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January, 2004
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February 2004
Executive Budget Proposal for Fiscal Year 2005
School Aid Budget Highlights
Community College Budget Highlights
Universities and Financial Aid Budget Highlights
Granholm Vetoes Ed-Flex Bills
Intermediate School District Legislation On the Move
2004 LOBBY DAY
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Executive Budget Proposal for Fiscal Year 2005
Governor Granholm has proposed an $8.7 billion general fund budget (community colleges, universities, and others) that marks the fourth straight year of reduced spending. Her proposal closes a $1.3 million deficit with cigarette and liquor tax increases, maintaining taxes on large estates, fund shifts, and employee savings. Aside from eliminating scholarships for private college students, no major program reductions were sought by the Governor, who said there is no consensus to move in that direction.
The Administration's proposal calls for an increase in the cigarette tax by 75 cents a pack, increasing the liquor tax, and decoupling the state's estate tax from the federal estate tax which ends in 2005. She also called for advancing the county property tax collection from December to June to help create a fund that would finance counties in lieu of revenue sharing payments for the next several years.
In order to avoid further cuts, the governor must win Republican support of her request for revenues. The economy must also begin to quickly show a turnaround in order to meet new revenue projections, especially in light of still sluggish figures from January.
House Republican Leaders have made it clear they are not endorsing the tax proposals. However, the House and Senate Appropriations Committees were told that if the Governor's proposals for the budget are not approved lawmakers need to be prepared to cut an additional $681 million from the budget.
All education budget bills (Community College, Michigan Department of Education, K-12, and University) will start in the Senate this year. Senate Appropriations Committees are just starting to hold hearings on the various education budgets. We will have more detail at Lobby Day on March 16. Sign up today - your voice is needed in Lansing to protect education budgets.
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School Aid Budget Highlights
The Governor's fiscal year 2005 proposed school aid budget totals nearly $12.5 billion, $11.2 billion of state funds and $1.3 billion of federal funds, essentially unchanged from the current year. In addition, schools are estimated to receive $3.4 billion from local property taxes.
- Funds the minimum foundation allowance at $6,700 per pupil.
- Changes "blended count" pupil membership current 20/80 formula to a 50/50 blend of the prior years' February pupil count and current years' September count, collectively costing local school districts $43 million.
- Continues to fund payments to districts with a foundation allowance greater than $9,000 per pupil at current year payment levels, costing those districts a total of $6.6 million.
- Provides funding for special education services in excess of $1.2 billion: $906.3 million in state funds (an increase of $23.6 million) and $345.5 million in federal funds.
- Maintains $314.2 million at-risk funding. In addition, over $427.0 million in federal funds are targeted to schools in need of supplemental support to improve student achievement.
- Provides a financial incentive of up to $500,000 for each school district consolidation or annexation, capped at $1.0 million statewide.
- Includes $72.8 million for the school readiness program.
- Appropriates $12.3 million in the Department of Education budget to provide preschool opportunities for over 25,000 four-year-olds.
- Increases from $3.3 million to $10.0 million Great Start Programs operated by intermediate school districts for all children from birth to five to promote early literacy, improve school readiness, and encourage positive parenting skills.
- Reduces intermediate district general operations funding by $6.7 million to pay for the above increase.
- Provides $250,000 in the school aid budget combined with $524,000 in the Department of Community Health budget to provide community-based prevention services that encourage healthy family environments for children from birth through three years of age.
- Recommends $1.0 million to initiate a planning process for the implementation of Learn to Earn Centers, which are specialized high schools operated by intermediate districts for students who have dropped out of traditional high schools.
- Maintains $39.0 million in state funding for traditional vocational education programs.
- Maintains $20.0 million adult education programs.
- Increases retirement rate to schools from 1.88 percent to 14.87 percent of payroll. The pension system will absorb some of the additional costs by using $145 million from the retirement reserve account to lessen the rate increase by 2.77%. This action will deplete this account.
- Reduces Freedom to Learn initiative to $22.3 million ($17.3 million federal and $5.0 million state funding) to reflect anticipated spending levels.
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Community Colleges Budget Highlights
The Governor's proposed community college budget for fiscal year 2005 totals $285.7 million. In addition, the Capital Outlay budget provides funding of $16.5 million for State Building Authority rent obligations for community college buildings constructed in recent years.
- The fiscal year 2005 budget includes $263.0 million in direct aid for community colleges. State aid represents approximately 28 percent of the $1.1 billion in total funding for community colleges; the balance of funding comes primarily from local property taxes and tuition.
- The Governor and the Legislature agreed to a fiscal year 2004 spending reduction plan that reduced community college spending by 4.4 percent. Those community colleges that pledge not to increase tuition and fees for the remainder of this academic year, and not to increase 2004-2005 tuition and fees above inflation (2.3%), will have 3 percent of their base funding restored. Those community colleges that do not accept the tuition restraint pledge will have their state aid reduced by another 3 percent.
- In addition to direct support for college operations, the state will subsidize pension contribution rates charged to community colleges, saving $7.2 million in retirement costs that otherwise would be charged to them.
- The recommended budget includes continuation funding of $3.3 million to support the At- Risk Student Success Program. This program provides services for approximately 58,700 students who are academically at-risk.
- The recommended budget includes $2.4 million to reimburse colleges that lose local property tax revenue as the result of the establishment of Renaissance Zones, an increase of $650,000 from the current year.
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Universities and Financial Aid Budget Highlights
The Governor's proposed universities and financial aid budget for fiscal year 2005 includes over $1.4 billion in direct aid for public universities.
- The Governor and the Legislature agreed to a current year spending reduction plan that reduced university spending by 5 percent. Those universities that pledge not to increase tuition and fees for the remainder of this academic year, and not to increase 2004-2005 tuition and fees above inflation(2.3%), will have 3 percent of their base funding restored. Funding for those universities that raise tuition above inflation will be reduced by another 3%.
- The state will subsidize pension contribution rates charged to the seven universities with employees covered under the Michigan Public School Employees Retirement System, savings of $6.4 million in retirement costs.
- Michigan Merit Award funding is recommended at $67.0 million. The Governor also proposes the elimination of the Michigan Merit Award supplement, scheduled to begin for the class of 2005, for results achieved on the middle school MEAP tests, and adds a community service requirement beginning with the high school graduating class of 2005.
- The Tuition Grant Program that provides aid to college students attending private colleges and universities is eliminated, saving nearly $64.8 million.
- The budget continues funding for the State Competitive Scholarship ($35.6 million), Michigan Work-Study ($7.3 million), Nursing Scholarship ($4.0 million), Part-Time Independent Student ($2.6 million), Michigan Education Opportunity Grants ($2.1 million), and Byrd Honors Scholarship ($1.5 million).
- Funding for the Tuition Incentive Program (TIP) is recommended at $10.3 million, responding to the growth in participation and higher tuition costs.
- The budget includes $32.2 million for the Agricultural Experiment Station and $27.7 million for the Cooperative Extension Service operated through Michigan State University. Included in these allocations is $5.4 million for Project GREEEN, a 3 percent reduction in support for these programs.
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Granholm Vetoes Ed-Flex Bills
Governor Jennifer Granholm vetoed House Bills 4693 and 4724, known as the Ed-Flex bills, designed to make it easier for schools to bypass some federal and state regulations. These bills that would have allowed school districts to have School Code and the State Aid Act provisions waived in exchange for promising to meet certain levels of academic achievement.
Granholm's veto was a welcome relief. The Republican-controlled Legislature passed the bills with the vast majority of Republican lawmakers' support. Throughout the process, the Granholm administration had made it clear they were not supportive of the legislation. House Republicans had passed similar legislation in the 2001-02 term, but it died in the Senate. As you will recall, the MF&SRP lobbied against Ed-Flex during this and the last legislative session.
Governor Granholm said the bills would grant "unprecedented and nearly unbridled discretion" over the School Code to one person: the state superintendent for public instruction. In particular, Ms. Granholm said in her veto message that she was alarmed at the possibility under the bills for school districts to obtain waivers from "key provisions of Proposal A," the 1994 landmark school finance law; accountability requirements for school districts, including maligned intermediate school districts; open enrollment requirements for charter schools; competitive bidding; corporal punishment; sex education; among other regulations.
"While I have full confidence in the judgment of Superintendent Watkins, I am not prepared to provide any superintendent of public instruction with such unchecked authority," Ms. Granholm wrote in her veto statement. The MFT&SRP is grateful for the Governor's watchful eye and veto powers on behalf of education.
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Intermediate School District Legislation On the Move
The House Education Committee is considering a large package of bills affecting intermediate school districts by:
- Requiring all intermediate school districts to have popularly elected school boards as of July 1, 2004; (MFT&SRP Opposes)
- Prohibiting constituent K-12 board members from serving on ISD boards; (MFT&SRP Opposes)
- Prohibiting ISD board members from holding other elective office; (MFT&SRP Opposes)
- Requiring all officers to be ISD board members; (MFT&SRP Supports)
- Allowing the recall of board members by popular elections; (MFT&SRP Opposes)
- Allowing the recall by of board members by constituent districts; (MFT&SRP Supports)
- Allowing and prescribing the removal of officers and board members by the Governor; (MFT&SRP Opposes)
- Requiring popular elections as voted on by constituent districts; (MFT&SRP Opposes)
- Allowing for a vote on popular elections by way of citizens petition; (MFT&SRP Opposes)
- Requiring term limits for ISD board members; (MFT&SRP Opposes)
- Allowing voters to reconsider a school or intermediate school district millage if the revenue from the millage is used for purpose other than what millage stated on the ballot if 10 percent of the qualified votes petition to do so at the next general election or at a special election; (MFT&SRP Opposes)
- Allowing the appointment of reform board for intermediate school district under certain circumstances; (MFT&SRP Opposes)
- Requiring public disclosure of school boards' voting preferences for intermediate school board members; (MFT&SRP Supports)
- Requiring that the board of a local school district ensure that the district develops and maintains a voluntary special education parent registry; (MFT&SRP Supports)
- Requiring intermediate school districts to adopt and implement a policy designed to avoid conflicts of interest by intermediate school district officials and employees. It also requires intermediate school districts to adopt and implement a policy to prohibit use of intermediate school district funds or public funds under their control to purchase alcoholic beverages, jewelry, gifts, tickets to entertainment or sporting events, fees for golf or other recreational activities, or any item the purchase of or possession of which is illegal; (MFT&SRP Supports Concept - but Opposes Detail)
- Requiring intermediate school districts to advertise for construction bids by posting a bid advertisement on a Department of Management and Budget website or other designated website set up specifically for school bid contracts for at least two weeks; (MFT&SRP Supports)
- Specifying that in addition to the annual audit currently required of intermediate school districts, Department of Treasury would conduct random financial audits of intermediate school districts at district expense; (MFT&SRP Opposes)
- Requiring constituent school districts to approve intermediate school district budgets; (MFT&SRP Opposes)
- Requiring intermediate school districts to provide at least quarterly an internet accessible database for their travel, conference, and contract expenditures.(MFT&SRP Opposes)
We would like to thank Mark Ciolek and Mike Sweeney for calling a meeting of the MFT&SRP ISD Committee in Lansing on February 12 to review the bills and establish the MFT&SRP's legislative position. Our thanks also to Priscilla Holmes, Char Kassley, Rae Marr, Maggie Messig, Mary Orloski, Ken Reid, and John Smallwood for attending this meeting and for their assistance in contacting legislators and lobbying our position on these bills.
These bills are in the House Education Committee and some are expected to move quickly. We have set up a list serve to keep our ISD locals appraised of their progress via e-mail. If you were not at the meeting but would like to be added to the e-mail list, please contact our webmaster at webmaster@mftsrp.org or call our office at (517) 371-4300.
The timing of Lobby Day will allow a perfect opportunity to talk to Legislators about these bills!
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Lobby Day 2004 -- Tuesday, March 16
LUNCH WITH YOUR LEGISLATORS
FOLLOWED BY LEGISLATIVE PANEL
Coach Transportation from Detroit Area and Northern Michigan
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Michigan Federation of Teachers & School Related Personnel
