School reform push focuses on learning results, not funding buckets

They say great oaks from little acorns grow. Maybe the same thing will happen as a result of last Tuesday’s meeting in Lansing to consider how to re-work the School Aid Act into the "Michigan Education Finance Act of 2013."

The School Aid Act was originally written in 1979. It’s been amended many times since. At 178 pages (with appendices), it is considered “exceptionally opaque," “arcane," “anachronistic” and “incomprehensible," according to various folks I asked.   

But it is also the basic law through which more than $14 billion is annually appropriated for Michigan schools. So fooling around with it is a big deal. Maybe 150 people gathered in Lansing last week to kick off the process. 

It’s almost certain the workings of the act have had a profound impact on the way our schools work. As Richard McLellan*, a highly experienced Lansing lawyer who is overseeing the rewrite, points out in working papers for the meeting, the School Aid Act “is structured around the concept of ‘membership’ in a local school district, whereby a student is essentially treated as the property (and responsibility) of the school district because of the school aid funds that flow to the district through enrollment of pupils in membership."

In practice, the workings of the act have helped construct a system of education that is made up of distinct kinds, each with separate funding streams: early childhood (i.e. pre-kindergarten); regular K-12 schools; community colleges; four-year universities. And, given the zero-sum mentality that drives all money discussions inLansing, whenever one asks for more dough, the rest howl in protest. 

When Gov. Rick Snyder proposed last April in a special message on education a new “Any Time, Any Way, Any Place” public education system, he was suggesting a model in which the state’s per pupil foundation grant not be tied exclusively to the school district a child attends.  That, in turn, leads to the idea of “proficiency-based funding," in which money moves in response to a student’s demonstrated knowledge and skills, regardless of where achieved. 

The obvious question is: If the overall objective is overall student “proficiency," why should education money be allocated into separate pots for early childhood, K-12, community colleges or universities?

This is not a small matter.  Education, in whatever guise, consumes by far the largest share of Michigan taxpayer dollars. 

A more powerful and much clearer way of framing this entire subject is to use the phrase “human capital," suggesting the idea that what we are really doing is investing in each citizen’s stock of knowledge and skills, regardless of what bucket of funds supports it. 

By denominating the discussion in terms of human capital, we achieve two important objectives:

1. We force the discussion into the returns that come from investment. Businesses invest in new factories or new equipment because those investments will yield a return, often over many years. Returns on investments in human capital yield a payoff that is far greater than investments in plant and equipment. For example, research suggests that the payoff from investing in early childhood education is a multiple of 8 to 12.  Kids who participate in early childhood programs are ready to start kindergarten, don’t have to repeat grades in school, are more likely to graduate, more likely to have stable marriages and less likely to wind up on drugs or in prison. 

2. Michigan’s system of investing in our citizens’ human capital should be seamless, that is, it should flow to individuals from birth to early childhood to kindergarten to K-12 school to community college and, where appropriate, to four-year university. The real issue in such a system is what knowledge and skills young people learn as they proceed, not which part of the bureaucracy owns a student at any one time. State Superintendent of Instruction Mike Flanagan made the point at the meeting when he said, “We’ve got to stop arguing who’s stealing whose money. We cannot be boxed in by classifying the source and use of particular funds.”

In his special message on education in April 2011, Gov. Snyder wrote about the idea of a “state education system that integrates all levels of learning." What he’s really talking about is an integrated, coherent system of investing in the human capital of Michigan’s citizens, an investment that will product enormous returns in our state’s future prosperity.

Who knows how the re-write of the School Aid Act will turn out. But it’s a big, big subject that’s vitally important to our future.

* McLellan is a member of the Bridge Magazine Board of Advisers.

Editor’s note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and chairman of the Center for Michigan, a nonprofit, bipartisan centrist think–and–do tank, designed to cure Michigan’s dysfunctional political culture; the Center also publishes Bridge Magazine. The opinions expressed here are Power’s own and do not represent the official views of the Center. He welcomes your comments via email.