David Hecker
President

Lois Lofton Doniver Secretary-Treasurer

Louise Somalski
Legislative Coordinator

September, 2007

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

Senate Cuts $900Million from Budget

With the start of the 2007 - 2008 fiscal year just one week away, it is believed that state government will need to be shut down if a revenue solution to the $1.75 billion deficit in the Fiscal Year 2008 budget is not found by Thursday. The Senate passed $900 million in cuts to next year's budget, during a rare Sunday night session.

A Senate Fiscal Agency analysis estimated the various cuts to state government could lead to hundreds of state employee layoffs and still leave a $600 million hole to be filled, presumably with a tax increase.

Minutes before the votes were cast, Senators were handed nearly 900 pages (Senate Bill 511) in cuts that included $116.8 million to the Department of Community Health, $111.2 million to the Department of Corrections, $35.9 million to higher education, $207.5 million from the Department of Human Services and $7.1 million to community colleges.

Senate Bill 511 contains the following education reductions.

Higher Education: Includes a $35.9 million reduction with the elimination of the 2.5% funding increase that is assumed in the current year funding level. The bill includes $138.7 million to pay the funding that was delayed in FY 2006- 07.

Community Colleges: Includes a $7.1 million reduction with the elimination of the 2.5% funding increase that is assumed in the current year funding level. The bill includes $25.8 million to pay the funding that was delayed in FY 2006-07.

Department of Education: Includes a $3.5 million reduction from the current year level. The majority of the Department of Education cuts come from reductions in the superintendent's office and central support, possibly resulting in 44 layoffs.

Senate Bill 237 contains a $363.7 million reduction in the school aid fund.

• Does not include a 2.5% recommended increase in the basic per-pupil foundation allowance ($289.7 million).
• Eliminates all funding for Declining Enrollment grants ($20.0 million).
• Eliminates all funding for Middle School Math grants ($20.0 million).
• Eliminates all funding for FIRST Robotics ($150,000).
• Eliminates funding for a one-time study of conductive learning ($250,000).
• Eliminates one-time funding to the Michigan Virtual High School for a career preparation software program ($500,000).
• Eliminates federal carry-forward funding for the Freedom to Learn program ($1.5 million).
• Reduces state At-Risk funding by $28.0 million, or 9.0%.
• Reduces School Bond Loan Fund debt service by $40.6 million to reflect savings due to refinancing.
• Reduces Proposal A obligation payments by $192.0 million to reflect fewer pupils and higher taxable values.
• Increases mandated funding by $37.8 million for Special Education and $68.1 million in federal funds for various programs.
• Increases funding for the MEAP by $10.3 million in State funds and by $374,800 in Federal funds.

Senate Bill 511 (General Fund) was passed by 20-18 and Senate Bill 237 (School Aid Fund) was passed by 21-17, along party lines, except for Senator Garcia's vote against Senate Bill 511. The $900 million in cuts still leaves a nearly $600 million deficit in the 2007 - 2008 budget. However, the Senate took no steps on Sunday to enact any kind of a tax increase.

The House stuck both bills on the second reading status for the time being. Reflecting the critical time line, both chambers are returned to session on Monday, September 24.

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Income Tax Bill Goes to Conference Committee

The House-passed version of House Bill 5194 kept the income tax rate at 3.9 percent, but created an exemption for disabled veterans.

The Senate removed any reference to a tax rate and removed the tie bar to the sales tax on services. They then tie-barred the measure to 24 Senate and House bills, virtually the entire list of government reforms Republicans have proposed.

House Bill 5194 is currently tie-barred to bills that would give Medicaid patients incentives to stay healthy, require a government efficiency commission, create the Public Employee Health Benefit Act, create a continuation budget, require Department of Corrections reforms, add income tax credits, require education employees to pay more of their retirement costs, and prevent state and education employees from double dipping into the retirement system.

The House voted 108-0 on Sunday, September 23, to reject the Senate's empty tax proposal, sending House Bill 5194 to a conference committee to work out a final solution to the revenue side of the Fiscal 2007-2008 budget. Administration officials reportedly stated that as long as the legislation is in place by Thursday, state accounting systems could be ready for the fiscal year to begin.

The six conferees (three House, three Senate) are expected to be named quickly. In conference committee, a higher income tax rate (4.6%) will hopefully be inserted into the bill as part of a general agreement. A 4.6% income tax increase would render only and estimated $1 billion, not sufficient to balance the $1.75 billion hole in the Fiscal Year 2008 budget.

The Senate version of House Bill 5194 basically left about $650 million to be dealt with in order to balance the state's $1.75 billion budget shortfall. The question of tie-barring the bill to $900 million in cuts and to the reforms is a matter the conference committee will need to try to hash out. A continuation budget could still be part of the deal.

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Consolidation of School Services

House Bill 4592 (Melton, D-Auburn Hills) was signed by the Governor on September 19, to become Public Act 63 of 2007. This public act will do the following:

• Require each intermediate school district (ISD) to study opportunities for its constituent districts to share services with other providers of similar services, such as the ISD, other districts or ISDs, other local units, and other programs designed to achieve cost savings.
  
  
• Require the board and officials of each constituent district to cooperate with the ISD in its study.
  
  
• Require each ISD, within six months after the bill's effective date, to submit a report on the results of its study to the Michigan Department of Education (MDE).
  
  
• Require the MDE, within two months after receiving the ISDs' reports, to compile the information from them and submit a summary to the legislative standing committees responsible for education legislation.

An ISD's study and report would have to address possibilities for sharing, at least, pupil transportation, human resources administration, purchasing, technology support, professional development, financial and legal services, food and child nutritional services, event management, production printing and graphics, and shipping and receiving.

In addition, the ISD's report also would have to describe the average cost per constituent district for each of those services. If the ISD has already conducted a study that meets these requirements, it is not required to conduct another study, but shall submit a report on the results of the study to the Department as required by this bill. The bill would require ISDs to use funds allocated to them under the State School Aid Act to comply with these requirements.

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Common School Calendar

Senate Bill 549 (Jelinek, R-Three Oaks) passed the Senate on June 27, 2007. The House Education Committee approved a substituted version that is currently on second reading on the House floor.

As amended by the House this bill would:

• 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 with the 2008 - 2009 school year.
  
  
• Require common school calendars for at least five years.
  
  
• Require the calendar to identify the dates at least of a winter holiday break and spring break, 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.

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Concealed Weapons in Schools

House Bill 5162, introduced by Representative Dave Agema(R-Grandville), along with sixteen other Republican representatives, would allow administrators, teachers, and other school employees to carry concealed weapons into the classroom.

In addition, parents and legal guardians could carry a concealed weapon on school property, if he or she is dropping the student off at the school or picking up the student from school. The same would apply to parents leaving children at daycare or childcare centers.

It would be up to the "chief executive officer" at each school to sanction the concealed pistol on that school property. Concealed weapon carriers would have to successfully complete training considered appropriate by the superintendent. Under this bill, students shouldn't be allowed to know who is carrying firearms.

House Bill 5162 has been sent to the House Judiciary Committee for their action.

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House Approves Stripped down Health Care Pooling Package

On September 4, the Senate passed the "Public Employees Health Benefit Act" that was supported by every union and education-related organization except the MEA.

The Senate version of the plan would have allowed a public group that provides coverage for at least 100 people to receive its own claims data. And Senate Bills 418 - 421 would have required any pool to seek new bids every three years in an effort to shop the market for the best insurance price possible.

Senate Bill 418 was passed in the Senate by Roll Call Vote No. 295 (AFT Michigan desired vote is "YES"):

On September 11, the House stripped the health care pooling package of all meaningful content and passed a very neutered version. As passed by the House, state employees were removed from the package at the request of the UAW because the catastrophic fund is no longer included.

The main bill in the package, Senate Bill 418, was amended by House Democrats to require claims data be released only by region and not by employer. Another House Democratic amendment removed wording requiring bidding of health care insurance.

Under the diluted House version, school districts and other governmental units could still pool its employees' health care coverage, but the public entities would not have access to its own claims data.

Senate Bill 418 was passed in the House by Roll Call Vote No. 363 (AFT Michigan desired vote is "NO"):

Now, as well as being tied-barred to each other, the bills in the health care pooling package are also tie-barred to a common school calendar bill (Senate Bill 549). Senate Bills 418 - 421 were returned to the Senate for their consideration. On September 18, Senate Bill 418 was sent to conference committee.

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Public Employees Health Benefit Act
Senate Bills 418 - 421
As Passed the Senate 9/4/07

The Public Employees' Health Benefit Act, introduced as Senate Bills 418 - 421, were amended and passed by the Senate on September 4, 2007 . These bills currently include the following:

Comprehensive Health Care Purchased Through Coalition/Regional Pools

• Public employers will be encouraged to join together to form regional purchasing pools or to participate in local purchasing pools, while maintaining existing collective bargaining rights.

Purchasing pools offer the opportunity for public employers to leverage the purchasing power of a coalition to obtain improved pricing of administrative services and the savings that accrue from self-funding.

Transparent Health Care Cost Information for Public Employer and Employees

• Public employers will have access to detailed claims information at the hospital and physician level, subject to meeting HIPAA regulations.
  
  
• Public employees will have access to information on the cost of physician and hospital health care services.

• This proposal will save public employers and employees' money spent on health care.

• It will maintain collective bargaining rights and the ability to negotiate health care coverage at the local level.

• The state will not mandate participation in the local insurance pools, but we are convinced that if employees exercise the option through collective bargaining, there will be significant health care cost savings.
  
  
• Participation in this plan will be open to all school districts, public school academies, intermediate school districts, community and junior colleges, public universities, and other public employers.
  
  
• This legislative proposal will provide employees and employers with health care claim utilization and cost data which can be used to make informed decisions about health care benefits and costs through the collective bargaining process.
  
  
• In total, we estimate school health care savings of 6% without reducing employee coverage. These are real dollars that can be used for programs and services to students and communities.

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