Fewer Kids Statewide Does Not Mean Less Money For Schools

State dollars 'follow the student,' but overall school tax collections not tied to enrollment

January 16, 2018

Sen. Jim Stamas, R-Midland, was featured in a recent Midland Daily News article discussing funding for Michigan’s public schools.

“The state population is still decreasing so there are not as many kids in a lot of schools,” Stamas told the newspaper. "So, even though the state is putting more dollars in, the schools are seeing fewer kids. When you have fewer kids you have a decrease in dollars."

ForTheRecord says: The senator’s lack of precision ended up painting a false picture of how Michigan school funding actually works. While most of the state money for schools is allocated to districts on per student basis, it is collected on a “per taxpayer” basis that has nothing to do with the number of students in the state or in a particular district.

Most of the money Michigan public schools get from the state comes as a per pupil sum called the “foundation allowance.” The amount varies by district and is determined using a complicated formula that combines local and state tax dollars. The foundation allowance provides about 80 percent of the state money that schools receive.

Though this particular pot of money is distributed to districts on the basis of enrollment, the overall tax collection system that funds public education in Michigan is not linked to enrollment in any way. Also, while per pupil foundation allowances have grown slowly since 2010-11, total public school funding has grown much more rapidly. Overall school funding levels have risen even as student enrollment numbers have gone down.

Money collected for Michigan public schools is all deposited in a state School Aid Fund. It comes from more than 10 taxes, including sales tax, income tax, a state education property tax, tobacco and casino taxes, and money from the state lottery.

The amount collected by those taxes and earmarked to schools has increased from $12.1 billion in 2015-16 to a projected $13.0 billion in 2017-18, according to the House Fiscal Agency.

The biggest revenue producer for the School Aid Fund is the state sales tax, which is not dependent on the number of children attending Michigan schools. The sale tax contributed $5.3 billion to public education in 2015-16, an amount that is projected to increase to $5.8 billion in the current fiscal year.

Stamas was correct that the amount of foundation allowance money a particular district gets in a given year will be lower or higher depending on its enrollment. That’s what “money follows the student” actually means. But total school funding and the amount of the per student state foundation allowance have been rising for most of this decade.

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.

DTE Produces Enough Wind Power To Run 24,000 Homes - But Part Of The Day Only

Oh, you wanted electricity 24/7?

By Tom Gantert | January 15, 2018

DTE Electric Company, Michigan’s largest electric utility, uses a simple rhetorical device to explain the impact of solar and wind energy. But one expert says it misleads people by making renewable energy appear more useful than it is in reducing the need for electricity from conventional fuel sources.

DTE Energy, for example, says its Pinnebog wind park in Huron County provides enough energy to power 24,000 homes.

But Jason Hayes, the Mackinac Center for Public Policy’s director of environmental policy, says this formula is misleading.

The problem, he says, is that renewable energy sources only produce power intermittently, which means consumers and businesses cannot depend on them to provide reliable power at any given time.

According to Hayes, when DTE Energy says a wind farm can power 24,000 homes, people mistakenly envision 24,000 homes getting all their electricity just from wind. Given the nature of wind power, though, it can’t happen.

The Michigan Public Service Commission says that wind power has a 36 percent “annual capacity factor.” This means that if a home relied solely on wind turbines, it would only have power 36 percent of the time, or 8 hours and 36 minutes per day.

Solar panels are even less productive, with a capacity factor in Michigan of just 13 percent. This would give a homeowner power for 3 hours and six minutes a day. The rest of the day, including from sunset to sunrise, DTE must provide electricity generated by coal, gas, nuclear or hydroelectric facilities.

Consequently, Michigan’s other electric utilities must maintain just as much capacity in conventional sources — coal, gas, nuclear and hydropower — as they would need if no wind turbines or photovoltaic solar cells existed here. For without that full inventory of conventional power plants, the state could expect brownouts and blackouts the first hot summer evening when the air is still. It would face the same fate on long winter nights when all is calm.

The use of renewable energy is largely driven by a 2008 law — then expanded in 2016 — requiring utilities to have a “renewable energy portfolio.” Wind accounts for 91 percent the power companies’ renewables, with solar adding another 6 percent.

DTE lobbied hard for the 2016 law, which also requires it to tear down existing coal generation plants. Given the intermittent nature of renewables, coal plants will be replaced by installing new gas-fired generators, and the law allows DTE to charge consumers rates high enough to guarantee a profit for itself on both activities.

Michigan households and businesses, then, pay not only for new windmills and solar cells, but also new natural gas plants. The result is likely to be a modest reduction in the use of natural gas, which is not facing a shortage. Thanks to new drilling techniques, the U.S. is the world's largest producer of natural gas and a net exporter of the fuel.

Speaking of the comparison of renewable electricity production to households, Hayes said, “Utility executives and renewable energy developers constantly tell the media and the public that their latest wind or solar facility will provide enough electricity ‘to power X,000 homes.’ “But the problem with that statement,” he continued, “is that it is a lie by omission. When the average person sees that from an energy expert, they rightly think that means that if you put up a wind turbine or a solar array, they can expect a steady, reliable, 24/7 source of electricity. But, the reality is that wind and solar only produce electricity when the wind is blowing, or the sun is shining.”

In response to a query, DTE spokeswoman Cynthia Hecht said, “DTE Energy provides electricity to 2.2 million customers in southeastern Michigan with an 11,084 megawatt system capacity using coal, nuclear, natural gas, hydroelectric, wind and solar. A balanced energy portfolio enables DTE to provide customers with energy that is reliable, safe, affordable and cleaner. As we execute our plan to reduce the company’s carbon emissions by more than 80 percent by 2050, that mix will shift with DTE producing over three-quarters of its power from renewable energy and highly efficient natural gas-fired power plants.”