A new financial transparency dashboard shows Michigan’s state government and school districts are facing growing debts while student enrollment declines.
According to Jordan Campbell, managing director of government finance and senior quantitative analyst at the free-market-focused Reason Foundation, the combination of long-term liabilities and demographic shifts are a bad mix for taxpayers.
Campbell’s team put together a database of local and state government finance data, no easy feat given the scale of America’s state, county and school district financial operations. Thankfully, the financial statements must be reported in an audited report.
Campbell told Michigan Enjoyer that Michigan ranks 23rd in total liabilities per capita.
About half of the state’s long-term debt is pension liabilities, much higher than the national average of 32%, Campbell said.
The dashboard also shows that what school districts owe outweighs the resources they have per student. School districts have about $34,000 per student, but owe over $51,000 for each one, according to the dashboard.
Campbell said it’s important to think about declining enrollment. The state has seen an 18% enrollment decline in the K-12 age population since 2000, a decline that began in the 1970s when abortion was legalized in Roe v. Wade.
Campbell said the pension debt is more concerning because of the declining enrollment. If there are fewer teachers, contributions to the plan will decline.
If Michigan cities decide to keep schools open instead of consolidating them, taxpayers will be forced to pay for more than they get. It’s not wrong to want tax dollars to work for the community paying them instead of funding debt and servicing pension plans.
There’s no easy way out of debt. It takes careful planning and often requires cutting back to make ends meet in the long run. That’s why school superintendents and elected boards need to ensure districts are the right size for the student population.
If not, we’ll all be paying for their mistakes for years to come.
Brendan Clarey is deputy editor of Michigan Enjoyer.
