Happy Thanksgiving, Let's Talk About School Capital Finances
First, Happy Thanksgiving.
Second, to avoid political arguments around the Thanksgiving feast table, here is a topic to discuss: How should the state resolve the most significant forgotten item of the Proposal A school reform measure, the lack of a solution on school capital infrastructure spending?
Fine, fine, fine, yes it could put Uncle Phil to sleep faster than tryptophan, but nearly 25 years after the voters approved Proposal A it remains an unsolved problem and while munching on that third slice of pie don't you want something to talk about besides who won and who should have won?
It's an issue that has always mattered, been galling to a number of officials – especially to former state Treasurer Doug Roberts, who was one of the chief architects of Proposal A – and has come to light most recently because of a report from Moody's Investors Services released this week.
That report warned that unless something is done to improve the Detroit Public School Community District's rapidly deteriorating school buildings, the city's economic rejuvenation could be threatened. And the report said the only viable way to attack the issue is for the state to provide financial help.
Of course, don't many school districts, urban, suburban and rural, need help dealing with capital expenditures?
Mr. Roberts has a suggestion to help.
It is no exaggeration to say Mr. Roberts has gnawed at this problem for years. "We left the issue on the table," he said recently while talking about Proposal A.
The only real method for schools to finance for new construction or repairs is take out debt, which means raising local property taxes. Which then gets into the question of the value of the millages, which depends on property values. Millage values in places like Detroit, Flint and Inkster are worth far less than those in Birmingham, Bloomfield Hills or Okemos.
When he was treasurer Mr. Roberts, to his continued regret, had to reject a proposal from the Hamtramck schools to build a new, desperately needed high school, because he did not think the local millage values would allow the district to maybe ever pay off the school.
But Mr. Roberts has a suggestion: finance school capital expenditures the same way the state pays for school administrative and instructional expenditures, through per-pupil grants.
He suggests those grants be roughly one-tenth the per-pupil grant for instructional purposes. So if the basic per-pupil grant is around $8,000 a student, then the capital expenditure grant would be about $800 a student.
That grant could only be used for capital expenditures, Mr. Roberts suggests. If a district had no expenditures in a school year it could bank the money for the future, but it could only go for capital needs and improvement.
With around 1 million K-12 students in Michigan that adds up to $800 million a year, minimum. But for Detroit, with more than 44,000 students in the 2016-17 school year it would mean $35.5 million going to building upgrades, improvements and repairs.
Even for the Upper Peninsula's tiny Ewen-Trout Creek Consolidated Schools, where there are quite literally more deer than people, its 189 K-12 students would net the district $151,200 for capital purposes. You don't think a school district couldn't use 151 grand for repairs, new technology and other upgrades?
How would the state pay for it all? Well, Mr. Roberts said it would have to tax for it. He leaves the decision of what tax to lawmakers. But he said the proposal could provide a big tax benefit making it more politically popular.
A statewide tax for school infrastructure means local property taxes could be reduced, he said.
So, before the first salvo on politics is fired over the salad or someone sputters, "What do you mean by that?" while stuffing stuffing, introduce the thought-provoking subject of school capital expenditures to your holiday gathering. You're welcome.Back to top