Wednesday, December 3, 2014

Legislature Considers Overturning Proposal A

Legislature Considers Overturning Voter Enacted Proposal A

In March, 1994, Michigan residents considered a referendum, entitled Proposal A. Inclusive in Proposal A was a new mix of tax changes that would provide funding for Michigan schools. Different from previous proposals, voters in 1994 were not able to keep the status quo, should they have voted against Proposal A. Instead, they were asked essentially to decide between an increase in the sales tax rate (Proposal A) or increase the income tax rate if Proposal A failed (Statutory Plan).

Indeed, Michigan’s residents in 1994 approved Proposal A, changing the formula for funding public education from property taxes to a 2% sales tax on consumable purchases. Before Proposal A, Michigan’s property tax burden was more than 33 percent above the national average with the sales tax 32 percent below the national average. Since then, Michigan’s residents and businesses have seen large decreases in the millage rates assessed on their property. In 1993, the average statewide millage rate for all property was 56.64 mills. In 2000, the statewide average homestead millage rate was 31.54 mills and the non-homestead rate was 50.10 mills.

Clearly, these were big, mutually beneficial changes, with school districts realizing more equitable funding (the funding ratio between the highest and lowest funded school districts went from 3:1 to 2:1) and property owners benefiting with decreased taxes. Twenty years ago, these were much needed adjustments to taxes.

Without question, in Michigan, our votes count. We go to the polls to voice our perspectives on many issues ranging from our representation in Lansing to our opinions on taxation. It’s essential that, when options come before us, we vote. When we do so, our government must listen.

Yet, within the current lame-duck legislative session, House Speaker, Jace Bolger, is floating a plan to repeal the 6 percent sales tax on gasoline and replace it with a tax on the wholesale price of fuel. This is estimated to reduce public school funding by more than $600 million per year, or over  $400 per student. Seemingly, the Legislature has the power to make the move — unlike other sales tax road proposals that require voter approval under the state Constitution.

Recently, I had a conversation with a preschool teacher who shared with me how her students had worked together through a difficult situation related to their classroom rules,  necessary to ensure student safety, security, and happiness. When asked for ideas of what to do for children who do not follow the rules, the class could not come up with a consequence, and they responded that in fact they fully intend for everyone to follow the rules--especially their leaders. Their reasoning? “Everyone just has to follow the rules because the students in the class made these rules.” In so doing, they collectively decided what was best for the class and everyone in it. There are no exceptions. To not follow the rules is not an option. The rules are for the class, created by the class, and a shared expectation of everyone in the class.

How is our legislature any different? How can the people of Michigan voice their opinion on public school funding via a statewide referendum and then have the legislature unilaterally overturn it twenty years later? This seems as undemocratic to me as breaking the collectively agreed upon rules do to a classroom of four-year-olds.

There’s no question that Michigan’s roads and bridges are broken. Safe roads matter greatly to everyone. We need a solution. Diverting public school funding to fix the roads is not a solution. Instead, it creates deeper potholes, destabilization of bridges to the future for Michigan’s children, and cuts to essential programs and services.

Tuesday, December 2, 2014

Moody's Upgrade

Moody’s Investors Service Upgrades Clarkston Community Schools Bond Ratings

CLARKSTON, Mich.— Clarkston Community Schools today announced it that Moody’s Investors
Service upgraded the district’s $19.9 Million 2015 Refunding Bonds (General Obligation –
Unlimited Tax) to an A1 underlying rating and Aa2 enhanced rating. An A1 underlying rating on
the district’s outstanding general obligation (GO) debt was reaffirmed, and Moody’s removed
its “negative outlook.”

Moody’s noted multiple strengths leading to the assigned rating, including recent improvement
to the district’s financial operations resulting from significant expenditure reductions, above
average socioeconomic indicators and a sizable recovering tax base.

“Moody’s upgrade to Clarkston Community Schools’ rating reflects the health of our district and
the hard work that has gone into keeping the schools financially sound even in a continually
challenging environment for education,” said Rod Rock, Ed.D., superintendent of Clarkston
Community Schools. “With a high rating, we are better equipped to borrow at better rates to
maintain our vigorous standards for student learning. Our rating proves we are a good
investment for bond buyers, as well as parents and students.”

Moody’s summarized its ratings rationale in its report:
The A1 underlying rating reflects the district's sizable tax base and affluent demographic
profile; limited reserves; maintenance of some revenue and expenditure flexibility
despite the sectors weak institutional framework; and elevated debt burden. Removal
of the negative outlook is based on recent improvement to the district's financial
operations that is expected to stabilize the district's reserves. Also incorporated is
recent recovery in the tax base, that will likely reduce the district's debt burden going
forward despite ongoing borrowing from the state School Bond Loan Revolving Fund
(SLRF) to support debt service.

The Aa2 enhanced rating is based on the SBQLP [School Bond Qualification and Long
Program] programmatic rating of Aa2, which reflects sound program mechanics and the
strength of the state's GO credit.