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Study: State hands down $2 billion in unfunded mandates
By KATHY BARKS HOFFMAN, Associated Press Writer

LANSING, Jan. 17, 2010 (AP): The state isn't living up to its obligation to cover at least $2.2 billion spent by local governments and school districts in services and reporting that the state requires them to provide, according to a legislative commission.

Michigan's constitution forbids pushing costs onto local governments and school districts through what's known as unfunded mandates. Yet lawmakers routinely have failed to cover the costs of requiring school districts to file extensive reports on student data and making local governments send out additional tax bills and offer more public health services.

``There are a lot of legislators don't know this part of the constitution exists,'' says Amanda Van Dusen, one of five members of the Legislative Commission on Statutory Mandates that recently released a report calling for change.

``It's very easy for the state to do this because there's not an effective way for the affected communities to object,'' she added. ``So it just fosters all this frustration and mistrust.''
Although lawmakers are partly to blame for the problem, they're also taking action to fix it. The commission was set up in 2007 after lawmakers passed a law charging its members with investigating the cost of complying with funded and unfunded mandates imposed by the state on local units of government, and to make recommendations for addressing that.

The commission members were appointed by legislative leaders, who met with them last week to hear their findings.

Matt Marsden, spokesman for GOP Senate Majority Leader Mike Bishop, says Bishop plans to go over the commission's findings with reporters and commission members on Jan. 27. He also plans next week to unveil changes he thinks need to be made to reduce some of the costs of running school districts and local governments.

``A lot of the reforms that we're going to roll out will deal with things'' the commission discovered, Marsden says. ``Structural reforms are part of what needs to happen to avoid unfunded mandates.''

The commission recommended that new laws require a fiscal note to be drafted in consultation with the affected local government or schools before a law can take effect.
Money would then have to be set aside to cover any costs, with the appropriations bill tied to the new mandate so neither could take effect unless both were passed.

``It doesn't demand that additional resources be spent. It just says before you do that, you have to think about it a little more closely,'' Van Dusen said.

Since 1978, when voters adopted the Headlee Amendment to the state constitution, the state has been required to set aside money to cover any requirements imposed on school districts or local governments by lawmakers or by rules and regulations adopted by state agencies.

The commission estimates in its report that those mandates cost at least $2.2 billion to $2.5 billion in 2009 alone. The largest costs were in pensions for school district and community college employees, which came to more than $1.5 billion a year.

Thirty years ago, school districts and community colleges paid 5 percent of the payroll in pension costs on behalf of their employees and the state paid the balance, according to the report. But legislation changed that arrangement, and they now pay for all pension costs. School districts now put nearly 17 percent of their payroll costs toward pensions.

Even as the state has required local units of government to cover more unfunded mandates, it also has cut the amount of state dollars it sends to schools and local governments.

Between fiscal 2003 and the current budget year, local governments have seen state payments decline by 20.7 percent, while higher education is getting 16.4 percent less and public schools are getting 6.8 percent less, according to the nonpartisan Senate Fiscal Agency.

``They're cutting money to cities ... and at the same time passing burdens onto cities,” said Andy Schor of the Michigan Municipal League. ``This report shows that it’s costing a lot of money.” Tom Hickson of the Michigan Association of Counties said a Michigan State University Extension survey in 2005-2006 of 27 counties, large and small, showed the state required those counties to provide $1.1 billion in services yet reimbursed them for only $550 million of their costs.

``For 30-plus years, the state has not funded its mandates. Our hope is that, going forward, this can resolve that and more mandates don't get pushed down to us,'' he said.
Legislative Commission on Statutory Mandates report: http://council.legislature.mi.gov/files/lcsm/lcsm_final_report.pdf






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