By Mike Scott
Legal News
The recent economic swoon, combined with falling home values and the continued impact of Michigan’s Proposal A, has put a death grip on the budgets of school districts across the state, with as much as 84 to 87 percent of a district’s expenses attributable to personnel costs, the value that The Thrun Law Firm offers to its clients at such a time is assured.
Based in East Lansing with a larger office in Novi, Thrun’s clients are composed primarily of school districts and municipalities, two groups of employers that have
come under fire with budget and labor challenges in the past few years.
It has placed even more importance on the work of the firm’s 24 employees, the majority of which counsel school district administrations on issues related to
compensation and benefits, unions and finances.
“The amount of time expended by us on (compensation, benefit and union) issues increased after public bargaining was allowed in the state in 1967 and there have been peaks ever since, generally when the economy suffers,” said Patrick Berardo, a partner who has been with the firm for more than 40 years.
Thrun attorneys are currently working with clients to address a range of industry issues ranging from financial management legislation that includes the possibility of emergency managers being appointed by Michigan Gov. Rick Snyder to take over financial management responsibilities within a district to potential legislation that could curb the rights of union members to engage in collective bargaining.
These and other issues are at the forefront of the challenges that face school district administrators.
The firm has created a series of presentations held at sites around the state of Michigan designed to update clients on an array of industry trends and topics.
That interactive part of the firm’s practice and increased communications has resulted in a higher degree of client loyalty and satisfaction during a time when the needs of school district administrators are greater than ever.
“The topic of public schools is in the middle of a very public debate that everyone as an opinion on,” Berardo said. “There is hardly anything that our clients are involved in that isn’t impacted in some way by the budget situation.”
Thrun attorneys also consult with clients to address everything from millage ballot language to the establishment of educational foundations to working with them to create affordable benefit options, Berardo said.
They work with administrators who are involved in labor negotiations and have been consulted by the Michigan Legislature on what the impact of curbing collective bargaining rights could have on teacher unions.
The firm works for as much as 80 percent of all school districts in Michigan, often working on either labor or finance issues, but rarely both, Berardo said.
The attorneys are even actively involved in administrator discussion regarding how to manage the revenue needs of elective activities ranging from sports to drama to other school-sponsored clubs.
It is no secret that the last couple of years have seen many districts establish “pay to play” programs for student athletes to help offset the costs of having sports teams.
“I think most districts are getting to or already at the point where pay to play is a necessity and others are looking at increasing that cost,” Berardo said. “It’s especially true with sports because of the added cost.”
The firm’s lawyers also provide guidance on how educational foundations should operate and how to afford the cost of bands and aforementioned clubs.
One challenge with offering such activities is that with reduced salaries and benefits, some teachers are less willing to provide their time to run drama or chess
clubs after regular school hours, requiring the need for volunteer parents.
While the majority of the firm’s clients are school districts, the challenges faced by municipal clients are very similar, Berardo said.
“You can draw a lot of parallels between public workers and teachers right now,” Berardo said.
But school districts have even fewer options. Proposal A, passed in 1994, essentially capped the property tax revenue that school districts could ask for and receive.
That limited the ability of districts to go public for new money.
The theory was that the state would make up the revenue difference when needed, but the expectation was that a prolonged downturn in the economy would have the exact impact that is not being experienced in terms of budget deficits and necessary cuts.
“You are seeing things like class size increase which no parents want to see,” Berardo said. “But it’s a clear trend.”
Another trend that the Thrun is experiencing is that school districts are looking for ways to defray general fund costs.
Two examples are through building and maintenance costs, and creating bond issues through equipment and school buses, issues that the firm’s attorneys provide guidance on regularly.
“They are looking for ways to generate revenue,” Berardo said. “You can cut costs and raise revenues, especially with state funding way down. Most districts need to do both.”
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