David Hecker
President

Lois Lofton Doniver Secretary-Treasurer

Louise Somalski
Legislative Coordinator

February, 2007

Links to current Advocacy Campaigns
may be found in the Legislative Action Center

Governor's Education Budget Recommendations

On February 6, Governor Granholm, in her State of the State Address, declaredthat Michigan is at a decisive moment in history. Michigan must choose to invest in its people so we can grow and compete. We must build a Michigan where our children choose to raise their own families and where every citizen has the opportunity to have a good job and enjoy a good life.

Two days later she presented her economic plan investing in education, public safety, and health care. Her plan would solve this year's shortfall of almost $900 million and fund next year's budget. She presented a budget that will make this all this possible with spending cuts, government reforms, the "two-penny" plan, and the Michigan Business Tax to replace the Single Business Tax.

The Governor's 2008 budget will invest an estimated $15.5 billion in educating Michigan's citizens through its public schools, community colleges, and universities. The Governor's recommendation for 2007 - 2008 Education Budgets include:

• increasing per pupil funding for K-12 schools by $178 per pupil;
  
  
• increasing our investment in higher education by over $43 million;
  
  
• investing $200 million to expand early childhood education.

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The Executive Budget Based on Tax Restructuring

The basic elements of the tax restructuring plan include:

• The Michigan Business Tax (MBT). The MBT has the broadest base and the lowest tax rate possible and will provide substantial personal property tax relief. It will eliminate the tax on payroll, benefits, and health care and preserve the economic development tools that will help attract new jobs and investment. The MBT, with revisions, represents a $480 million tax cut from the Single Business Tax.
  
  
• A "two penny" tax on services, excludes education, day care, and health care services. As the economy has shifted from producing goods to providing services, in order to stay competitive, we must shift our tax system. To the Average person, the 2% service tax will cost around $1.33 per month - about the cost of a bottle of pop from a vending machine.
  
  
• This service tax applies only to registered businesses, not to your child's lemonade stand or the neighborhood kid who mows your lawn. The Governor's plan is progressive - those who make the most money typically spend the most on services. For just $1.33 per month, Michigan citizens will get increased investment in our public schools; in early childhood education; in our colleges and universities; in health care for the elderly, the poor and the disabled; and in training for workers impacted by trade and outsourcing.
  
  
• An estate tax applicable to about 350 estates each year and decoupled from the federal estate tax. At least 18 states and the District of Columbia have decoupled from the federal estate tax to ensure that their tax codes are independent and no longer affected by federal changes. Estates that are valued at $2 million or more are subject to this change with the exception of family farms and businesses. This will generate about $119 million in 2008.
  
  
• An increase in the tax on other tobacco products and a five-cent increase in the rate on cigarettes. The proposal doubles the tax on other tobacco products and raises over $36 million, while the increased tax on cigarettes generates about $21 million for 2008.
  
  
• An increase in the liquor mark-up percentage. The Michigan Liquor Control Commission currently sells liquor with a 65 percent mark-up prior to selling to licensees. This proposal would generate $29 million by raising that percentage to 75 percent.
  
  
• The elimination of certain tax loopholes. The closing of these tax loopholes will generate about $84 million for the General Fund and School Aid Fund.
  
  
• A sales tax break for people who trade in a car when they purchase a new vehicle. By charging sales tax on the difference, this will save taxpayers $180 million a year and spark auto sales.

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Public Education and School Employees' Jobs are in Jeopardy!

The Governor's proposal will solve the fiscal crisis by eliminating the current budget deficit and put the state on solid financial footing. Without the Governor's budget, the state will be forced to make deep cuts to schools before the end of the school year and additional cuts in public safety and health care.

Contrary to the naysayers claims that this will drive away business and make Michigan a high-tax state, the Governor's plan ensures that Michigan will remain below the national average in both business and personal taxes.

AFT Michigan supports the Governor's tax proposal and urges all our member to assist in getting it passed by the state legislature. Please contact your state legislators urging their support for public education and the Governor's proposal.

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2007 - 2008 Executive School Aid Budget

The Governor's 2008 School Aid Budget proposal totals $13,431,028,400, an increase of $337,283,300 over the current year. Listed below are some of the highlights of the 2008 Executive School Aid Budget.

Foundation Allowance. Proposes rolling in the 2006 - 2007 $23 equity payment, and increasing the foundation allowance by another $178 per pupil. Sec. 20 (1)

ISD Operational Funding. Increases funding for ISD operations by $2.0 million to $82.1 million, matching the 2.5% increase in the basic foundation. Sec. 81

Declining Enrollment. Increases payments to districts that experience two consecutive years of declining enrollment (not including charters), from $20.0 to $36.0 million. The payments would equal the district's three-year pupil membership average minus the actual pupil membership times the district's foundation allowance. If insufficient funds are available the funding would be prorated. Sec. 29

School Readiness Per-Pupil Funding Increase. Proposes increasing the per-pupil funding for the half-day preschool program for educationally at-risk four-year-olds from $3,300 to $3,500, for a total $5,400,000. Sec. 32d

Full-Day School Readiness Program. Creates a full-day preschool program funded with a foundation allowance for up to 26,000 educationally at-risk four-year olds at a cost of $194.6 million. In the following year districts must make a full-day kindergarten program available for these pre-schoolers. Sec. 32e

Elimination of Parental Involvement/Education Option under Michigan School Readiness Program (MSRP). Recommends removing the optional use of MSRP funds for preschool and parenting programs (PIE) as found under former Sec. 32b, when that section was in effect for FY 2001-02. Sec. 32d(1)(b)

Health/Science Middle College. Proposes doubling the funding from $2.0 million to $4.0 million in grants to intermediate school districts or Detroit Public Schools for a program that links high schools with community colleges for students to attain an associate's degree in the health sciences upon graduation from high school. Sec. 64

School Services Consolidation Incentives. Appropriates $10.0 million for incentives payments to school districts that establish written cost-sharing agreements with their intermediate districts. Sec. 22e

Extra Requirements for Intermediate Districts. Proposes additional requirements for ISDs to receive operational funding. These requirements include that they employ at least one person trained in rules, regulations, and district reporting procedures for the individual-level student data that serves as the basis for the calculation of the district and high school graduation and dropout rates; compliance with sections 1230g, 1278a, and 1278b of the Revised School Code, and provision of data and other information as required by law to CEPI and DOE. Sec. 81

Adult Education Reimbursement Formula. Changes the distribution of payment to districts for funding adult education students from 90% for enrollment and 10% for completion to 75% for enrollment and 25% for completion. Sec. 107

Michigan Public School Employees Retirement System Rates. Proposes revaluing the Michigan Public School Employee Retirement System (MPSERS) assets to their fair market value, thus allowing the rate change to districts to decline from 17.74% of payroll into FY 2006 - 2007 to 16.72% in FY 2007 - 2008. If that legislation is not enacted, the rate would increase to 18.56%. Sec. 147

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2007 - 2008 Executive Higher Education and Financial Aid Budget

The Governor's 2008 Higher Education and Financial Aid Budget proposal contains $1,812,912,700 for Michigan's fifteen public universities. This is an increase of $25,421,400 over the previous year. Listed below are some of the highlights of the 2008 Executive Higher Education and Financial Aid Budget.

Research Universities Operations. Adds an inflation increase of 2.5% ($20,950,300) for Michigan State University, the University of Michigan-Ann Arbor, and Wayne State University. Creates a separate appropriation bill for these three universities which are characterized as "research universities".

State University Operations. Includes an inflation increase of 2.5% ($15,626,900) for each of the other 12 public universities and they are funded in a separate bill, along with grants and financial aid.

FY 2006-07 Payment Delay. Proposes a delay in half of the $138.7 million August 2007 State payment for University Operations, the Agricultural Experiment Station, and CES; includes the restoration of this payment in FY 2007-08, with the payment to be made on October 16, 2007. Sec. 212(2)

Cooperative Extension Service (CES). Reduces funding for Michigan State's CES by 9.1% ($2,655,700); the FY 2007-08 appropriation would be $26,520,700.

Tuition Grants. Eliminates these need-based grants that are awarded to students at independent colleges and universities for a savings of $58,768,100.

Michigan Merit Award Program. Adjusts funding for the Merit Program to reflect the move to the new Promise Grant Program for the class of 2007; $43.5 million of Merit Program funding was transferred to the new Program and $24.2 million was eliminated due to temporary cost savings related to the payment schedule of the new Promise Grant.

Michigan Promise Grant Program. Allocates $43.5 million for this program created by Public Act 479 of 2006 to provide merit-based grants of up to $4,000 to students who do well on the high school Merit Exam or who complete two years of postsecondary education with a 2.5 GPA.

Tuition Incentive Program (TIP). Recommends a 50.7% ($7,100,000) increase for this currently $14.0 million program that promises to pay college tuition for Medicaid-eligible students who graduate from high school, because of a growing TIP caseload.

Project GEAR UP. Appropriates $3,000,000 to target this grant for student scholarships in three urban school systems: Detroit, Flint, and Muskegon. The mission of the Federal "Gaining Early Awareness and Readiness for Undergraduate Programs" is to increase the number of low-income students prepared to succeed in postsecondary education.

Per-Student Floor Funding. Deletes.

Research and Technology Transfer Report. Deletes reporting requirement for 12 of the State universities and retained it for Michigan State University, University of Michigan-Ann Arbor, and Wayne State University. Sec. 712

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2007 - 2008 Executive Community College Budget

The Governor's 2008 Community College Budget proposal contains $297,369,000 for Michigan's twenty-eight community colleges. This is an increase of over $7,489,600 the previous year. Listed below are some of the highlights of the 2008 Executive Community College Budget.

Operations Funding. Includes a 2.5% ($7,089,600) General Fund across-the-board increase for community college operations.

Wayne County Community College. Includes a $225,000 General Fund special adjustment for Wayne County Community College to fully restore $450,000 that was reduced in FY 2003-04. Public Act 153 of 2006 (FY 2005-06 Supplemental Appropriation Bill) restored $225,000.

Abortion Services. Eliminates this section that prohibit colleges from using funds appropriated in this Act to provide health insurance coverage for abortion services and provides for certain exceptions and penalties.

At Risk Student Success Program. Modifies this section by requiring that equipment or information technology hardware or software purchased under this section must be associated with the operation of a program designed to address the needs of at-risk students.

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Governor Announces Town Hall Meetings on State's Finances

Governor Jennifer Granholm is going to undertake a series of five, live, televised "town hall meetings" over the next week in an effort to build public understanding of the state's financial situation. The Governor intends to discuss the scope of the state's problems; and she will also be open to hearing ideas from the public.

The governor will present her ideas on "how best to move Michigan forward." The state's fiscal condition has not improved and Governor Granholm is calling on the state to enact a "two penny" sales tax on services to help stave off devastating cuts to the budget.

The audiences will vary from venue to venue. Stations in Grand Rapids and Detroit will choose participants, while the administration and stations will work together to select audiences in the other three locations. Republican leaders have been invited to the Lansing televised event.

Each of the sessions will be an hour long. The sessions are scheduled for:

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The Senate Also Scheduled Town Hall Meetings on Budget

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