How one Grosse Pointe public entity
found a new way, and why it matters

After a year of drama tempered with a great deal of wonkish financial analysis, the Grosse Pointe Public School System Board of Education approved a budget last night. The meeting at Parcells Middle School was sparsely attended, and while I had to duck out before the PowerPoint barrage concluded, I'll assume the clouds did not part and no heavenly beam shone down on the proceedings when the final vote was cast.

But this budget, and its cornerstone, the recently ratified contract with teachers, represents something special. If we can't wrangle a choir of angels, this column will have to do.

I recently learned, via an excellent podcast of "This American Life," of the concept of "the Jaws chart" – one with one line (costs) rising steadily, a second (revenue) falling, together forming a suggestion of an open maw, coming after taxpayers. The Jaws chart is the story of the age for our public institutions, as declining property values, unemployment and disappearing jobs mean falling tax receipts, at the same time the costs associated with those institutions, mainly that of public employees, continue to rise. And while Grosse Pointe is far from an ocean, our waters are full of sharks.

Look at the anguish in the Shores, where a 1-mill tax increase last year led to a painful, protracted recall battle – and where the special election settled little, and the fighting goes on. The Woods had a similar blowup last summer. There isn't a city manager who isn't struggling to do more with less, or less with less, patching and stretching and jury-rigging budgets and praying they hold until things turn around. Whenever that is. And whatever that means.

The schools are no different, at least in the big picture. Enrollment is falling. The financial firestorm sweeping Lansing has reached the barn where the sacred cows are kept, and that includes school funding. The district had to absorb a $3 million cut mid-year, with no guarantee more won't come in the future. Of course fewer students require fewer teachers, but the ones who remain become more expensive by the year, as health-care costs rise, among many others. Not every financial problem can be solved with pink slips.

The administration's contract with teachers represents a major step forward in closing the shark's jaws, and while the board and administration get a great deal of credit for coming up with the solution, the teachers deserve at least that much for agreeing to it. What it does is put the two sides in the same boat, pulling oars in the same direction.

A complicated formula links salaries and benefits – the major cost of running any school system – to the district's income and its biggest liquid asset, its fund equity, the rainy-day cash on hand. If the district prospers, the teachers will, too. If it doesn't, and it probably won't, for at least a few more years, the teachers could see pay cuts.

That's a scary thing to agree to, which is why the teachers deserve credit for approving the new contract this past spring. Millions in the private sector have already seen salary cuts in this disastrous economy, so it's not like they don't have company. But far more important, it closes the shark's mouth.

Brendan Walsh, the board treasurer, is understandably enthused about the deal, having written about the district's finances extensively on his own blog. But he points out that the partnership it creates gives teachers more control over many elements of their compensation than they had in the past.

"If they see (rising) health-care costs will curb their take-home pay, they're going to be more willing to consider changes in the health plan," he said, offering one example. The classic adversarial model of labor and management falls by the wayside when there's less to argue over. And, with the fund equity pegged at an agreed-upon level (10 percent of expenditures, or roughly $10 million), it allows the district to leverage it in future planning. It's no longer something for teachers to covet and administrators to hoard against an uncertain future.

The contract model is already catching on around the state, with Ann Arbor and Farmington the first to imitate it.

Which makes me wonder if this is possible at the municipal level. The situations aren't exactly equivalent. Under Proposal A, school districts can no longer raise money independently, as municipalities can, and employee unions can always push for that. But the blowouts in the Woods and Shores should tell them how taxpayers are feeling about tax increases, even ones that translate, amid falling property values, into lower tax bills. Everyone's feeling poorer these days, and many actually are.

I wish we could have a public discussion that starts with acknowledging what we have in common, that the good times are over, and that the road back will be a long one. The community survey conducted by the Chamber of Commerce was a good start, but the results were hardly surprising. Yes, everyone loves the services and other perks of Grosse Pointe life. What are we willing to pay? That's the hard part.

Addendum: I mentioned a podcast earlier. "This American Life," the public-radio show, looked at the wrangle over ruinous public budgeting recently, in "Social Contract." That link will take you to a podcast and/or stream. Recommended.

• Login or register to post comments
• Printer-friendly version
• Send by email