THE MICHIGAN DAILY wwwmmw Educators Take Up Finances Of School And Its Relation To Comnmun1ity A Meetings Close (Continued from Page 1) Michigan increased more or less au- tonatically until 1930, with the grw- ing proceeds of the utility taxes, schol expenditures increased even faster," he said. "Rising educational standards were the chief cause. "In the period from 1923 to 19.0, for example, expenditures increased about 55 per cent to a peak of $134,- 000,000, while school population was increasing 22 per cent. The large proportion of this peak figure of school costs due to capital outlay ($21,400,000) and to debt charges on past borrowings ($17,000,000) indi- cates the important part played by plant expansion and improvement in this rapid increase. "After taking account of aid from the state, new loans and minor reve- nue sources, Michigan school dis- tricts in 1930 balanced their budgets by a local school tax of $79,360,000,- the principal resource at their corn- m'and," Professor Caverly said. "By 1932," he continued, "despite some reductions in levies, the mount- ing delinquency in the collection of di property taxes had become a se- rious obstacle to this balancing of the school budget. In earlier years non-collection of current tax levies has usually been just about offset by collections of back taxes. In 1932, however, the total collection includ- ing back taxes, was but some 80 per cent of the levy; while the collections of the current year will probably be between 60 per cent and 65 per cent." "In individual districts, delinquency has been a still more serious factor," Professor Caverly stated. "This fail- ure in the basic resource of the schools has precipitated the financial crisis in education as, similarly, in all branches of governmental activ- ity, he said. "Following upon the breakdown in property tax collections," he contin- ued, "came the threat of further re- duced tax resources as a result of the constitutional amendment of last fall limiting the total levy of taxes on property to fifteen mills for oper- ating purposes.~ "Had this limitation been enforced literally, the threat would have ma- terialized. Fortunately, the decisio of thie Michigan supreme Court in the Pontiac case exempting chartered muiciplities - all 'cities and vl-- laes -fromi the limitation has greatly relieved the pressure. "axes Jevied for city and village purposes need not be included with- in the maximum 15 mills. It is not too much to say that the decision averted a complete financial break- down" of local government in the atate" tii the light of the Pontiac deci- sion, it was possible to draft the necessary enforcing legislation, the Prpperty Tax Limitation, or Alloca- tion Act, in such manner as to ac- cord considerable protection to the interests of the schools, Professor- Caverly said. "This law, which inci- dentally established no limits on tax rates in itself, but merely provides machinery for allocating the consti- tutionally limited rate, guarantees school districts a minimum alloca- tion of four mills for operating pur- poses and gives school interest ade-' quate representation on c o u n t y boards set up to administer the allo- cation. "The districts can, of course, obtain as much more than four mills as their needs, in comparison with the needs of other' branches of govern- ment, may warrant. "in cities and villages schools should be ale to levy, on the aver- ago, as much as hitherto as far as constitutonal power is concerned. The real limit will be the amount of taxes that property owners can. affor to pay. "In rural 4istricts, where the town- ship government must be provided for, the pressure will be greater, and some decrease in the average rate' of school tax levies is probable. On the whole, however, the limitation; amendment is far less restrictive than' it seemed, before a liberal interpreta- tion was placed upon it by the court," Professor Caverly said. "Nevertheless by the first of this year it was apparent that education in Michigan was facing a serious fis- cal' emergency," he said. "Shortly after the Legislature con- vened, therefore, a comprehensivet and ambitious program was initiated by educatioiial interests in the State, designed-to bring the financial power of the State government to the ies- cue of local school districts Thisl program called for a Legislative ap- propriation of the round sum of $25,- 000,000 as additional State aid to schools, over and above the estab- lished Primary Fund; together with a new plan for the apportionment of State educational funds. The estimates upon which this fig- ure was based were roughly as fol. lows. It was maintained that school operating costs in 1933-1934 could not reasonably be reduced below $69,475,000, a figure derived from the eta ted'school population of the coming year and the per capita oner- mary Fund were placed at $18,000,- 000. The property tax was estimated at $25,000,000, assuming a five-mill levy on a State valuation of $6,00,- 000,000 less 16 2-3 per cent delin- quency. The gap between revenues and expenditures, so estimated, is $26,475,000, giving rise to the con- clusion that additional aid of at least $25,000,000 would be required to per- m iit even very economical peration throughout the school year," Profes- sor Caverly said. "Estimates of tax developments in Michigan during the next months are necessarily subject to wide possible errors. "Assessed valuations, rates, collec- tions, payments on back taxes, all these are subject to unforeseeable economic and legal changes. Never- theless it seeis probable that this estimate, in the lightof present co- ditions at least, is definitely on the pessimistic side. Specifically, the five-mill figure for average operating levies is too low. "Certainly there will be no legal obstacle to an average school levy higher than this. If, for example, the average turns out to be seven mills instead of five, the shortage between revenues and expenditures will be decreased by some $10,000,000. Fur- thermore collection of back taxes has been left entirely out of account. "While the relief accorded to de- linquent payers during the last ses- sion will materially slow up back tax collection, some revenues can reason- ably be anticipated from that source. Despite these considerations it still stands out that without added State aid in 1934 local schools in Michigan will be unable to function," he went on. "The plea of education was urged upon the State, vigorously if not too discretely, at a time when the State also was facing a serious financial and fiscal problem. "There was a current deficit a serious State general fund of some- thing like $8,000,000. The limitation amendment, and other considera- tiois, made it desirable to eliminate the State property tax levy, which would leave a gap in the State's resources of $23,000,000. "Welfare expenditures from the Statetreasury were in prospect, in amount of $12,000,000. These facts, in themselves, created a grave situ- ation. "The solution sought involved the enactment of a quite general sales tax at an unusually high rate, de- signed to bring in upwards of $35,- 000,000, which sum, with minor rev- enue sources, might serve to meet these requirement, after all possible economies had been effected," Pro- fessor Caverly said. "This program was, in large meas- ure, carried through. The property tax was substantially eliminated; the sales tax was passed, though in re- stricted form designed to produce $31,700,000; the welfare appropriation was passed; other appropriations were cut to fit the anticipated reve- nues. From this situation the schools emerged with their bill, the Sias- Thatcher Act, passed indeed, but se- riously emasculated," he went on. The act as passed appropriates $15,000,000, instead of the $5,000,000 for 'whih the schoolestimate of needs called, he said. "The payment of this sum to the schools is in effect contingent upon collections from the sales tax run- ning far in excess of the estimates. State appropriations taking priority over the school appropriation will absorb all but about $2,500,000 of the anticipated revenues of the State. The schools are to receive only such part of their appropriation from the salse tax fund as may remain after prior obligations are met. "The new act sets up two separate funds, in addition to the old Primary School Interest Fund, namely, the Primary Supplement Fund and the School Equalization Fund. The in- terrelationships between the three funds are complex. The workability of the distribution scheme thus cre- ated should not be prejudged. But it seems clear that, with the decreased sums of money involved, the equali- zation fund, which is to be 10 per cent of the sum of the other two, will be too small to accomplish its essen- tial purpose of aiding those districts which really need the aid. The bulk+ of the resources will still be. distrib- uted on the old census basis. Thin; phase of the act was not tampered with by the Legislature, except in- sofar as its effectiveness is decreased by the reduction in the amounts available," Professor Caverly said. "In general the schools seem to have emerged from the legislative session with a gracious gesture, in- stead of real money. The gesture will probably not pay the bills. "Against the gloomy prospect which thus emerges may be set one or- two more hopeful considerations. As sug- gested, the needs of the schools for state assistance during the co'ming year do not appear as great as was thought earlylast spring. How great they will be depends very materially on the willingness and ability of property owners to tax themselves and pay their taxes for the support of their local educational establish- ments. "IJmproving economic conditions will have a large bearing in this question. Moreover, the sales tax promises to produce well above the estiniates. "Again the prospects of economic recovery, with increasing turnover of goods and rising prices, which will expend the collections of the tax, are are basis of the expectation. .In de- fault of these elements of relief, the State will be faced with the alterna- tive of a special session of the legis- lature, convened to amplify the school program or a year of curtailed school- ing and avicious policy in the treat- ment of school personnel. "It may be hoped that at any rate the last of these prospects may not materialize," Professor Caverly con- cluded. Following Dr. Caverly on the morn- ing program, Professor Theisen's ad- dress continued the series. The speaker pointed out that the prob- lem with which he is concerned is of interest both from the legislative and from the administrative point of view. "Under the present zeal for re- ducing taxes," he said, "legislators are likely to give serious considera- tion to any measures designed to re- duce taxes, so long as they repre- sent what they believe their consti- tutents desire. All too frequently proposed tax reforms are urged by groups whose primary concern is to shift the burden of governmental support to the shoulders of others. School people have been too little concerned about what citizens know about their schools and what it costs to run them." Professor Theisen declared that the average citizen needs to be in- formed as to the cost of education in terms of what he can afford to pay. The schools are accused of spending 35sto 50 per cent of the total taxes, he said, when 20 per cent would be nearer the truth. When parents are made to realize this fact they will think twice before reducing school expenditure out of propor- tion to the reduced cost of living, according to the speaker. "We must be wary of reform in the method of taxation until we know just what the effect on schools will be," Professor Theisen said. "Concerns which create government- al burdens by attracting workers and their families to a community and then seek to escape their just share of the burden by shutting down or moving to more profitable localities the moment profits cease to roll in, must be made to pay their fair share' of the cost. Neither an income nor a sales tax is competent to meet this situation. For that reason the tax on general property should not 'be entirely removed." Claims of inability to pay for edu- cation may be more apparent than real, according to the speaker. When people are willing to spend as much for paved roads as they do for edu- cation, or are willing to spend several times as much for services or com- modities for which there is little real necessity, he said, they have lit- tle cause to grow excited over edu- cational costs. "Regardless of the ability of the public to support education, however, the schools should seize the oppor- tunity to make such readjustments in the scope of the educational pro- gram as the facts warrant. If they have been extravagent or inefficient in any sense they should endeavor to make the necessary corrections. The friends of education, however, should not pass up any opportunities to other directions that might be made point out possible economies inf which would serve to reduce the bur- den of the taxpayer and with less harm to society. Eliminations of du- plications in local governments, honesty in the enforcement of taxing laws, and proper restrictions on banks to prevent misuse of public and private funds would leave thous- ands of persons more able and will- ing to pay taxes for the education of their children," he declared. In the afternoon session, Professor Moehlman opened the addresses with a talk on "Is Fiscal Independence For Schools Necessary?" Accentuated by the depression, SUM NOW Hundreds c regulc Sues Ier Manager .; w n n Irene Ware, screen actressdnd former Folles girl, complained t Ch arles R. Kenney, Jr, had with- drawn $71,981 from her bank ac- count. He was charged with grand theft.* there has been within the past three years an increasing amount of dis- cussion -concerning the need for a complete overhauling of our tradi- tional patchwork system of taxa- tion and for a serious re-study of administrative concepts and prac- tices, he said. The subject is not new. Fnmance and tax specialists pointed out the inherent weaknesses before 1910. The twelfth conference of the National Tax Association offered a concrete program for the solution of the num- erous problems arising from the con- tinued use of a tax program design- ed for a long since outgrown rural culture," he said. "However, popular thoughit on mat- ters of taxation is extremely con- servative. There is an unusually wide gap between theory and practice in thie field. Some authorities even con- tend that there is no visible connec- tion between laboratory theories of taxation and the political practice of taxation."c The program for tax reform was said to have, within the past five governmental activities and agencies and an increasing emphasis has been progressively placed on administra- tive change as well as on taxation re form. "Political scientists, particularly specialists in local and state govern-X ment, have given ety,erjncreasing at- tention to the idea of centralization of activity and increase m size of local autonomous units," Professor Moehlman said, "In this survey the traditionaly independent school district has re- ceived its share of attention. Move-s ments within education and in the more specialized field of political sci- ence have all emphasized 'the need for change," he went on. "Much good work in the field oft education has already been accom- plished in states that examined the problem as an entirety and planned accordingly. Many poor results havel also been achieved by lack of recog- nition of the fundamental sociologi- cal factors that are every bit as im- portant and vital to organized pub- lic activity as pure political theory," Professor Moehlman said.m "We are confronted today by two sets of problems:" he said. (1) an antiquated and unfair system of tax- ation that throws a very unequals burden on the owners of real prop-e erty and (2) an inadequate and un-u satisfactory system of local govern-v ment, political and educational, evol- ved progressively by a piling up and' duplicating process since the pioneer days. "Running through both of .these problems is the thread of fiscal in- dependence common to most of these numerous local units, and the ter- minal result is a multiplicity of du- plicating tax units, admittedly an administrative extravagance from any point of view. Careful; study of the numnber of independent tax units and the suc- cessive tapping of the same sources of revenue for different public pur- poses has centered the thought of -Genuine Old Town CAN91'S For Rent 9 A.M. to 12 P.M. CANOE LIVERY Foot of Cedar Street many specialists in political scie and public finance on the indepe ent school district, Professor Mo man said. "Much has been said and wri about the need for eliminating t various' local authorities and c tralizing tax power in the hand fewer units. The outcome oft movement to date has been an creasing discussion on the part educators and specialists in gov ment and finance outside of edu tion," he said. "At the outset both sides may a on two phases of the problem.7 educator believes that the cur: system of small fiscally inadeq school districts has little to' c mend it. Differences do arise specting the particular forms of ganization to replace them. "He naturally leans to the socio ical as well as the educationally sirable organization while the pu finance specialist generally proi on the slender a'd inadequate 1 of prely statistical assumptions "The educator also agrees that present system of taxation is in quate and stands wholeheartedly hind intelligent reform in this fie Professor Moehlman said. "Vital differences of viewp arise in the third problem-fiscal dependence," he continued. "Loo at this question broadly, it is prim ily a difference between the th of general public income and theory of segregated or earmar public income; the concept of pu education as a purely essential s function, as it has unanimously b declared by every superior cour the forty-eight states, and me as a local activity. "The educator considers thef of activity in which he is engage a long-span movement that requ 9 to 15 years for the completion the institutional task of educatin individual. "If this time factor is to be c sidered seriously, it must mean promulgation and protection o fiscal policy insuring constancyf relative freedom during this peri he said. "It requires distinct separa from the political vagaries of pa sari activity. It requires an ex tive organization of techniciansr specialists to carry out the plan requires preparation and merit the selection- and direction of ess tial personnel. "In providing for early educati organization our forbears prob had soething of this need in i fo the theory of freedom from pc tical control, the maintenance the people of close popular con and interest, supplemented by fi independence have combined to p duce one of the most unusual sc systems in the world-universal e cation under the direct control of people," he said. "The people, as a state, make t generalized educational policies a as local quasi-corporations or sc districts, carry out these policies. "As a result the public scho with all of the defects inheren any functioning, public activity hi remained free on the whole f entangling political alliances and tradition of service and the pro sional executive has been so well veloped that within recent years political scientists have been clam ing for the same type of execu organization in municipal and s activity, not always recognizing pioneer work of the schools, togei with the Federal civil service, of veloping the tradition and prac of essential professionalization of rather complicated administra practices of government," Profe Moehlman stated. "In those centers where sch and municipalities have been fo into class relationships and schools curtailed in fiscal indepe ence," he said, "some of the m unhealthy political conditionso vail. "New York and Chidago furn the most striking examples. Thes SPECIAL Reduced Prices On All Permanents nce brilliant exception appears to be De- ly followed in the par l reorgar nd- troit, where an unusual educational ization of local units of political go ehl- tradition and a dymmnic public opin- ernment, much of our present 4iff ion on public education have co m- culty might be solved," Profess tten bined to produce an excellent system Moehlman concluded, hese of schools. .FISHER IS LAST SPEAKER en- "However, in those smaller inde- Dr. Fisher, the last speaker on tl s of pendent districts surrounding Detroit, program, chose as his topic "TI this such as Groose Pointe, Hamtramck, Co-ordination of Various Communit in- Highland Park, and Wyandotte, Sim- Agencies." of ilarly excellent schools have been de- enseo ern veope by fisall * ndeendntHe spoke of community projec rn- veloped byi fiscally* independent of parent teacher associations? wd ca- boards of education and at no greater ren t blcheo cubs, a proportional expense," he said. and teachers clubs. lr.Fisher sag gree "Careful study of traditional prac- he chose these glroups becasthe The tice and actual results leads the edu- were typicalrofpMichgaii cmmunit rent cator to the belief that no good and life and active organizations ofcon uate much harm may result from the sqee n c hgan. of tol om- elimination of fiscal independence influence and function of each re- and the subsequent closer affiliation above groups. or- with the professional political ma- chine..in conclusion Dr. Fisher sid con log- "The danger is too great to dare munity relations needs study an evaluation in the light 'of rece de- for the sake of a laboratory theory," happenings. Effort should be tov iblic he said, "and there is no inherent the creation of a more wholesom e s value in centralized organization. happier community life-ndot tow b se "It possesses much that is danger- a re-establishment of things as the ous. The educator is also aware of were. "Those interested in commUm the the need for reduction in the num- ity life should remember: ade- ber of tax units and is therfore ac- '1.That each one of the diffeembi be- tively in favor of larger local ad- organizations mentioned, can'th dao ld," ministrative units, whether county useless duplication. or counties in combination," he said. ere isdnoialoc oint "Cetra edcatinalautoriy ."2 There is no allocation of pi oint "Central educational authority jects carried on in communities I in- within the county, legally capable different organizations-Thle Fedi' king of equalizing all the wealth within ation of Women's Clubs may do nar- the county, would increase greatly same work in one town that U eory current tax levying collection and P. T.A.does in another. the tax-use efficiency," Professor Moehl- "3 Representatives of differi ked man said. iblic "It would materially affect certain community organizations shot tate concepts relating to state aid. The meet frequently for discussion. een vounty plan would reduce approxi- "4 These discussions should ilea t in nately the number of school taxing satisfactory conclusions about ce rely authorities approximately 90 per tain community problems. ;ent. Fiscal independence, however, "5 Representatives should not I field should be completed by these new concerned with the winning of a d as independent 10 c a 1 administrative guments, but with coming to a :i' tires units. tive solution, which is not a con n of "If this same plan were successful- promise," he concluded, g an con- the f a . and id,," C-s o o o, ? cc o coth e snd- Here are values galore! 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