Making Education Reform Happen

September 16, 2010

Hang around Lansing long enough and you begin to believe that most “new” ideas are either recycled, never acted upon, or both. It’s as if lawmakers are on a proverbial merry-go-round.

Often these ideas are extremely important but precede the political will necessary to achieve them legislatively. The legislature largely plays “whack-a-mole” with these politically tough issues, attempting to smack them down or make them go away so lawmakers don’t have to deal with them.

If only the stubborn economy would grow or we could find a few more budget tricks, they figure. They would rather kick the can down the road and ignore the problem a bit longer.

Comprehensive education system reform — including school district consolidation and addressing the unsustainable costs associated with current education pensions and health care — is among the hot issues that have been kicking around this town for too many years, in both Republican and Democratic administrations.

Without addressing the unsustainable health care and pension costs through right-sizing, and maximizing resources at the school building level through consolidation and sharing services, there will never be enough money to fund our schools in ways that they can prepare our children for the global knowledge economy.

In a report I wrote to the governor, the state Board of Education and legislature in 2004 while serving as state superintendent of schools (“Structural Issues Surrounding School Funding in the 21st century”), I made it clear that we have a problem that needs fixing — and six years later we’re still waiting for the fix!

The report concluded that Michigan’s public education system is increasingly “unstable, unbalanced and ultimately unsustainable unless bold changes are made to alter its present course…” Putting money into a dysfunctional system will not fix the problem. But nothing has changed and, if anything, it’s grown worse.

Others, including the Citizens Research Council and The Mackinac Center, spoke to this crisis and the need for reform well before 2004 and, subsequently, Business Leaders For Michigan and the Center for Michigan have called for some or all of these types of reforms.

Here are the chief problems:

1. Health care and pensions. Health care and pension costs consume nearly two-thirds of every new dollar provided to schools (and the new dollars have been anemic the last several years). Local schools need up to $300 more per student annually just to cover these two rising costs. Without new state dollars, local schools have been cannibalizing themselves to cover these fixed and contractually obligated costs. On the last page of the 2004 report was a compelling dramatization of this phenomenon: “$300 per student times 1.7 million public school children = $510 million.”

   Does anyone see a time when the state will be able to invest an additional half billion dollars a year to enable school employees to enjoy pensions and health care benefits that few who are currently paying taxes enjoy for themselves and their families?

   The built-in expenditures for health care and pensions choke off any desired investments in professional development, technology, smaller class sizes, energy costs or salary increases.

   There should be a bit of intellectual honesty attached to school funding. If the governor and the legislature decide these benefits are warranted, they ought to be willing to go to the taxpayers and seek additional resources to fund them.

2. Consolidation of School Districts/Shared Services. Maintaining Michigan’s school structure as though nothing has changed — when everything has changed — is an insane form of Pure Michigan. Too much of our limited tax resources are invested in propping up the past rather than investing in our future. The goal should not be consolidation for consolidation’s sake, but rather constantly seeking ways to improve services and lower costs to the taxpayers. We are witnessing the beginnings of success for GM, Chrysler and other auto corporations after they accepted their new reality, restructured and reorganized for the unpredictable global economy. Have we seen the same degree of change in our schools? Hardly.

It is past time for Michigan to consider radical change and begin acting to reorganize school districts (along with state government itself and local units of government). This involves streamlining, sharing services/resources, and consolidating school districts and local government units to help redirect limited public resource and promote the region and state.

Consolidation and shared service arrangements help increase efficiencies by eliminating redundant functions. Michigan is not lacking for local school districts. There are 551 school districts, 57 intermediate school districts and 240 public school academies or charter schools (considered school districts under Michigan law).

There is no interest from the general public in investing additional tax resources to maintain the school structures we created for a different era. With technology and innovative thinking, we can maximize educational opportunities while redirecting costs into classrooms and away from administration and propping up buildings. (See The New Education (R)evolution — e-learning for Michigan) to see how creativity, innovation and technology can be tapped to expand learning.)

Granholm steps up
Governor Jennifer Granholm recently proposed incentives totaling $50 million to local districts to spur consolidation and services sharing. “We look at this as an investment of $50 million to save hundreds of millions of dollars,” State Superintendent Mike Flanagan said.

Flanagan noted that the recent series by the Booth Newspaper chain demonstrates significant savings can be had through sensible and reasonable shared service arrangements. The series “helped bring clarity to the issue” of school consolidation, he said, and “the work showed that this is a no-brainer.” The study commissioned by the Grand Rapids Press and affiliated Booth newspapers showed that the state’s schools could save $612 million annually after three years by forming under countywide districts, or $328 million if adopting countywide shared services plans.

A comment by SageofthePage on mlive.com about this story captured what many were thinking during a recent consolidation and shared services conversation: “For eight years it had never occurred to the present administration that saving and economy might be achieved?”

However, it is a start.

Following the premise “better late than never,” the governor’s latest proposal was designed to encourage what should be demanded from any public servant — maximize our limited tax dollars. Recall that in her 2005 State of the State address the governor called for school districts to seek ways to share services and consolidate. She promised “carrots” but was willing to use a “stick” to accomplish these sensible changes. Little happened.

What reforms and restructuring that have taken place have been driven largely by necessity, as budgets have dried up and fixed costs of salaries, pensions and health care had to be protected.

However, the local school superintendents and school boards that have addressed inefficiencies and taken steps to share services and redirect administrative costs to the classroom were fuming over this recent bribe/incentive to do what districts should already have done. Those districts that have taken tough actions in the past would get nothing additional from the state for their troubles.

“Those laggards who have waited are now rewarded,” say groups of local superintendents in near unison. “To add insult to injury,” they add, “in a time of limited resources we take an additional $50 million away from kids — unbelievable!”

Regardless, providing new tax revenue without the new 3 Rs (Reform, Restructure and Reinventing our schools) would be the equivalent of adding lubricant to further protect the status quo. It will not get us where we need to go as a state.

Our system of local school districts was born in the 19th and 20th centuries and has not kept pace with the times as we enter the second decade of the 21st century. The people of Michigan need to ask the tough question about the most effective size and shape of schools districts to save and redirect taxpayer money to teaching and learning: “What is the best school structure that will enable us to position Michigan to thrive in the competitive, global knowledge economy where ideas and jobs move around the world at the speed of the Internet?”

History tells us that the new will not come completely until the old has gone. Too many of our elected leaders in Lansing, plus the elected local school boards and their hand-picked superintendents, are clinging to the past. We must get a handle on the cost of operating school bureaucracy — everything from the number of local units and size of districts to the pension and health care benefits that have been promised, yet in many cases are underfunded and unsustainable.

These issues, along with the declining economy and falling tax collections, pose serious threats of insolvency for many districts.

Re-Imagining education
If we just discovered this place called Michigan with 10 million people and 1.7 million children attending K-12 public schools, would any rational group of people structure our school system the way it exists today? If not, the answer (other than from those who are benefiting from the existing system) is obvious: we need to move aggressively to undo the old and begin building anew.

I would like to think the political will exists, after the November election and during the lame-duck session, to enact sensible reforms. But given the tough budget battles ahead and the sorry track record of lawmakers and local school officials, I hold out little hope.

As the new governor and legislature take the reins of government in early 2011, they will likely be confronted with a fantasy education budget. Now is the time to come to grips with the structural funding crisis that I outlined in 2004 and deal with reality. Or they can try to raise taxes — the equivalent of “fixing” the old General Motors by charging more for cars without addressing the fundamental structural problems.

Here are the steps the governor and legislators should consider taking to finally begin to fix the problems:

1. Adopt the Dillon health care prescription to pool all health care for state, local government and school employees, yielding a conservative annual savings of $250 million. Imagine if these reform had been enacted in 2004 — more than a billion dollars could have been redirected to the classroom.
2. Change education pension plans from defined benefits to defined contributions for any school employee hired after January 1, 2011. This would not impact current employees. There is a one-time estimated cost of $150 million to make this transition. This would be paid for by closing tax loopholes or raising the tax on beer, a levy that has not been raised in decades. This tax could sunset after it has raised the revenues needed to make the pension reforms transition a reality. Alternatively, keep the tax in place and use it to fund adult literacy and adult retraining to provide the necessary 21st century skills to fill high-demand jobs.
3. The governor, with legislative consent, should appoint a bipartisan School Consolidation Commission, similar to the federal military base closing commission that recommended a plan to close unnecessary military bases. The legislature would have the authority only to accept or reject the recommendations and could not modify them.
4. In order to maintain more local control over school reforms and restructuring than contained in recommendation number 3, the legislature could roll all local school district budgets into one lump sum under the jurisdiction of the 57 intermediate school districts or regional educational service agencies. The locals would be told to figure out sensible ways to cut 5 to 10 percent from the budget. The ISDs would coordinate the process, and the state superintendent would determine if the cuts placed teaching, learning and children above power, control, politics and adults. Budgets that placed adults over children would be required to be resubmitted until they passed muster. No state resources would flow until the right balance was struck. The local schools would have one year to make changes or the state would step in. The “savings” would be reinvested in educational programs that support teaching and learning.

None of these actions will be easy or without pain to local communities, schools and families. Change never comes easily.

I vote for adopting FDR’s attitude during the Great Depression: “Do something, and if that does not work, do something else. But, for God’s sake, do something!”

Our school funding problem will not go away until we stop ignoring the problems. The hole has been ignored far too long. The sitting governor and legislature have but a few short months to finally address the issue before leaving office. If they don’t, the mess will be left for the new chief executive and legislature.

Given the economic realities facing Michigan, the next bunch of elected leaders need to employ a different strategy rather than believe additional resources can produce better academic results. Simply spending more, as we always have, will not get us to where we need to go.

Must we continue to let the state sink and our children drown? Let’s quit playing games and get off the merry-go-round.

Send a message to the governor and legislators on the way out the door: do what is right for the kids and fix the problems.

Tom Watkins is an education and business consultant in the U.S. and China and served as Michigan’s state superintendent of schools from 2001-2005.

(Also see Dome’s September 2009 feature “China Bridge” by Watkins for a detailed focus on China.)

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