Auburn Hills, Mich. – March 30, 2015 – Bob Kittle, president of Michigan-based Munetrix, which offers a proprietary fiscal credit score and early warning indicator for school districts and municipalities through a data-driven, public-facing dashboard that complies with state transparency laws, testified before the Michigan legislature on Wednesday, March 25 about a series of “early warning” bills currently under consideration in Lansing.
The tie-barred bills (many of which will not take effect unless preceding legislation passes) are HB 4325 – 4431. All look at budgets, periodic financial reports and identifying deficit or likely deficit districts, with the threat of withholding state-aid revenue. A substantial amount of reporting and administration by both the state and the district are the result – using ink-on-paper reports.
“If nothing else, give the districts the tools to simplify the process as much as possible,” Kittle said.
Kittle’s testimony reflected the state’s need to focus on anticipating and avoiding fiscal stress among its school districts in the first place, rather than reacting to financial disasters after they occur.
“The proposed bills put too much burden on cash-strapped local schools to produce periodic reports which require resources, including additional staff, that are not available in these districts,” said Kittle. “In some cases, it is this same lack of resources that contributed to the financial stress in the first place. Let’s also remember that job one for these entities is to provide a quality education to their students.”
Kittle notes the bills are overly ambitious, and vague on many details.
“In their current language, these bills are too complex and require input on too many data points,” Kittle said. “There is a definite need to simplify the system and these bills don’t accomplish that. Moreover, while the bills have numerous directives on what school districts need to do, they lack clear instruction, especially on reporting formats.”
HB 4325 proposes looking at enrollment declines of 5% in one year to 15% over a three-year period, a time frame Kittle suggests is too long and too high.
“To put it in medical terms, the body will have bled out by that time,” said Kittle. “Other factors such as failing to pay a debt obligation or improper use of revenue are a better gauge of districts at risk because the identification of a problem is much more immediate. It can be very difficult to resuscitate a district after three years of falling enrollment and expenses exceeding revenues. We need to reach districts that are likely to be in deficit in the near term and address the situation immediately. The state needs to more or less give districts a house call, like doctors did in the old days.”
Kittle uses the basic laws of supply and demand to convey the underlying cause of many of Michigan’s public school funding issues.
“There is a declining statewide student base and an increasing number of schools. If the schools are thought of as ‘available square footage’ on the supply side and the students are on the demand side, the supply side needs to fit the demand side to avoid an over-capacity situation, where districts are enticed to steal revenue (students) from each other. Following the basic laws of economics, poor performing districts might have to close their doors in an effort to balance the supply side,” Kittle said. “This will keep everybody on their toes and, by itself, could improve achievement. If the supply and demand lines are kept in check with each other, the situation will be far less dramatic.”
Michigan-based Munetrix is the creator of the Munetrix (municipal metrics) cloud-based local government transparency tool and is among the nation’s largest aggregators of municipal and school district data, allowing subscribers to view public sector financial and demographic data in an easy to understand format and use that data to make meaningful and reliable budgets and financial projections. What is your community’s Munetrix Score? To learn more, visit the Munetrix website.