Report: Michigan K-12 Funds Diverted to Higher Ed

August 24, 2018

Michigan has diverted a total of $4.5 billion from K-12 schools to community colleges and universities since 2010 as policy makers routed money from a fund set up under the state Constitution, according to a new report released Thursday casting a critical eye on the way the state balanced spending on K-12, higher education and tax cuts.

In question is spending from the School Aid Fund, which was first established under an amendment to the state Constitution in 1955. The Constitution says it will be used for aid to “school districts, higher education, and school employees’ retirement systems, as provided by law.”

But the fund had not been used for postsecondary education until the 2010 fiscal year, says the report, which is from the Michigan League for Public Policy, a group that aims to promote racial equity, economic security, health and well-being. In that first year money was drawn from the fund for higher ed, it was appropriated as a loan to be paid back, the report says -- although it ultimately never was repaid.

Then in the 2012 fiscal year, Governor Rick Snyder’s first budget used money from the School Aid Fund to replace general fund money for universities and community colleges, according to the report. That practice has continued, setting up a “zero-sum game in which money that has traditionally supported K-12 is used for postsecondary education instead, with the savings going to the General Fund to be used for non-educational purposes -- including tax cuts.”

Three out of the last five budgets funded community colleges entirely from the School Aid Fund. For the 2019 fiscal year, lawmakers moved $908.3 million from K-12 to postsecondary education, the report says.

“Rather than make difficult decisions regarding how to restore the lost state revenues, elected leaders year after year have resorted to taking School Aid Fund dollars from K-12 education, using it to fund postsecondary education, and subtracting a roughly equal amount of postsecondary education funding and putting it back into the General Fund to help make up for shortfalls created by tax cuts,” the report says. “Following the money leads to only one conclusion: the state is paying for tax cuts with money taken from its K-12 students.”

Not everyone agreed with the criticisms. The practices outlined are permitted by the state Constitution, said James Hohman, director of fiscal policy for the Mackinac Center for Public Policy, a free-market think tank.

“Are they going to criticize rain for being wet next?” he said, according to Chalkbeat.

A state budget office spokesman told MLive that the Snyder administration has increased funding for K-12 education by $2.1 billion since 2011. “The budget pie is only so big,” and K-12 education has been a top funding priority, he said. But per-student funding has not kept up with the pace of inflation, MLive reported.

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