For Immediate Release
Contact:
Kenneth M. Braun, Policy Analyst
Phone: 517-482-7108 or 989-631-0900
MIDLAND — Commenting on Proposal 5, the education spending mandate on the
November statewide ballot, Mackinac Center Policy Analyst Kenneth M. Braun
said today, "Voters should be aware of the likely unexpected consequences of
this proposal."
Braun, author of a Center study released today on Proposal 5, added, "This
is true not just of the proposal’s mandated annual increases in state
government’s primary, secondary and higher education spending, but of the
lesser-known and most expensive part of the proposal, which would shift
financial responsibility for the growth in education employee pension costs from school
districts to state government."
In the study,
"An Analysis of Proposal 5: The ‘K-16’ Michigan Ballot Measure,"
Braun calculates that from 1995 to 2005, state spending on primary and
secondary education rose by 40 percent, leaving it about $1 billion above
the 27 percent total inflationary growth for that period. Michigan ranked in
the top 10 states
in per-pupil primary and secondary education spending in 2004 and in
per-capita spending by state community colleges and universities in 2002.
"Given that education was generally guarded from the larger budget cuts that
followed the recessionary decline in state revenues after 2001," Braun
observed, "the proponents’ goal of high education spending is already being
met.
"The real issue," Braun added, "is Proposal 5’s requirement that state
government cover the rapid cost increases in state education employee
pension payments. These pension costs in the past three years have actually
consumed every additional dollar provided to school districts through the
state’s per-pupil foundation allowance. Proposal 5 does not address this
growing problem in the education employees’ unusually generous public
pension; the proposal simply shifts which part of the government would be
making the payments. Unfortunately, the shift could make the problem worse
by providing a subsidy that would encourage school boards to increase their
payroll, intensifying the retirement system’s long-term liabilities."
In the study, Braun also observes that the proposal’s less-heralded
provision to increase payments to districts with declining enrollment would
artificially bolster their budgets and soften the incentives to reform, even
if students were leaving because of flaws in the school system. "This could
delay important reform, a risk that is also present in the proposal’s basic
guarantee of increased education spending regardless of schools’ academic
performance," said Braun.
The study notes that the proposal could have unexpected consequences.
Although the proposal mandates overall annual education spending increases,
it is likely to lead next year to cuts of as much as $141.7 million in
certain state education spending programs, such as adult education and
vocational education. In addition, during lean budget times, the proposal’s
annual spending increases could lead to cuts in noneducation areas such as
corrections, human services or community health. "While the Mackinac Center
has advocated spending reductions in many of these budget areas, voters
should be aware that spending cuts are a likely result of Proposal 5," noted
Braun.
Colorado’s experience with a similar spending initiative reinforces the
likelihood of noneducation spending cuts and further tax increases. "Higher
taxes would be unwise during a state recession that sets Michigan apart from
the growing national economy," Braun said. "This is particularly true given
that the nonpartisan Tax Foundation found that Michigan’s overall state and
local tax burden in 2006 was 16th highest in the nation. At the same time,
Michigan’s spending on public education is high compared to most other
states, yet that spending has not produced the prosperity that some have
claimed for it."
The Mackinac Center study is available at
www.mackinac.org/7924.
