Granholm Issues $127 Per Pupil K-12 Cut

October 22, 2009 - Gongwer News

GRANHOLM ISSUES $127 PER PUPIL K-12 CUT

Michigan schools will face the hammer of another $127 cut per student as part of a proration ordered by the administration of Governor Jennifer Granholm, who said the action was dictated by shrinking revenues and denied the move was an attempt to force legislators to enact revenue increases.

But in a press conference, Ms. Granholm said she took the proration action, along with her earlier veto of some school funding, to "defend public education from a serious threat" caused because the Legislature has not passed revenue increases. And she called on parents and teachers across the state to contact lawmakers and urge them to push for more revenues to help close the gap.

Ms. Granholm took the action during a day in which Senate Republicans said a memo from the Senate Fiscal Agency proved that her earlier veto was not needed, and despite her projections the K-12 school aid budget was in fact balanced. Senate Majority Leader Mike Bishop (R-Rochester) issued a scathing letter to her and legislative Republicans charged she acted as she did to try to force a tax increase. (See related story).

But an angry Bob Emerson, the state budget director, said at the same press conference with Ms. Granholm, that when the school aid budget was completed two weeks ago, "I told everybody in the room" that if they were relying on the May revenue estimating numbers "it was wrong, and they all agreed it was wrong." He said that "everyone in the room" included Senate Appropriations Chair Sen. Ron Jelinek (R-Three Oaks) and Rep. Terry Brown (D-Pigeon), the House K-12 Appropriations Subcommittee chair.

Under law, now that a proration letter has been issued, the Legislature has 30 days to act to offset the reduction. And Mr. Emerson said it was critical for lawmakers to act before they took a break at Thanksgiving or for the firearm deer hunting season.

According to Ms. Granholm, the state now faces a shortfall in the School Aid Fund of $212 million.

Unless counteracted by the Legislature, that will mean cuts of another $127 per pupil which comes of top of the $165 per pupil cut that was enacted in the K-12 School Aid budget, HB 4447*, signed this week. School administrators across the state had already warned those cuts could force layoffs during the school year.

For 39 school districts that got "hold harmless" funds under Section 20j in the school aid act, the proration could bring their per pupil cut to nearly $600.

Ms. Granholm said this action would have been made necessary in January when the first revenue estimating conference of 2010 would be held, but it would be unfair to school districts to make that wait that long for bad news. A proration announced in January, when their fiscal years are already more than half-over, would be too late for them to adjust.

To repeated questions of whether the move was politically motivated, Ms. Granholm, Treasurer Robert Kleine and Mr. Emerson all said the "numbers don't lie."

Ms. Granholm said, "We have never seen times like this in Michigan. We have never seen times where we have had to cut like this."

Mr. Kleine said the estimates were based on projections looking at the state's continually weakened revenues. He had the first indications of the situation about a week ago when September revenues were finally tallied, and said that the October estimate is not looking promising.

Since the May Revenue Estimating Conference, sales and use tax revenues are some $91 million below projections.

Mr. Kleine said he discussed the situation with both Senate Fiscal Agency Executive Director Gary Olson and House Fiscal Agency Director Mitch Bean.

He disagreed with Mr. Olson's now much-talked about memo about the School Aid Fund, saying Mr. Olson was relying on the May estimates, which are not panning out, and on $100 million in revenues the Senate has passed, but which have not yet been signed into law.

And Ms. Granholm said she doubted there was much House support for the main provision in the Senate plan, which was to freeze the Earned Income Tax Credit, making it unlikely that provision would pass.

Asked why Mr. Kleine and the administration did not call for an earlier revenue estimating conference, which could possibly force lawmakers to take action to raise revenues, Mr. Emerson said it would take too long to prepare the necessary documentation.

There is an urgency to act now, he and Ms. Granholm said. And while Ms. Granholm said she expects lawmakers to hear from parents and school officials, she called on them to urge lawmakers to pass revenues in order to avoid crowded classrooms and the elimination of after-school programs and other cost cutting measures.

"If you care about schools, if you care about children getting a good education, contact your legislator," she said, adding the issue was not just about "the present for the future as well."

But Matt Marsden, spokesperson for Senate Majority Leader Mike Bishop (R-Rochester), blasted Ms. Granholm's decision.

"I think it's absolutely unnecessary," he said. "It's I think an irrational approach."

Mr. Marsden questioned why Ms. Granholm would not wait for the January revenue estimating conference to see what happens with revenues in the interim.

"You don't know that the pro-rata cut that you're putting out there now is necessary," he said. "It reeks of a stunt."

Mr. Marsden said the state does not need new revenue to balance the budget and expected no action to raise revenues.

"Why would we reward this behavior?" he said. "She is certainly within her legal rights to issue the pro-rata cut. I just question the rationale behind it."