David Hecker
President

Lois Lofton Doniver Secretary-Treasurer

Louise Somalski
Legislative Coordinator

October, 2007

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

Revenue Deal Reached

In the wee hours of the morning on Monday, October 1, the Legislature completed action on bills that created a revenue package for the 2007-08 fiscal year, as well as established a 30-day continuation budget. Legislative approval of a comprehensive solution to the state's budget crisis prevents massive cuts to public safety, health care and education. In the end, the agreement involved trading off tax increases for cuts and reforms.

The Legislature still has a lot of work to complete in the next month to enact a 2007 - 2008 budget. Reductions totaling $440 million must still be enacted, cuts that are likely to touch nearly all education programs. Officials must now set budget targets for the state's departments so the conference committees can begin work on the final budget documents. Even with the tax increases, hard decisions on cuts will remain.

K-12 schools, community colleges and universities will likely get a meager 1 percent increase in the budget agreement. Lawmakers will still have to cut $212 million from the general fund budget, and $162 million from the school aid budget compared to spending for the 2006 - 2007 year.

Top

Continuation Budget (SB 772 & SB 773 - Public Acts 91 & 92)

The deal also includes Senate Bills 772 and 773, a 30-day continuation budget. The regular bills that make up the state's Fiscal Year 2008 budget will be passed as part of the overall deal in the days to follow.

Senate Bill 772 provides for interim general fund appropriations for the month of October 2007. The bill provides appropriations for the period October 1, 2007, through October 31, 2007, for all State departments and agencies, the legislative branch, the judicial branch, universities, community colleges, and capital outlay programs.

The funding levels assumed in the bill, with several exceptions, are for 1/12th (8.3%) of the FY 2006-07 year-to-date level of appropriations.

The appropriations for community colleges and universities are equal to the projected State appropriations that the institutions would receive in October 2007 based on the payment schedules currently in law. In addition, the bill contains line-item appropriations for the payment of funding that was delayed to help balance the FY 2006-07 State budget. The level of appropriations for the payment of the delayed FY 2006-07 funding equals $25.8 million for community colleges and $138.7 million for universities.

Senate Bill 773 appropriates, in most cases, 1/11th of fiscal year 2006-07 allocations in order to provide funds for the first monthly school aid payment (October 22, 2007) of fiscal year 2007-08 to school districts, charter schools, intermediate school districts.

All programs funded with State dollars, except under Section 11j, are appropriated at 1/11th of their fiscal year 2006-07 amount, with language specifying that all State funds are allocated for the same purposes, from the same funding sources, and under the same conditions as State funds were allocated under the Act in fiscal year 2006-07.

Most programs appropriated under this bill total 1/11th because school aid payments are made over 11 months during the year, beginning in October and ending in August, and this funding continues fiscal year 2006-07 policies and appropriations into the month of October, 2007. Section 11j provides debt service funding for the School Loan Bond Redemption Fund, and is funded in its entirety at $1,900,000.

Federal funds are appropriated in their entirety, with updated estimates for most Federal grants reflected in Section 39a. Also, Federal bilingual funds appropriated under Section 41a in fiscal year 2006-07 are moved into Section 39a, and Federal carry-forward funding appropriated under Section 98b in fiscal year 2006-07 for wireless technology is repealed since that program has ended.

The bill contains three boilerplate sections. The first (Section 8b) includes a mechanism for providing district codes to charter schools in the event more than 100 schools open in one county; the second (Section 17b) provides for the payment schedule; and, the third (Section 147) reduces the retirement rate charged to districts to support the Public School Employees Retirement System. (17.74% in 06 -07 to 16.72% in 07-08).

Top

Income Tax Hike (House Bill 5194 - Public Act 94) - Part One

Michigan's first income tax increase in 24 years passed the Legislature, with Lt. Governor John Cherry cast the deciding vote in the Senate to approve House Bill 5194 on a 20/19 vote. The measure had passed the House earlier on a 57/52 vote.

House Bill 5194 increased the current 3.9 percent tax rate to 4.35 percent. A rollback in the rate will begin in 2011. It will raise about $765 million of the estimated $1.75 billion deficit for the current fiscal year.

Top

Service Tax Expansion (House Bill 5198 - Public Act 93) - Part Two

House Bill 5198, which broadly expands the sales tax to such services as janitorial work, mailing, copying and dating operations, was passed by the Legislature with a vote of 20/19 in the Senate and 56/53 in the House. The plan is to put the expansions in place by Dec. 1, 2007.

Given an effective date of December 1, 2007, HB 5198 would increase use tax revenue by an estimated $613.8 million in FY 2007-08 and $751.3 million in FY 2008-09. The use tax rate is 6%, of which 2% is constitutionally earmarked to the School Aid Fund (SAF), while the remaining 4% is General Fund/General Purpose (GF/GP) revenue.

Therefore, this bill would contribute $204.6 million to the School Aid Fund and $409.2 million to the GF/GP revenue by in FY 2007-08. Contributions to the School Aid Fund will be $250.4 million and $500.9 million to the GF/GP in FY 2008-09.

Top

Public Employees Health Care (SB 418-421 - Public Acts 106-109) - Part Three

Governor Granholm has signed legislation creating more health care coverage options. Provisions contained in the Public Employees Health Care Act include:

• Maintains collective bargaining rights and the ability to negotiate health care coverage at the local level.
  
  
• Does not mandate participation in the local insurance pools - they are voluntary.
  
  
• Allows all public school districts, intermediate school districts, school academies, community and junior colleges, public universities, and other public employers to pool together for better health insurance rates.
  
  
• Pooling may be self -funded or they may share risk.
  
  
• Once a group joins a pool, they must stay in the pool for 3 years. If they leave a pool, the may not rejoin the pool for 2 years after leaving.
  
  
• Requires health insurance carriers to release aggregated, HIPPA-protected claims data for employee groups of 100 or more employees or a combination of employers that together have 100 or more employees.
  
  
• Requires groups to seek 4 bids every three years when renewing or continuing a medical benefit plan. At least l bid must be from a V.E.B.A.
  
  
• The Office of Financial and Insurance Services (OFIS) will oversee and regulate these pools.

The House passed the package 56/53. House Roll Call No. 442 is listed below:

Corriveau Senate Roll Call No. 378 is listed below:

Top

Graded Premiums (Senate Bills 546 and 547 - Public Acts 110 and 111)

Reforms specify the following:

• Affects new education employees hired on or after June 29, 2008.
  
  
• New education employees will be vested in healthcare benefits at 10 years of service, at a coverage rate of 30%.
  
  
• New education employees will have 4 percent of the healthcare premium paid by the retirement system for each year they work to a maximum of 90 percent, at 25 years of service.
  
  
• New education employees will be prohibited from purchasing service credit without having earned at least two years of service credit on hours of service performed.
  
  
• New members who retire early as a result of purchasing service credits must pay for health care until the age they would have otherwise retired.

Currently, all workers earning more than $15,000 have to contribute $510 and 4.3 percent of their salary to the retirement system. Under Public Act 110 and 111, new workers will still contribute $510 plus 6.4 percent of their salary to the retirement system.

Top

Common School Calendar (Senate Bill 549 - Public Act 101)

Public Act 101 requires school districts within an intermediate school districts to operate under a common calendar. The House passed the bill 64/45 and the Senate passed the bill 38/0. Senate Bill 549 contains the following provisions:

• Require an intermediate school district, in cooperation with its constituent districts and public school academies, to adopt a common calendar for all of its constituent districts and ISD programs by July 1, 2008 and comply with the calendar beginning with the 2008 - 2009 school year.
  
  
• Require the calendar to identify at least the dates of a winter holiday break and spring break for at least the next five years, and encourage common professional development days.
  
  
• Provide that a school district or ISD would not have to comply with the common school calendar until after its collective bargaining agreement expired, if that agreement were in effect on the bill's effective date and conflicted with the common calendar.
  
  
• Make exceptions for a year-round school or program in operation on the bill's effective date; an international baccalaureate academy; and a public school that operated grades 6-12 at a single site, and aligned its high school curriculum with advanced placement courses as the capstone of the curriculum.
  
  
• Permit an ISD or school district that began operating a year-round school or program after the bill's effective date, or that was operating or began operating a school or program on a trimester schedule, to apply for a waiver from the bill's requirements.
  
  
• Authorize the superintendent of public instruction to grant a waiver from these requirements.

Top