Advice to board: Tax, spend, save

LANSING, Mich. - Separate events brought school administrators, economists and policy analysts to Lansing on Tuesday, but according to media reports the topic everywhere was the same: the cost of public schools.

The Michigan State Board of Education heard a range of ideas on increasing school revenue or decreasing spending as is prepares to make recommendations to the state Legislature.

Three guest speakers cited Michigan's defined-benefit pension system for school employees and health care costs as significant budget problems. Charles Ballard, a Michigan State University economics professor, and Tim Bartik, a senior economist with the W.E. Upjohn Institute for Employment Research, suggested ways to increase school revenue that ranged from statewide taxes on services to a graduated income tax to allowing local school districts more taxing authority, as part of a larger review of the state's income, sales and business tax systems, according to The News.

Bartik also suggested spending more money in several areas, particularly mandatory preschool, saying it would reduce spending on remedial education or corrections programs later, The News reported.

On the spending side, Michael Van Beek of the Mackinac Center suggested that potential savings be addressed first, such as lowering the cost of school employee pensions by shifting new entrants to a 401(k)-style plan and introducing health savings accounts. He also cited privatization and charter school growth as cost-saving ideas, The News reported.

Separately, a coalition of school administrators hosted a news conference and suggested these cost-savers, according to a report in the (Royal Oak) Daily Tribune: a regional or statewide approach to negotiating labor contracts and health insurance for school employees; requiring school employees to pay a percentage of the cost of their health insurance; and changing the retirement benefit system.

The administrators said they want more money for their districts but doubt a tax increase would have support unless schools are more careful with the money they already receive, the Tribune reported.

(Royal Oak) Daily Tribune, "Schools, state education board discuss finances," Jan. 12, 2010

The Detroit News, "School aid pitch splits Michigan board," Jan. 13, 2010

Mackinac Center for Public Policy, "Are Schools Underfunded?"