LANSING - When asked why her school district is implementing best financial practices under a new school aid fund program, Kathy McLeod responded with one word: Money.
"Without it, we'd just throw money away," said McLeod, the business manager for the St. Ignace Area Schools.
But while state officials say schools can cut costs by implementing these best practices, the money McLeod is referring to is the $100-per-pupil award Michigan districts receive if they comply with four out of five possible best practices.
Students take notes in Steve Solinski’s government class at Marquette Senior High School this week. School districts across the state, including Marquette, are attempting to comply with best practices criteria set by the state, to qualify for additional state aid. (Journal photo by Danielle Pemble)
The state funding incentive would help alleviate the $470 per-pupil cuts to districts for the 2011-2012 fiscal year, a significant drop for any district, said Glenda Rader, the deputy director for the Office of State Aid and School Finance. Because of that, schools have responded to the program. Twenty-six have already submitted applications to the state, and many more are still working on theirs, including districts in St. Ignace and Marquette. The first round of incentives will be distributed in October, which is when the state begins to distribute school aid.
Although almost 800 districts could qualify for funds, Rader said $154 million from the state's school aid fund is reserved for the program. As long as there aren't more than 1.54 million students this year, Rader said there would be enough funds to cover all schools that qualify. Last year, she said the state had approximately one million students.
The program rewards districts with the extra funding if they implement the best practices, which Rader said are cost-saving measures. To qualify, schools must submit a resolution through their board of education demonstrating they have met four of the five requirements. The funds are only available for the 2011-2012 fiscal year, and schools have until June 1, 2012, to submit their resolution.
Two of the options schools can implement are insurance policy adjustments, including charging employees at least 10 percent of the cost of their health care premium and having the district become the chief policy holder for its medical benefits plan. Designating a district as the policy holder allows it to have more control over its insurance policy, Rader said.
Two other options streamline services, including creating a plan to consolidate services used by the district and holding competitive bids on contracts for non-instructional staff.
Another option is to provide a dashboard on the district website that shows certain categories and their improvement. Required categories on the dashboard include graduation and dropout rates, Michigan Merit Exam test scores and Michigan Education Assessment Program test scores.
The best practices were chosen to alleviate the impacts of the budget at the local level, said Sen. Howard Walker, R-Traverse City, chair of the House Subcommittee on K-12 School Aid and Education. He used the employees' payment of the health care premium as an example.
"It allows a bunch of employees to help a little bit, so that a few employees don't have to help 100 percent by getting laid off, and that affects kids," he said.
Walker said it was important to set up this incentive to achieve best practices because he believes it assures taxpayers they're getting the most out of their tax dollars.
"The best practices are important for running a well-run school system," he said. "These are all geared so that they can operate in a manner in which, I think, protects and respects the taxpayers' money."
But Doug Pratt, director of public affairs for the Michigan Education Association, said the initial cuts to public education and subsequent partial repayment of those cuts wasn't fair because the school aid fund has a surplus.
"The governor and the Legislature cut a billion dollars out of public education, and then they went and dangled some things over the heads of school districts," he said. "Rather than investing in public education, and leaving that money where it was, because they didn't need to cut a dime, they had the money, and they chose to cut it."
Pratt said Michigan schools already have some best practices in place. In addition, he said a bill the Legislature just passed last month that requires public employees to pay 20 percent for their health care conflicts with the best practices provision. The bill was presented to Gov. Rick Snyder on Sept. 14.
Although St. Ignace schools haven't formally submitted their resolution yet, they're working on implementing their best practices, McLeod said. Her district has already consolidated services, partnering with the nearby Moran Township School District to share busing services and athletic programs, among others. She said both schools save money through the partnership.
In Marquette, the district has benefited from having its employees help pay for their premiums, said Deborah Veiht, the district superintendent. She said the savings in employee health care have led directly to more funding for instruction.
However, when the district fielded bids for custodial services, they found the cost savings weren't as apparent. Veiht said concessions made by the schools' custodial staff union actually brought them in line with the cost of outside custodial companies.
"A lot of people say, 'We're going to bid out our custodians and we're going to save a lot of money,'" she said. "Well, we thought that perhaps at first When we compared the total costs of the outside company and the total costs of our employees, it was roughly the same."
The schools ended up contracting a majority of their services with their original employees, she said