An Extra Layer of School Bureaucracy
Many people do not realize that
their property taxes support two school districts – the one that
neighborhood kids attend, plus one of 57 Intermediate School Districts (ISDs)
in Michigan. As the name suggests, ISDs are an intermediate level of
bureaucracy between regular school districts and the state Department of
Education. They are run by boards selected by the elected school boards of
regular school districts within the ISD area, or in a few cases by direct
election by voters. Prior to the passage of Proposal A in 1994, ISDs were
heavily engaged in overseeing the wide variety of "categorical grant" programs.
As a result of Proposal A these "categoricals" were mostly eliminated and
replaced by basic per-student foundation grants to regular school districts.
Since then, the ISDs have specialized in special education and vocational
Most taxpayers also do not
realize that Proposal A’s prohibition on new school operating fund millages
contains a big loophole: ISDs. Unlike regular school districts, which can only
request new millages for buildings and other capital improvement projects, ISDs
can go to the voters for more taxes to pay for day-to-day operations — the very
practice that led to the taxpayer revolt which brought about Proposal A.
Oakland Intermediate School District an Example of ISD Abuse
The Oakland Intermediate School
District (OISD) is an example of this, and of much else that is wrong with ISDs.
On Sept. 25, 2001, OISD voters were asked to approve special education and
vocational education millage increases of 1.1704 and 0.2279 respectively. The
Oakland Press referred to this vote as a "stealth" election, because less than 8
percent of registered voters participated. The cost to run this special
election was approximately $300,000. Passage of the new millage meant that the
owner of a home worth $150,000 is now paying an additional $104.87 in new
taxes each year: $87.78 for special education and $17.09 for vocational
Within weeks of the vote, OISD
announced it was building a new $29 million headquarters to house its nearly 600
administrators. Of the $29 million, $18 million came from the new taxes imposed
for special and vocational education. Some have referred to the new building as
a state-of-the-art "taj mahal."
This abuse of the public trust
was partly responsible for the ouster of James Redmond, the OISD superintendent
at the time. When he was fired Redmond was collecting $270,000 a year in salary
and "stipends." On top of this he was reimbursed for his Social Security taxes,
and had an unrestricted expense account, on which he rang up $133,588 in 2002
alone. An example of the many questionable expenses picked up by taxpayers was
personal flying lessons for Redmond.
Redmond may be gone, but his big
compensation package is not unusual at OISD. State Rep. Ruth Johnson, R-Holly,
represents citizens and taxpayers who live within the area covered by the
district. She chairs a House subcommittee that has been granted subpoena power
in its investigation of OISD shenanigans. Among other things, Johnson has
discovered that more than 20 OISD employees have gross annual salaries of
$100,000 or more.
The amounts include unexplained
"stipends" of up to $30,000. Johnson has uncovered many other abuses, including
boatloads of outrageous travel and entertainment expenses paid for by
taxpayers. She reports that the district has apparently gone to great lengths
to hide evidence of these expenses, for example, hiding travel records in a file
labeled with the name of a low-level employee. (Note: Michigan’s Freedom of
Information Act requires governments to give citizens records upon request, but
citizens need to know which documents or files to ask for.)
The Oakland intermediate
district is emblematic of the larger problem with ISDs — their lack of
accountability. Redmond’s dismissal was a necessary first step for OISD, but
much more needs to be done there. For example, the district’s board has either
been asleep at the wheel, or complicit in the abuses. The individual members
should resign and the district should adopt a system of direct election of board
members by the public, instead of the current one of appointment by the boards
of the regular school districts which make up the OISD. Next, the $29 million
building constructed with tax dollars raised under the deceptive 2001 millage
vote should be sold to a private developer, and the proceeds returned to the
Intermediate Reforms Introduced
More broadly, in the short term,
the Legislature should adopt some of the bills Rep. Johnson and others have
introduced to clean up the governance of ISDs, and make them more accountable.
Already mentioned is making the direct election of all ISD boards mandatory, not
optional, as it is under current law (House Bill 4338, sponsor: Rep. Ruth
Along with this must come election consolidation, which
would take school millage elections out of the hands of those who benefit from
them, and would end the days of single-digit voter participation percentages in
school elections. An election consolidation package establishing four dates
each year for all elections in the state has already passed in the House (House
Bills 4820 to 4828, various sponsors). The Senate should quickly follow suit.
Gov. Jennifer Granholm has already indicated she is disposed to signing the
Other reform bills include:
House Bill 5043, sponsored
by Rep. Ruth Johnson, R-Oakland, to authorize the recall of Intermediate
School District (ISD) board members by voters.
House Bill 4935 also
sponsored by Johnson, to establish a procedure by which voters in an ISD could
replace the current board with a "reform board." Among other powers, such a
reform board could cancel contracts entered into by the previous board,
including labor agreements.
Senate Bill 643; House Bills
4979 and 4947 (various sponsors), to require that the selection of ISD board
members by regular school district boards be an open process, rather than
selection by secret ballot, as is now allowed (but not required). These bills
have been introduced in response to controversies at two other ISDs, in
Genesee and St. Clair Counties. They are half-way measures at best; direct
election of ISD boards is a better solution.
House Bill 5025, also
sponsored by Johnson, to prohibit a public body (including an ISD) from
charging a fee under the Freedom of Information Act to separate exempt
information (such as employee Social Security numbers, etc.) from nonexempt
information in a document, if it had been possible to keep the information
separated when the document was created or modified. Gratuitously inserting
such personal data into unrelated records is one of the techniques OISD has
used to hide its fancy bookkeeping. When citizens (including Rep. Johnson,
before getting subpoena power) attempted to acquire the records, OISD
threatened to charge thousands of dollars to excise the superfluous
House Bill 4934, also
sponsored by Johnson, to establish a procedure for reconsideration by voters
of a school or ISD millage vote, if the money is used for a purpose other than
that stated in the original ballot language. Were this now the law, Oakland
voters could act to obtain a refund of the $18 million misappropriated from
the September 2001 millage authorization.
The Real Problem, and the Real Solution
These reforms are a start, but
they do not go far enough. ISDs have become purposeless bureaucracies in search
of a mission, with abuses such as those at OISD the result. No one has dug into
other ISDs yet, the way Rep. Johnson has in Oakland County, but it would be
surprising if OISD turns out to be much different from the rest. As mentioned,
the Genesee ISD is also wrapped up in a current controversy, this one over some
$245,000 in travel expenses.
Intermediate school districts
should be eliminated altogether. To the extent that there may be opportunities
for regular school districts to realize economies of scale in the joint
provision of special education, vocational training, or other programs, nothing
prevents them from doing so on a case-by-case basis. They can do this and skip
the overhead expense imposed by a permanent additional layer of bureaucracy.
Michigan’s 554 school districts
already have enough problems reining in their own bloated bureaucracies: More
than 10 percent of the $12.5 billion school aid budget is spent on bureaucratic
overhead, and only 58 percent of all school spending is directly related to
instruction. (Some of the non-instructional spending is necessary overhead, such
as heating bills, etc.) Another superfluous layer of government bureaucracy —
which each year imposes some $878 million in additional property taxes statewide
— is the last thing schools or taxpayers need.
# # #
Note: Jack McHugh is legislative
analyst for the Mackinac Center for Public Policy, a research and educational
institute headquartered in Midland, and editor of MichiganVotes.org. Brennan
Brown is former director of operations and advancement for the Michigan School
Board Leaders Association and holds a Masters of Business Administration degree
from Central Michigan University.
CRC: Eliminate intermediate
school districts. A number of changes have occurred
over the past decade that have reduced the
need for intermediate school districts. Proposal A
eliminated categorical grants that were so prevalent
under the former school funding system.
With this elimination, ISDs no longer serve a role in
auditing the local school districts. The
growth of the personal computer industry has reduced
the need for local school districts to cooperate in
administrative tasks such as scheduling through
the ISD. ISDs are typically associated with
special education and vocational education programs.
With more and more special education students
being "mainstreamed," and with community colleges
offering a wide array of vocational
education programs, ISDs are either acting as
pass-through agencies or offering duplicative services.
A BIRD’S EYE VIEW OF MICHIGAN LOCAL GOVERNMENT AT THE END OF THE TWENTIETH CENTURY
Michigan administrative expenses top $1.4 billion
Figure 1: About 48.3 Percent of Michigan’s Education Budget is Spent on Teachers
EDUCATION INTELLIGENCE AGENCY
Per Pupil Amounts for Current Spending of Public Elementary-Secondary School Systems for 2000-01