by Amy Kerr Hardin

The Saginaw School District Board of Education is considering shuttering one of two high schools to consolidate them under one roof. Much of the discussion has centered around closing Saginaw High School and merging its orphaned student body with Arthur Hill High School.
The rationale given is a bit murky though. Both schools are ranked as “Priority” schools, meaning they score academically in the bottom 5 percent statewide.  The district itself is on the Michigan Department of Education’s short list for fiscal distress, with a current deficit of more than $4 million. Their per-pupil funding has remained marginally above the lowest in the state, but as the district’s enrollment decreased, so went their revenues. Munetrix rates the district among the highest levels of fiscal distress.
The mayor of Saginaw, Dennis Browning, suggests closing both schools and starting afresh with a new identity.  Closure of a school often has a negative impact on its community, eroding their sense of belonging and school pride. Browning said:
“I believe if Saginaw High has to close and no longer will exist, I believe Arthur Hill needs to close also. We should become united, and we should create one high school.”
Closure May Cost More Than Its Worth
Saginaw Schools have experienced a 25 percent decline in enrollment since 2007. The Citizens Research Council of Michigan draws a bright line between enrollment decline and fiscal peril.
Moderate to significant enrollment decline is a clear sign of existing, or rapidly developing, fiscal stress. School officials and the state must heed this signal. It should be used as an early warning to districts and the state that a district is in trouble, prompting them to take action and provide additional assistance (i.e., technical, managerial, financial) to mitigate the effects of financial problems, including the potential disruption of student learning.
In his recent state of the union speech, Gov. Snyder addressed the need for early identification of potential problem areas. Though he offered no specifics — just acknowledging the problem, is a start. However, this administration has a history of invoking punitive measures instead of getting ahead of the problem. With a consistent 10 percent of the state’s schools treading fiscal water, withholding revenue sharing from districts that don’t embrace “best practices,” such as privatization and consolidation, is not a viable policy solution.
Education funding should not be used as a cudgel. When Buena Vista and Inkster school districts, neighbors to Saginaw, were legislatively dissolved over declining enrollment and fiscal troubles, the former Chair of the House Committee on Education, Rep. Lisa Posthumus-Lyons, referred to their teachers as swine, as if they were somehow responsible for the Great Recession. That’s not just poor statesmanship, it’s irresponsible governance. The law they invoked which permits the dissolution of school districts is deeply flawed, and does not anticipate the actual costs, which in the case of Buena Vista and Inkster, exceeded their combined deficits.
As a non-punitive remedy for the declining enrollment/fiscal jeopardy relationship, the CRC proposes that the state consider adopting a blended student count formula, averaging the current year with the previous, thus allowing a little breathing room for districts experiencing rapid decline. Another salient suggestion calls for a sea change in the thinking behind education funding.
Most importantly, a fundamental disconnect exists between the state’s per-pupil foundation grant and the nature of school cost pressures (i.e., heavy fixed costs in short run). Policymakers should consider modifying the per-pupil foundation grant so that the marginal revenue that a district losses or receives because of a change in student enrollment is equal to the change in marginal costs, either up or down. This would require breaking up the grant to reflect the relevant fixed and variable costs in education.
Public Policy Based on the Mythology of Consolidation
Myths about consolidation abound among both political parties. Eric Scorsone, Professor of Economics at Michigan State University, is the foremost expert on municipal fiscal policy. In a 2010 study, he examined the efficacy of consolidation of public bodies. His conclusions should be a splash of icy cold water on the faces of the cheerleaders for consolidation and merger. The data simply does not support the wisdom of the practice based on economic rationale, and additionally found that contrary to what many believe, Michigan is already one of the most efficiently run states at the local level.
The Wall Street Journal examined the consolidation movement in Michigan under Gov. Snyder, finding among the problems with merging local bodies of government and their services a strong voter-backlash and no tangible evidence they produce the kind of savings that make it worthwhile.
A meta-analysis from the Indiana Policy Research Foundation similarly warned against attempting to solve public sector fiscal woes through consolidation and merger. Their conclusions were not supportive of the practice — although they didn’t full-scale condemn it — they simply did not find compelling reasons to embark upon that course of action without identifying a valid basis for it.  Anticipated savings and perceived improvement of service were not generally borne-out in reality. The few times consolidation seemed to work were actually a result of better management practices, which were unrelated to the consolidation itself.
Parents Stand Their Ground
The parents at Saginaw Schools are not taking this lying down. They held an informational meeting on Monday, Feb. 16th, in anticipation of the school board’s vote to possibly close Saginaw High School. The group is considering seeking an injunction and following through with litigation to block the closure.
Closure, or not, the debt trend will remain the same if the state continues to neglect its responsibility to properly fund public schools.