Reliance on Fund Equity to Address K-12 Budget Shortfalls - A Statewide Analysis

Some argue that the "crisis" of Michigan's K-12 funding is no crisis at all and that school districts have the financial wherewithal within their General Fund Equity to address the funding
shortfalls. This model uses actual spending data of the aggregate of all the public school districts in the state of Michigan from the years 2003 through 2008. It then applies those
spending trends over the years 2008 through 2011. When combining the aggregate of the ensuing cost increases with the per pupil and categorical funding cuts, the model proves
that absolute reliance on General Fund Equity would obliterate all Fund Equity in less than three years.

ACTUALS:
Actuals (Source: State of
Michigan Bulletin 1014)
All School Districts' General Fund Spending by Object
(Source: State of Michigan Financial Information Database)

# of # of
School Employee Purchased Supplies & Unreserved
Students Teachers Salaries Capital Outlay Other Total
Year Benefits Services Materials Fund Balance
Statewide Statewide

2003-4 1,734,019 78,148 $8,706,394,495 $3,517,905,588 $1,334,469,340 $810,412,532 $215,783,188 $107,638,465 $14,692,603,608 $1,822,332,908
2004-5 1,723,087 76,319 $8,621,985,511 $3,734,033,179 $1,405,153,628 $844,599,895 $194,478,419 $107,110,497 $14,907,361,129 $2,009,002,832
2005-6 1,712,133 74,544 $8,521,558,089 $3,965,466,455 $1,534,190,286 $900,224,911 $187,569,603 $108,609,116 $15,217,618,460 $1,887,005,667
2006-7 1,693,436 74,256 $8,549,753,792 $4,064,332,128 $1,598,862,796 $905,369,399 $192,171,734 $114,542,095 $15,425,031,944 $1,938,494,461
2007-8 1,661,417 72,961 $8,499,096,715 $3,972,603,962 $1,842,559,414 $941,963,604 $164,805,070 $116,791,780 $15,537,820,546 $1,824,407,455
APR -0.85% -1.36% -0.48% 2.46% 6.67% 3.05% -5.25% 1.65% 1.41%

Aggregate Cost
PROJECTIONS (based on applying 5 year annual percentage rate change factor) Increase
2008-9 1,647,266 71,966 $8,458,233,248 $4,070,366,260 $1,965,368,907 $970,732,830 $156,156,893 $118,713,808 $15,739,571,945 $201,751,400
2009-10 1,633,235 70,984 $8,417,566,251 $4,170,534,402 $2,096,363,845 $1,000,380,719 $147,962,531 $120,667,466 $15,953,475,214 $415,654,669
2010-11 1,619,323 70,016 $8,377,094,780 $4,273,167,594 $2,236,089,804 $1,030,934,107 $140,198,170 $122,653,275 $16,180,137,729 $642,317,183
$1,259,723,252

Revenue Losses
Section 20J Funding Cut $52,000,000
2009-10 Foundation Allowance $165 x # of Projected Students 1,633,235 $269,483,707
2010-11 Foundation Allowance $215 x # of Projected Students 1,619,323 $348,154,481
TOTAL REVENUE LOSSES (2009-11) $669,638,188
TOTALS
TOTAL COST INCREASES AND REVENUE LOSSES $1,929,361,439
TOTAL UNRESEREVED GENERAL FUND BALANCE (2008) $1,824,407,455
PROJECTED REMAINING UNRESERVED FUND BALANCE (2011) ($104,953,984)

Prepared by: Brendan Walsh Disclaimer: This is not an official document of the GPPSS