Contents of this issue:
  • MESSA insists: "we do not earn profits"
  • Michigan public schools have $1.7 billion in budget surpluses
  • Hart teachers vote in favor of board insurance plan
  • State Superintendent calls for service consolidation
  • Coopersville Public Schools projects budget surplus
  • Cassopolis teachers see raises, insurance changes
  • New issue of Michigan Education Report; win an iPod

LANSING, Mich. — The Michigan Education Special Services Association reported a net gain of $130 million in fiscal 2006 and $88 million in fiscal 2005, according to the MIRS Capitol Capsule. MESSA is a third-party administrator affiliated with the Michigan Education Association, a school employees union.

Citing a report circulated by MESSA, MIRS reported that MESSA's total assets stand at $269 million. After its $88 million gain in 2005, MESSA raised rates 4.5 percent, according to MIRS.

As a third-party administrator, MESSA is not required to carry reserves, MIRS reported.

In a memo to members of the Michigan Legislature, Gary Fralick, MESSA's director of communications and government relations, said that MESSA is a non-profit 501(c)(9) organization that does "not earn profits."

State Rep. Brian Palmer called MESSA's gains "outrageous," MIRS reported.

"MESSA is (the MEA's) generator. MESSA is their big engine that generates all this money," Palmer told MIRS. MIRS reported that Palmer believes that if MESSA can make these gains, school districts should be able to save on the school employee health benefits they purchase from MESSA.

Palmer also supports legislation that would make MESSA claims data available to school districts so they can shop for more competitive rates.

MIRS Capitol Capsule, "MESSA Assets Up To $268M," Feb. 23, 2007
(subscription required)

Michigan Education Special Services Association, "MIRS on MESSA: MESSA Members are Helping Districts Save Money," Feb. 28, 2007

Michigan Education Report, "Require MESSA data-sharing to let districts shop around," Dec. 15, 2005

LANSING, Mich. — Part way through 2006, Michigan public schools reported a combined $1.7 billion in budget surpluses, according to the Detroit Free Press.

State Rep. Jack Brandenburg finds this to be a problem in a time where people perceive that all school districts are short on cash and he wants to cap the amount that districts can hold in their fund balances at 15 percent of operating costs, the Free Press reported.

"At a time when we've got the governor running around talking about how cuts to schools are going to cause bankruptcies... we ought to be looking at these numbers," Brandenburg told the Free Press.

The report showed that many districts had reserves exceeding 25 percent of their operating costs. Wayne County's intermediate school district holds about $15 million in surplus, or about five times what would be allowed under the 15 percent cap, according to the Free Press.

Tom White of the Michigan School Business Officials noted that districts need to keep some money in reserve to avoid problems when state aid payments are halted in September, while also keeping savings in case of troubles in the future, the Free Press reported.

Detroit Free Press, "Schools rolling in cash?" Feb. 28, 2007

Michigan Education Digest, "Thirteen districts have budget surpluses," Dec. 12, 2007

Mackinac Center for Public Policy, "Six Habits of Fiscally Responsible Public School Districts," Dec. 3, 2002

HART, Mich. — Hart teachers recently voted 56-25 to approve a new contract and accept the school board's preferred health plan, according to the Oceana Herald-Journal.

The board implemented a new health insurance plan earlier this school year that has a $2,500 annual deductible, and the district created a health savings account for teachers to use for co-payments. The district will pay for $2,500 in co-payments for teachers with family plans and $1,250 for single teachers, the Herald-Journal reported.

According to Michigan Education Digest, the switch to SET SEG will save the district at least $250,000 annually. That savings is effectively a $195.35 per-student increase in funding, according to the Mackinac Center for Public Policy.

"The board would like to commend the teaching staff for remaining extremely professional during this lengthy and sometimes frustrating process," board President Vince Greiner said in a statement, according to the Herald-Journal.

Under the new contract, teachers will receive a 3.5 percent pay increase for both 2006-07 and 2007-08. Both the board and the Hart Education Association are pleased with the outcome, according to the Herald-Journal.

Oceana Herald-Journal, "Hart board, teachers OK 2005-2008 contract," March 1, 2007

Michigan Education Digest, "Hart schools leave MESSA," Dec. 5, 2006

Mackinac Center for Public Policy, "Potential Per-Pupil Savings Resulting from Health Benefits Changes Made in Michigan School Districts," March 6, 2007

Michigan Education Digest, "Hart teachers upset about insurance savings plan," Dec. 12, 2006

Michigan Education Report, "Blue Cross and MESSA," Sept. 6, 2006

LANSING, Mich. — At a recent conference for social studies teachers, State Superintendent Mike Flanagan declared his support for having the state's intermediate school districts provide the non-instructional services currently performed by individual school districts, according to MIRS Capitol Capsule.

Flanagan believes that school districts should focus on student achievement, rather than costs for food service, busing and custodial work, MIRS reported. He would like to use a $10 million incentive from the state to encourage districts to consolidate services. He also favors the consolidation of school districts, according to MIRS.

State Board of Education President Kathleen Strauss expressed concern over the contracting of noninstructional services and said that unions would also disagree with the decision, MIRS reported.

MIRS Capitol Capsule, "Flanagan Wants Education Consolidated Around ISDs," Feb. 27, 2007 (subscription required)

Michigan Education Report, "Map: School contracting continues to grow," Feb. 23, 2007

Michigan Education Digest, "Gov. Granholm pushes for district consolidation, power to merge," Feb. 15, 2005

Mackinac Center for Public Policy, "School Districts: Is Less More?" July 11, 2001

COOPERSVILLE, Mich. — While the majority of Michigan school districts are operating with budget deficits, Coopersville Public Schools is projecting savings of $420,000 this year, according to The Grand Rapids Press.

Business Manager Catherine McClatchy attributes this success to a number of factors, including increased enrollment, having a single campus and having relatively new buildings, according to The Press.

Coopersville also has increased the number of steps in the teaching staff's pay schedule, so it takes longer for teachers to reach the highest pay level.

"The long-term effect of this structure is that our lifetime cost for each teacher is less than what it would have been had we had a more traditional schedule," Superintendent Kevin O'Neill told The Press.

O'Neill also said that this allows the district to give more cost-of-living raises to teachers and preserve smaller class sizes, The Press reported.

The Grand Rapids Press, "Coopersville: School district projects surplus," Feb. 27, 2007

Michigan Education Digest, "Ewen-Trout Creek Schools uncovers deficit," Dec. 5, 2006

Michigan Education Digest, "Holland budget projection off by $6 million," May 23, 2006

Mackinac Center for Public Policy, "School Budgets: A Crisis of Management, Not Finance," Feb. 11, 2005

CASSOPOLIS, Mich. — A new two-year contract calls for teachers in Cassopolis to receive a 1.75 percent pay increase this year, while contributing more to their health plan, according to the South Bend Tribune.

Next year, teachers are set to receive a 2 percent pay increase, but that may be reduced by one-tenth of a percent for each 5 percent increase in health insurance costs. For 2006-07, teachers will contribute $45 a month to their own health insurance and $65 next year, according to the Tribune.

The district currently contracts with Michigan Education Special Services Association, a third-party health insurance administrator affiliated with the Michigan Education Association school employees union. According to Business Manager Scott Thomas, the district has seen its insurance costs increase 15-20 percent in some years. The increase between the 2005-2006 school year and the 2006-2007 school year was 5 percent, the Tribune reported.

South Bend Tribune, "Cassopolis approves teacher contract," Feb. 28, 2007

Michigan Education Digest, "Berrien ISD settles contract, rejects MESSA," Feb. 27, 2007

Michigan Education Digest, "Hart schools leave MESSA," Dec. 5, 2006

MIDLAND, Mich. — The expanded spring issue of Michigan Education Report is being mailed now, and can be accessed on the Web at

Michigan Education Report is offering readers a chance to win an iPod when they comment on articles in its spring 2007 issue.

Comments can be made via e-mail about stories on the U.S. House Fellows program (, school district health benefits savings (, whether private employees in public schools provide the same quality of service as public employees in public schools ( and, a community college cooperating with home-school students ( and the role of profit in public schools ( Please visit for more information.

MICHIGAN EDUCATION DIGEST is a service of Michigan Education Report (, a quarterly newspaper with a circulation of approximately 150,000 published by the Mackinac Center for Public Policy (, a private, nonprofit, nonpartisan research and educational institute.

Contact Managing Editor Sarah Grether at

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