News Story

ISD Bloat Redux

My recent analysis showing that staffing levels at intermediate school districts grew significantly over the last decade — even as the number of students in Michigan public schools fell — drew some criticism from Dr. David A. Spitzley, an employee of the Washtenaw ISD. Dr. Spitzley points out that the data provided by the Michigan Department of Education's Center for Educational Performance and Information are inconsistent over time in some respects. Nevertheless, no matter how one slices the data, it still shows that ISD payrolls expanded while enrollment contracted.

Among Dr. Spitzley's observations is that the system for collecting the number of regular school district and ISD employees changed in 2002 which may have resulted in both kinds of districts reporting more staff after that date than before. Thus, part of the apparent ISD employee increase after that year may be an artificial product of no longer under-reporting the actual figures.

While this and other factors make it harder to compare ISD staffing level changes for periods that overlap the change, the trends I described remain even during times when there were no such complications. For example, from 1996 (the earliest data available) to 2002, ISD staff grew by 35 percent, while statewide enrollment increased just 3 percent. In other words, there was one ISD employee for every 210 students in 1996, and one for every 161 students in 2002.

Analyzing the data from 2002 onward faces additional challenges. For 2003, CEPI shows no data for three ISDs (Hillsdale, Kent and St. Joseph), and information from Kent is missing again in 2004. Still, even if data from these three ISDs is discarded, staffing levels in all the remaining ISDs grew by 28 percent from 2003 to 2010 — a period when student enrollment decreased by 7 percent.

Another issue deals with reporting changes that occurred in 2006 due to new school safety laws. Once again, changes in the procedures caused an increase in the number of employees reported to the state, and some of the apparent ISD employment increase since 2006 may just be the product of changed procedures.

And once again, when periods before and after the change are separated, the data still show that ISDs continued to add staff at roughly the same pace. From 2003 to 2006, ISD staff grew by 9 percent (not including Hillsdale, Kent and St. Joseph) while overall enrollment declined by 1 percent. Similarly, from 2007 to 2010, ISDs added 9 percent more staff, even as enrollments fell by 5 percent.

The ISD employment increases are even more remarkable in light of the fact that many more districts (both ISDs and conventional ones) are using private contractors to perform some functions, which would seemingly reduce their reliance on consolidating services through ISDs. Since 2001, the number of school districts that have privatized custodial, transportation and food services has increased by 58 percent. This will reduce the number of employees who are directly on school payrolls.

CEPI's Financial Information Database also suggests that employee compensation levels at ISDs have also grown sharply. This format for this detailed fiscal information from all ISDs has not changed since 2004. From that year to 2009, total compensation for ISD employees increased by 31 percent, or by 15 percent when adjusted for inflation. Over the same period, total student enrollment statewide fell by 5.5 percent. This equates to an inflation-adjusted increase in per-pupil ISD employee compensation of 22 percent between 2004 and 2009. Taxpayers now spend $644 per pupil to compensate ISD staffers.

While Dr. Spitzley raises some interesting issues regarding the limitations of state data, none of them change the fact that ISD payrolls have ballooned while the total number of students in this state has shrunk.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

Michigan Teacher Pay 16.5 Percent Higher Than Indiana

Paying teachers wages comparable to Indiana's could save $780 million annually

The average pay of a Michigan public school teacher is 16.5 percent higher than it is in Indiana, according to the most recent salary comparison from the U.S. Department of Education. If Michigan were to compensate its average school teacher at what the federal government reports as Indiana’s wages, annual savings for the state budget would equal $780 million.

A family of four in Michigan is annually paying $312 to make up the difference.

A budget cut of this magnitude would be sufficient to wipe out a significant chunk of the Michigan Business Tax, which kicked $726 million into state K-12 school spending in 2010. Nearly all of the salaries for public school employee wages in Michigan are paid out of state government’s budget. K-12 schools are the largest single expenditure funded by general state tax dollars.

In a recent interview with MichCapCon.com, Governor-Elect Rick Snyder noted that he wanted to cut the MBT by $1.5 billion, to reduce the size of the state government and to reign in the cost of public employee compensation. U.S. Department of Education data shows the Great Lakes State to be paying its average teacher 6.3 percent more than the national average for the 2009 reporting period, and 16.5 percent higher than Indiana’s average.

This is happening as Michigan has become one of the 10 poorest states in the nation, as measured by its ability to produce goods and services.

When asked by MichCapCon.com which state governor he considers most worth emulating, Snyder singled out Indiana’s Republican governor, Mitch Daniels.

The average teacher wage reported for Michigan was $57,327. This is $3,417 above the national average and $8,129 above the average pay for Indiana teachers. The Department of Education reports just over 96,000 public school teachers in Michigan.

And these may be conservative calculations. The Michigan Department of Education issued a revised figure for 2009 teacher salaries, stating a new average of $62,272.

Measuring by the ability of Michigan taxpayers to afford these salaries, it would appear to be more reasonable to compare Michigan to Indiana, rather than to the nation as a whole.

As reported recently at MichCapCon.com, Michigan’s annual gross domestic product per capita in 2009 was just $34,157. The national average of $42,031 is 23.1 percent higher. This places Michigan in the bottom 10 of the 50 states for this measure of economic prowess, after being as high as 21st best back in 2000. GDP per capita measures the total goods and services being produced in Michigan and is thus one good measure of the state’s relative ability to pay its public employees.

The U.S. Bureau of Economic Analysis reports that GDP per capita for Indiana in 2009 was $37,495. This is still 9.8 percent higher than Michigan, but also well below the national average. Because Indiana is a stronger producer of goods and services per capita than Michigan, it is even arguable that a comparison with Indiana’s teacher compensation still overstates Michigan’s comparative ability to pay its teachers.

It is unclear how far Michigan’s new governor will go toward bringing public employee costs down in Michigan.

"We are talking about people and their families," said Snyder to MichCapCon.com, as he was noting that public employee pay would be a significant part of his plan to reduce the cost of state government. "We have to do it in a constructive fashion and realize that we are asking people to make sacrifices. And we need to all share in those sacrifices."

When deciding how much was needed, Snyder said two questions should be asked:

1.       What is comparable with the private sector?

2.       What is financially affordable?

"I don’t think you can check either of those boxes today," he noted, in answer to his own questions.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.