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Michigan School Funding and Economic Facts

Michigan School Funding and Economic Facts. Thomas White, Michigan School Business Officials. Comparing Michigan’s Taxes and Expenditures.

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Michigan School Funding and Economic Facts

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  1. Michigan School Funding and Economic Facts Thomas White, Michigan School Business Officials

  2. Comparing Michigan’s Taxes and Expenditures • All data on the slides in this section are from the Tax Foundation - a respected, fiscally conservative source information about taxes and tax policy in the US • www.taxfoundation.org

  3. Is Michigan a high tax state? • According to the Tax Foundation: • Michigan’s “tax freedom” day is April 27 • US Average is April 30 • “Worst” is Connecticut at May 20 • “Best” is Oklahoma at April 12 • Michigan’s Rank is 22

  4. According to Tax Foundation • $4,422 is US Per Capita Tax Burden for State and Local Taxes in 2007 • $4,202 is Michigan Per Capita Tax Burden for State and Local Taxes in 2007 • Connecticut = $6,756; Alaska = $2,729

  5. State and Local Sales and Gross Receipts Tax • Per Capita - 2005 • Michigan = $1,167 Per Capita • US Total = $1,293 Per Capita • Michigan’s Rank = 30 • Hawaii = $2,274; Oregon = $267

  6. State, Local and Federal Tax Burden • Comparison for 2007 • Michigan = 31.9% • US = 32.7% • Michigan ranks 21 • Connecticut = 38.3%; Oklahoma = 27.8%

  7. State Individual Income Taxes • Per Capita - 2006 • Michigan = $617 • US = $816 • Michigan’s Rank = 35 • Connecticut = $1,648; Several States = 0

  8. State and Local Tax Collections • Per Capita - 2005 • Michigan = $3,494 • US = $3,698 • Michigan’s Rank = 23 • NY = $5,752; Alabama = $2,569

  9. State and Local Revenues • Per Capita - 2005 • Michigan = $8,056 • US = $8,509 • Michigan’s Rank = 25 • Alaska = $17,089; Georgia = $6,602

  10. State and Local Spending Per Capita for 2005 • Per Capita - 2005 • Michigan = $7,577 • US = $8,000 • Michigan’s Rank = 23 • Alaska = $15,118; Oklahoma = $6,210

  11. State Business Tax Climate for 2007 • The Tax Foundation Gave Michigan Ranking of 27 Overall • This is before repeal and reconfiguration of the Single Business Tax to the new Michigan Business Tax - an improvement

  12. State Budget Situation and Economic Data • Except where otherwise noted, the slides in this section are derived from information provided by the Citizen’s Research Council of Michigan, a highly respected, non-partisan organization sponsored by businesses, individuals and foundations.

  13. The Economy in Michigan -How Bad Is It? • Michigan is 50th in • Personal Income Growth • Unemployment Rate • Employment Growth • Index of Economic Momentum • Between 1990 and 2006 MI went from just over 810,000 manufacturing jobs to 638,000 a loss of 171,100 or a 21% reduction

  14. Are Taxes to Blame? • Arguably the major economic problem is declining market share for Big 3 • 1992 • US Light Vehicle Sales = 12.9 million • Big 3 Market Share = approx 70% • 2004 • US Light Vehicle Sales = 16.5 million • Big 3 Market Share = approx 54%

  15. Michigan’s Changing Population/Estimates to 2017 • Between 2007 and 2017 Michigan will see the following changes in its population: • 14.3% decline in 5-17 year olds • 8.5% decline in 18-24 year olds • 3.9% decline in 16-64 year olds • 31.5% increase in 65+ year olds • 0.4% decline in total population

  16. State General Fund Revenues • General Fund Revenues Have Dropped • 1996 = $8.6 Billion • 2008 = $7.2 Billion • High of $9.6 Billion in 2000

  17. Reductions of: $275 Million or 13% less for Higher Ed in last 4 years $172 Million or 14% less for Human Services in last 5 years $447 Million or 29% less for Revenue Sharing in last 5 years 7,400 Fewer State Workers over last 4 Years; the smallest state workforce since 1974 $323 Million or 84% less for K-12 Education in last 5 years General Fund in Recent Years

  18. What About Taxes? • State Taxes as a % of Michigan Personal Income Have Declined • Approx 7.7% in 1995 • Approx 6.6% in 2007 • People are generally paying less of their income for State taxes in Michigan

  19. The State Budget Now • Current Revenues for the School Aid Fund and General Fund for 2007 • Income $6.3 Billion • Sales $5.4 Billion • Misc./Other $3.4 Billion • Property $2.1 Billion • Business $2.0 Billion • Use $1.4 Billion • Tobacco $0.7 Billion TOTAL $21.3 Billion

  20. Current State Budget Structural Deficit • Tax Cuts Reduce GF and SAF Revenues by $3.2 Billion a Year • Increased Use of Slow or No-growth Revenue Sources, e.g. tobacco tax • Weakening Economy Leads to Lower Revenues • Use of $8 Billion in One-Time Revenues over Past 7 years to Balance Budget Result: Structural Deficit of $1.75 Billion for FY 2007-08

  21. An Unpleasant Picture • 7 Years of Spending Cuts • GF is Less in 2007 than 1996 • SAF Annual Growth of 1.4% Since 2000 • Reserves Exhausted • Spending Pressures Exceeding Revenues

  22. The Future If No Changes Made • Spending Grows 5% Year • Retirement; Health; General Pay; New Programs; Other (utilities, fuel, etc.) • Revenues Grow 3% a Year in Moderate Case Scenario

  23. Options? • Reduce Spending and Spending Pressures • Increase Revenues • Both

  24. Tax Rates and Revenues Source: Senate Fiscal Agency • Individual Income Tax • Current Rate = 3.9% • Net Revenue = $6.3 billion • Each 0.1% increase in rate = $160 million • Lowest Rate was 1967 = 2.6% • Highest Rate was 1983 = 6.35% • When Prop A passed in 1994 = 4.4%

  25. State Spending inSelected Budget Areas 2002-03 to 2006-07 • Changes in State Spending from State Resources for: • Community Health = 46.5% • Corrections = 13.1% • Human Services = 3.0% • K-12 = 3.1% • Comm. College = -16.1% • Higher Ed. = - 7.3% • Rev. Sharing = -13.2% TOTAL STATE SPENDING = 6.5%

  26. The “Equity Gap” • The Difference Between Lowest and Highest Spending Districts • $7,532 in 1993-94 • $5,454 in 2000-01 • $5,231 in 2006-07

  27. The Equity Gap The gap was consistently reduced from $7,532 in 1993-94 • To $5,454 in 1999-2000 • To $5,254 in 2002-03 • To $5,231 in 2006-07

  28. School Aid Fund Budget Recent History In 2000-01 SAF Rev = $9.994 billion In 2006-07 SAF Rev = $11.230 billion SAF revenues have risen by 12.4% in 6 years The CPI rose by approx 19% in the same period MPSERS costs rose from 12.16% of payroll to 16.72% over the same period, an increase of 37% in the State operated retirement system.

  29. History of School Aid Funding Except where otherwise noted, the following slides were prepared using data from the Senate Fiscal Agency

  30. Distribution of Capital Stock & Millage Rates by District Taxable Value per Pupil (Prepared by David Arsen, Ph.D., Michigan State University)

  31. Change in Tax Payments Under Proposal A for Selected School Districts (Prepared by David Arsen, Ph.D., Michigan State University)

  32. Average Change in Tax Payments Under Proposal A(Prepared by David Arsen, Ph.D., Michigan State University)

  33. Trends in Total Public School Revenue per Pupil (in 2005 $) (Prepared by David Arsen, Ph.D., Michigan State University) 20.5% 8.4% $7,464 -5.6%

  34. Foreign Language • Nation - 16.8% Schools Offered Foreign Language • Michigan - 17.6% Michigan Schools

  35. Public Elementary/Secondary School Revenue • Estimated, Per Pupil - 2005 • $9,741 National • $10,036 Michigan • Rank = 19 • New York = $13,997; Utah = $6,413

  36. Public Elementary/Secondary Current Expenditures • Estimated Per Pupil - 2005 • $8,554 National • $8,909 Michigan • Rank = 19 • New York = $12,879; Utah = $5,245

  37. Change in K-12 Expenditures – Percentage(2000-2004, Adjusted for Inflation) • Percentage – 2000-2004 (Adjusted for inflation) • National - 10.5% Increase • Michigan - 7.9% Increase • Rank = 44 Source: US Census ____/Quito Press

  38. Change in K-12 Expenditures • Percentage 1995-2004 • National – 21.7% Increase • Michigan – 11.4% Increase • Rank = 44 Source: US Census ____/Quito Press

  39. Expenditures for Salaries & Wages • Per Pupil - 2004 • National – $5,257 • Michigan - $5,350 • Rank = 18 • New York = $8,076; Utah = $3,114 Source: US Census ____/Quito Press

  40. Expenditures for Salaries & Wages • Percentage Per Pupil - 2004 • National – 62.1% • Michigan - 57.9% • Rank = 45 • North Carolina = 68.6%; Wisconsin = 55.5% Source: US Census ____/Quito Press

  41. Expenditures for Employee Benefits • Per Pupil - 2004 • National – $1,564 • Michigan – $2,162 • Rank = 9 • New York = $2,629; Texas = $834 Source: US Census ____/Quito Press

  42. Expenditures for Employee Benefits • Percentage Per Pupil - 2004 • National – 18.5% • Michigan – 23.3% • Rank = 5 • West Virginia = 28.3%; Texas = 11.6% Source: US Census ____/Quito Press

  43. Expenditures for Instruction • Per Pupil - 2004 • National – $5,056/60.5% • Michigan – $5,182/55.9% • Rank = 18/49 • New York = $8,840; Utah = $3,187 Source: US Census ____/Quito Press

  44. Expenditures for Support Services • Per Pupil - 2004 • National – $2,892/5.1% • Michigan – $3,602/6.9% • Rank = 7/7 • New York = $8,840; Utah = $3,187 Source: US Census ____/Quito Press

  45. Expenditures for General Administration • Percentage • National – 2% • Michigan – 2.1% • Rank = 26 • North Dakota = 4.6%; Hawaii = 0.7% Source: US Census ____/Quito Press

  46. Expenditures for School Administration • Percentage • National – 5.5% • Michigan – 6.0% • Rank = 9 • Vermont = 6.9%; Minnesota = 4.1% Source: US Census ____/Quito Press

  47. High School Graduation • Percentage of Population • National – 84.2% • Michigan – 87% • Rank = 21 • Wyoming = 91.3%; Mississippi = 78.5% Source: US Census ____/Quito Press

  48. High School Graduation • Estimated Rate - 2005 • National – 71.5% • Michigan – 75% • Rank = 23 • New Jersey = 94.5%; Florida = 56.8% Source: US Census ____/Quito Press

  49. Teacher Salary • Average - 2006 • National – $48,045 • Michigan – $56,973 • Rank = 3 • Connecticut = $58,688; South Dakota = $34,040 Source: National Education Association

  50. Teachers as Staff • Percent of K-12 Staff who were Teachers - 2005 • National – 52.3% • Michigan – 48.0% • Rank = 39 • South Carolina = 72.2%; Kentucky = 43.2% Source: National Education Association

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