Projections of 25,000 fewer public schools students each year through 2011 mean local schools are facing less state funding.
"There is no real savings (for local districts) until you can cut staff by closing buildings," said Tom White, executive director of the Michigan School Business Officials.
White said schools are losing students faster than they are shaving costs, creating financial challenges for many districts. About 70 percent of Michigan school districts are experiencing enrollment losses.
Michigan school districts are funded primarily through payments for each student enrolled. Payments vary for each district, but the state average is about $7,575. The proposed state budget for 2008-09 includes per student payment increases of between $108 and $216 per student. That budget has not been approved.
Increases to payments for each student are often more than offset through the double whammy of inflation and fewer students.
"A hundred bucks on top of $7,000, I don't consider that a 'wow,' " said Eaton Rapids Superintendent Bill DeFrance. "And then the number of kids shrinks. It's a hard way to run a railroad if you look across a district of 3,000 and see you've lost 30 kids."
With up to 25,000 fewer students predicted, the savings for the state could be as much as $190 million annually from an $11.3 billion school aid fund.
Some of that savings is being used to shift educational costs from the state's general fund to the state aid fund.
According to Mary Ann Cleary, associate director of the House Fiscal Agency, some of those shifts include some costs the state incurs for borrowing money to make payments to local schools, expenses for adolescent health centers, costs for school breakfast programs, MEAP testing and hearing and vision programs.
This year, $22 million in interest costs were shifted. In the governor's proposed budget, $45 million would be shifted, according to Kathryn Summers-Coty, chief analyst in the Senate Fiscal Agency's Education Unit.
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