Ann Arbor Parents for Schools

Negotiations on a school aid budget for FY2011 ground to a halt as House and Senate conferees split on what to do with the projected School Aid Fund surplus.

After months of uncertainty, closure appeared near on the school aid budget for the 2010-11 fiscal year. A deal in principle was reached among House and Senate members on the conference committee reconciling the differences in the two chambers’ versions of the budget bill, SB 1163. The Senate version, passed before the optimistic news from the May revenue estimation conference, had included further cuts of $118 per pupil plus larger transfers from the cash-strapped general fund.

The revenue conference projections, however, allowed lawmakers to consider making no cuts at all for fiscal 2011. The news was good enough, in fact, that the School Aid Fund might emerge with a surplus when all was said and done. And that is where the trouble began.

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The State’s key financial agencies released their consensus revenue estimate today, updating their predictions for state tax revenue for both this fiscal year and next. The consensus estimate for School Aid revenue for this year (2009-10) is now $10.75 billion, up $292 million (2.8%) from the estimates made in January. The estimate for next year (2010-11) is now $10.83 billion, up $352 million (3.4%) from the January estimates. These new projections may limit school aid cuts for next year to the $118 per pupil passed by the Senate earlier this spring, or possibly reduce it even more.

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One of the things we hear over and over are calls to run our public schools “like a business.” The basic argument is that if schools were run in a more businesslike manner, they would not have the budget problems we are seeing today. It sounds like a simple argument, and that gives it great appeal. The reality is more complex. Let’s take a look at how it plays out in the real world.

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