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Michigan Tries Radical Route to Reform

State's move to cut its major source of education financing is straining political alliances and threatening school closings

MICHIGAN is taking the radical route to education reform.

Two months ago, its legislature and governor agreed to cut most property taxes - the major source of funding for public schools. If they don't figure out how to replace that money, and soon, most school districts will find it impossible to stay open next fall.

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``This represents a kind of brinkmanship,'' says Michael Traugott, program director at the University of Michigan's Center for Political Studies in Ann Arbor.

``It's also education reform by accident,'' says David Plank, professor of educational administration at Michigan State University in East Lansing. ``The stakes are extremely high and the probability of agreement is extremely low.''

Republican Gov. John Engler will have to reach a compromise in a statehouse evenly split between Republicans and Democrats. If they don't find common ground, ``this whole thing could blow up in everyone's face,'' says Bill Ballenger, editor of a biweekly newsletter called Inside Michigan Politics. And the politics of agreement are dicey.

Even if the parties find a solution, each side risks alienating powerful friends. Governor Engler will have to think twice about forcing wealthy (and largely Republican) communities to cap their spending on schools. Democratic State Sen. Debbie Stabenow, who introduced the dramatic tax-cut amendments, has angered the state's most powerful teachers' union. The state's highest-ranking labor official recently called the senator ``unelectable.''

Complicating matters, both Engler and Ms. Stabenow are eyeing the race for governor next year and covet the mantle of education reformer. Both of them cast the current crisis as a historic opportunity to reform Michigan education.

``We need first to define what quality education is, and then we'll decide how much it's going to cost,'' says Bobbie McKennon, special assistant to State Treasurer Doug Roberts. ``We have an opportunity here to really restructure education so we get the outcomes we want and deserve.'' The treasurer is heading up the governor's education-reform team.

The governor is expected to announce his plan Oct. 5, when he addresses a joint session of the legislature.

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Stabenow released her reform program last week.

``We have families that are changing, economic changes, and our schools need to reflect that change,'' she said in an interview.

Her plan would drive decisionmaking down to the individual school, allow students to attend schools of their choice within their particular district, and funnel more funding to the districts that historically have gotten the least funding.

But neither she nor any other politician has explained how legislators plan to make up the $6.8 billion they cut from property taxes in July.

Education reform and property taxes are closely connected in Michigan because the latter provide most of the revenue for public schools. The result: Wealthy communities raise far more money per student than poor ones. Upper-crust Bloomfield Hills, Mich., gets $9,534 per student; rural Bad Axe gets only a third that much.

The state's politicians have a few funding alternatives to the local property tax. At the state level, they can impose a new statewide property tax, raise Michigan's sales or income taxes, increase the single business tax, or pursue some combination of all four. Engler does not want to raise income taxes, and Michigan voters have twice rejected initiatives to raise the state sales tax.

Even if the politicians reach agreement, Michigan's constitution limits the amount of state taxes to 9.49 percent of total personal income.

That means legislators won't be able to raise more than $3.8 billion from state sources. The rest would have to be made up with local taxes. The state could reauthorize communities to raise sales, income, or even property taxes that would boost school funding.

Legislators will have to hurry, though. If a funding package isn't passed by Dec. 31, any bill would have to pass the legislature by a two-thirds majority in order to take effect in time. The property tax cuts are scheduled to take effect next summer.

``You've got to go at that [reform] in a coherent way,'' says Philip Kearney, an education professor at the University of Michigan and coauthor of an initiative petition on school financing. ``You don't do that with these silver bullets.''

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