Edu

Children should not be pawns

Recently in the state of Michigan the politicians have been struggling with balancing a huge deficit in the state budget.  There are many causes of the deficit, some of which include reduced property values and decreased revenue from the sales tax.  The cause is not the main concern here.  Recently the education system was pulled into the budget process and the students and children that attend public schools in Michigan will be the ones to lose.

A recent report about Governor Granholm’s cut of the 20j funding states that the funding is for more affluent school systems.  This is not always the case.  River Rouge Schools, near Detroit, is a 20j district.  The majority of students at River Rouge Schools receive some form of lunch aid.  This is not an affluent school system.

Soon after the Governor cut the 20j funding there was another cut to the baseline per pupil funding.  All Michigan schools now have to revise a budget that was created before the start of the fiscal year on July 1.  Schools that had started or were planning certain programs now have to evaluate what is the most important and make cuts from a budget that was in place, and approved before the cuts happened.

In an economy like Michigan everyone needs to work hard to pull correct the problem.  What could help solve the problem in the long run is an educated population though.  Michigan has traditionally been a blue collar, working class state.  The recent impact of auto sales slumps, construction slumps and the general economy shows that to more stable there needs to be a more broad range of jobs.  To create these jobs there needs to be an educated public that companies will hire, or even a public that will create the company and jobs themselves.

Using Michigan students as pawns in the political process, on all sides of the government, is wrong and needs to stop.

Educational Endowment Funding

Funding is always an issue for public education.  Some private educational institutions may also have funding issues from time to time.

The solution, while being a very forward looking option, is to create endowments for every school.  At some point in the future every school could run completely off of their endowment, thereby ending the need for public tax money to be spent on schools.  As mentioned, this is a very forward looking idea and will take multiple decades, most likely into the centuries mark.

Let’s take a look at an example.

Example:

School A has an annual budget of $20 million dollars.
School A is required to set aside 1% of their annual budget towards the endowment each year.
1% of $20 million is  $200,000.
The interest rate on the endowment account is 1%.

After 10 years the endowment account would be worth $220,924.
After 100 years the endowment account would be worth $34,978,202.
After 200 years the endowment account would be worth $129,046,764.

50% of interest after 10 years is: $462
50% of interest after 100 years is: $7,489,101
50% of interest after 200 years is: $44,523,382

If School A is allowed to use a maximum 50% of the interest that is funded to the endowment each year after maturity the endowment would be constantly growing and the endowment would reach maturity in a bit over 200 years if there is any inflation.  By restricting the school to work with only a portion of the interest the endowment would keep growing and allow the school to adjust the budget for inflation.  There could also be clauses built in for the construction of buildings.  The key is that the endowment fund will keep growing over time and relieve the burden of paying for education from all taxpayers.