. Students’ stress may stem from the loss of a loved one, financial difficulties, family pressures or the simple uncertainty of tomorrow.

The trauma experienced during the pandemic is expected to be long-lasting – disproportionately impacting our most marginalized populations. 

For many kids, school may be their only safe haven. Keeping schools as that safe, supportive and welcoming place means ensuring they have the resources to meet students’ growing needs. 

The process for getting resources to kids takes place on an annual basis. Understanding how the state budget cycle works is paramount for advocating on students’ behalf.

Related Story: Local school leaders welcome governor’s proposed K-12 spending plan

Where Districts Get Their Funding

Before diving into the budget cycle, it’s important to get the crux of how schools are funded in Michigan. The passage of Proposal A by voters in 1994 altered the school funding formula. Before Prop. A, local property taxes were the main source of districts’ revenue. Today, taxes are redistributed at the state level through the School Aid Fund. 

The largest category within the School Aid Fund is the per-pupil funding allotment – the foundation allowance – covering the daily operations costs of schools. Think teachers, staff, textbooks, supplies and similar costs.

The foundation allowance varies from district to district, tracing back to funding levels just prior to Prop. A – fiscal year 1993-94. Included is a floor per-pupil allotment – the minimum foundation allowance. The vast majority of districts fall into this category today.

For further insight on school finance in Michigan, check out our brief four-part video series.

How Funding is Determined

Every year, taxes are collected across our state from a variety of sources. The state then estimates its projections in available revenue for coming and future fiscal years. Forecasts are reported annually in January and May. Using these figures, the governor and state legislature determine how to spend new money. 

Most of the time, the majority of dollars go toward the foundation allowance – largely to raise the floor per-pupil allotment. Other dollars go toward specific programs. Support services for at-risk students, mental wellness projects, strategies to build foundational reading skills and others are among these initiatives.  

COVID-19 and the Process

Like everything else, COVID-19 has had a real impact on the state’s budget process. During this same point in 2020, schools were facing potentially historic and unprecedented cuts to their finances. Through the assistance of federal recovery dollars, Michigan’s economic outlook ended up much more positive than predicted.

According to the State Budget Office’s May 2021 revenue analysis, the School Aid Fund is projected to have a one-time balance of $1.74 billion. Over the last year alone, the overall state budget went from a nearly $3 billion deficit to a $3.5 billion surplus.

This time is also unique in that the federal government has allocated significant additional resources for districts to address the fallout from COVID-19. Coinciding with these new federal financial resources is Michigan’s Blueprint for Comprehensive Recovery. The report is a guide for education leaders as they build their pandemic recovery plans for the next school year and beyond.

While the support from the federal government is of tremendous benefit, it represents a rare, one-time allocation of money. Long-term progress requires continued, annual advocacy at the state level around the School Aid Budget.

Priorities for the Upcoming Fiscal Year

With the positive economic outlook, it’s imperative that new School Aid Budget dollars are invested in ways that will most impact our students. Below are key priority areas for West Michigan educational leaders for the coming fiscal year:

  • Raise the minimum foundation allowance for school districts: The success of our students requires providing them adequate resources at school. We must continue to advocate for raising the floor on the per-pupil allotment statewide.
  • Adopt a student-centered funding formula: While raising the floor promotes equality, it’s just as important to ensure school districts are funded equitably. Additional resources must be distributed to districts serving special education students, English learners, low-income students and other at-risk groups.
  • Recognize the whole child needs of students: The pandemic has elevated the urgent call to address the academic, social, emotional and physical well-being of students. Greater access to nurses, psychologists, social workers, guidance counselors and other support staff are indispensable right now.
  • Stabilize budgets for school districts experiencing declining enrollment: With funding directly tied to student counts, districts experiencing significant enrollment drops – often in our most impoverished communities – are faced with mounting debt. This is due to the fixed costs associated with staff salaries, building maintenance or other expenditures that can’t be cut quickly enough to match sharp enrollment changes.
  • Fully fund early childhood programs: The research is clear. Early childhood is the foundation for students’ success in K-12 and beyond. Before students even enter kindergarten, we see gaps between our highest poverty students and their more affluent peers. Initiatives like the Great Start Readiness Program are in place to close that gap and provide free, high-quality preschool options to disadvantaged students.

Timeline for Budget Passage

The budget process officially kicks off with the governor’s executive recommendations – typically released in February.

In the weeks and months following the executive budget recommendations, the Michigan House and Senate introduce their own proposals. In some areas, these three sets of recommendations align closely. In others, they couldn’t be more different. The political makeup of the three bodies often determines the extent of disagreement.

The next step is to reconcile differences. Through a conference committee, any misalignment is negotiated by representatives from the state Legislature and governor’s office. The time to complete this process varies year to year, as it is mainly dependent on the size and scope of required compromises.

Per state law, schools must have their budgets in order by June 30. This is regardless of the negotiation timeline between the governor and Legislature. The longer the process drags out, the less certainty for districts as they plan for the upcoming academic year.

Once there is agreement, the final step is voting by the Legislature and a signature by the governor.

Throughout this time, advocates and stakeholders lobby their elected officials to ensure the budget is prioritizing areas they believe best serves students. In our region, the West Michigan Talent Triangle – an educational collaborative representing the 42 school districts in Kent, Ottawa and Muskegon counties – is primary among these groups.

Advocating for Students

This past school year will go down as among the most taxing in recent history. It also highlighted and exacerbated the inequities in our society – including for our most vulnerable. The good news is that the positive economic outlook provides hope for the future. 

Now is the time to ensure these new resources are put to good use. One that creates a public education system in which every child can thrive.

Take action today: visit the Our Kids, Our Future campaign website and urge our elected officials to pass a timely budget for our students.

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