How Much Is Enough?

The Grand Rapids Board of Education voted last month to outsource 225 school bus driver and mechanic jobs to a private firm. This move is projected to save the school district an estimated $2 million next year, with a total savings of $18 million over five years.

As a former member of the board, I attended the meeting at which it made its decision. The auditorium was packed with bus drivers, custodians and other school employee union members.

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Every single person who spoke to the board was against the move. The common theme of their comments was that more public money should be spent on education so that these jobs could remain with the school district.

But this raises the question, How much spending is enough?

The Mackinac Center for Public Policy has found that the school employee union’s health care plan, which is administered by the Michigan Education Special Services Association (an entity created by the Michigan Education Association), is far above the market rate for the same insurance administered through other private insurers. Yet school districts can face heavy pressure from MEA school unions to accept MESSA insurance plans.

In addition, school districts must enroll all school employees in the state of Michigan’s generous, defined-benefit pension system, known as the Michigan Public School Employees Retirement System. MPSERS costs school districts approximately 15 percent of each employee’s salary. This percentage is expected to rise during the next several years.

The state Legislature appears primed to finally address these two issues, but we should look anyway at how much school districts like Grand Rapids are spending per pupil. K‑12 education funding in Michigan has become so heavily politicized that the real context of school funding has been lost.

The Grand Rapids Public Schools has been steadily losing students for much of the last decade. Since school district funding from state government is tied to enrollment, the common complaint of school districts that are losing students is that they have a hard time adjusting their instructional staff. The districts observe that students typically don’t depart just one school, making it difficult to reduce teacher staffing when only one or two students per classroom are lost.

But is instructional spending the real problem, or is it just part of the problem? Over the last five school years, according to Standard & Poor’s, the Grand Rapids Public Schools has lost 2,650 students, or more than 10 percent of its previous enrollment. At the same time, spending — and essentially revenues — per student actually increased nearly 23 percent between 2000 and 2003 (the last year for which the numbers are available). The amount GRPS spent per student has increased between 2000 and 2003 from $8,653 per student to $10,634 per student.

While it is astounding that a school district can spend more than $10,000 per student and still shout from the mountaintop that it isn’t nearly enough, we should look at how that money is being spent. Again, using Standard & Poor’s numbers, of the $10,634 spent per pupil by GRPS in 2003, only $4,999 of that was spent on instruction. In other words, only 47 percent of the money was going to classroom teaching. Even if we limit the analysis to the schools’ operating expenditures (as opposed to expenditures on buildings or debt), only 56 percent of the money in 2003 was going to instructional staff.

So what happens if school funding is increased? Former State Superintendent of Instruction Tom Watkins simply pointed out the facts when he wrote Gov. Jennifer Granholm a letter stating, "Almost 2/3s of new dollars invested in our schools will be used to cover pension and health care expenses." In addition, a state Department of Education report released last December, during Watkins’ tenure, stated very clearly "that additional revenue without unprecedented change in the fundamental structure of our public education system is not enough."

These comments came just before Watkins was forced to resign. Evidently, speaking the truth in the education community can be a dangerous thing.

It’s worth remembering that increased pension and health costs are not just for teachers alone — they are for many of the nonteaching staff in Michigan’s schools. Given school districts’ growing costs, it is natural for school boards to examine how noninstructional money is being spent and to attempt to direct as much of that as possible to the classroom. The Grand Rapids Board of Education is finally doing just that.

If more than $2 million per year can be freed for the classroom by outsourcing just 225 part‑time school bus driver and mechanic positions, it’s easy to imagine that much more could be saved by looking at other noninstructional departments. A 2003 survey performed by the Mackinac Center suggests that only 34 percent of Michigan school districts have outsourced at least bus, food or janitorial services. Clearly, many school districts are using privatization, but there is room for considerable educational cost savings in most Michigan districts.

There’s a reason that funding levels have no correlation with student achievement: The real issue is how the money is spent. It appears as though our state’s economic and fiscal condition has finally forced local school districts to examine their expenditures. The Grand Rapids board is only doing what makes sense.


Jeff Steinport was a member of the Grand Rapids Board of Education between 2001 and 2004, and he served as the board’s treasurer for two and a half of those years. He wrote this piece for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.