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State Facing $383 Million In Revenue Shortfalls
Senate Education Budget Proposals for 2008-09
Senate's School Aid Budget Proposal for 2008-09
Senate's Higher Education Budget Proposal for 2008-09
Senate's Community College Budget Proposal for 2008-09
School Board Members Allowed to Serve as Volunteers
Attachment: Proposed Fiscal Year 2008-09 Foundation Allowances
Lobby Day 2008
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State Facing $383 Million In Revenue Shortfalls
The State of Michigan is facing revenue issues totaling $383.6 million according to Senate Fiscal Agency. The budget shortfall for the current fiscal year totals $134 million ( $119 million from the General Fund and $15 million from the School Aid Fund) and for the coming fiscal year $249.6 million ($114.2 million General Fund and $135.4 million School Aid Fund).
The key issues facing the state during the current fiscal year (2007-08) include: tobacco settlement shortfall - the companies have been withholding around $30 million; the federal stimulus package is expected to cost a loss of around $22.3 million this year due to changes in how businesses expense certain items; the State Education Tax (SET) is expected to bring in $35.2 million less this year than; and the Midland Property Tax settlement is expected to cost the School Aid Fund an additional $33.8 million this year.
For the coming fiscal year, (FY 2008-09) lawmakers must confront revenue related issues including:
the Federal stimulus package will reduce business taxes by $114.2 million (General Fund); SET revenues are expected to come in $100.4 million lower than expected due to falling property values; and $54.4 million to support the basic school foundation grant as local schools see loss in property tax revenue due to a loss in property values.
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Senate Education Budget Proposals for 2008-09
The Senate is attempting adhere to their schedule to have FY 2008-09 budgets through the Senate by Mid-April. Last week the Senate Appropriations Subcommittees approved budget proposals for School Aid, Higher Education, and Community Colleges. The next step is approval by the full Senate Appropriations Committee, which is anticipated to happen before the end of March, with full Senate action by the middle of April. Education funding bills will then travel to the House for their consideration.
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Senate's School Aid Budget Proposal for 2008-09
The total Fiscal Year School Aid budget approved by the Senate Appropriations Subcommittee was $13.38 billion, a 2.8 percent larger than the current year's budget, but $140 million less than the Governor's suggested budget. The budget was sent to the full committee unanimously.
Faced with an anticipated $150 million less in available funding, the version of the 2008-09 school aid budget reported by the Senate Appropriations Subcommittee made major changes to Governor Granholm's recommendations, including scrapping her proposal for smaller high schools and all-day kindergarten.
Senate Bill 1107 also significantly cut back the Governor's recommended 3 percent increase in the overall per pupil foundation grant from 3 percent to about 1.9 percent. If the Legislature does move bills making property tax cuts, the committee warned that the budget would have to be cut again.
The Senate Appropriations Subcommittee used a portion of what Governor Granholm had hoped to use for smaller high schools to provide grants for all schools to pay down debt, make immediate repairs or put money into a sinking fund.
Some of the major differences in the Governor's proposal and the Senate's proposal are listed below.
Foundation Allowance Increase. The Governor proposed to increase per-pupil funding between $108 and $216, with the smallest increase provided to districts above $8,433, and the largest to those at $7,204. The Senate proposed a $70 to $140 increase, with an extra $40 per pupil to those districts whose FY 2007-08 foundation allowances are at or above $8,433.
Kindergarten Membership. The Governor proposed language that, beginning in FY 2009-2010, in order to qualify for full per-pupil funding for children in kindergarten, the program must be full- day. Current law provides full funding for either a half-day or full-day program. The Senate did not concur. Sec. 6
Reduction in Per-Pupil Increases for High School Grades Not Offered. The Governor included a new provision affecting increases in per-pupil foundation funding, such that for each high school grade, 9-12, not offered, the proposed increase would be reduced by 7.5%. The Senate did not concur. Sec. 20(22)
Supplemental Funding to Small, Isolated Districts. The Governor allocated out of Sec. 22b, $2,025,000 for both FY 2007-08 and FY 2008-09. The additional dollars are for per-pupil grants to sparsely populated districts in the Upper Peninsula. The Senate does not concur with Governor on additional $1,25,000 earmarked for sparsely populated districts in the Upper Peninsula, but does continue $750,000 allocation in current law. Sec. 22d
Pupils Transferring to Detroit Public Schools After Count Day. The Senate requires DPS to bill not later than December 31 of the fiscal year following the year in which the pupil transferred, and allows for payment no later than October 31of the second fiscal year after the pupil transferred. Also allows the original district to bill DPS if it is determined that DPS owes funds to the district after accounting for the transfer of students between the two schools. Sec. 25c
Declining Enrollment. The Governor maintained appropriations at the 2007-08 level of $20,000,000. The Senate reduced declining enrollment funding by $5.0 million. Sec. 29
At-Risk Funding. The Governor maintained appropriation at the 2007-08 level of $321,350,000. The Senate concurred. Sec. 31a
School Readiness Program. The Governor proposed an increase of $24.0 million ($2.0 million in GF/GP) to increase by more than 7,000 the number of at-risk four-year-olds to be served in a preschool setting. The Senate did not include this increase. Sec 32
FY 2007-08 Hold Harmless for MSRP. The Governor appropriated $4,700,000 in FY 2007-08 to ensure districts receive at least what was received in FY 2006-07 for MSRP. The Senate concurred. NEW - Sec. 32e
Great Start Innovative Programs. The Governor appropriated $2,500,000 for FY 2008-09 to ISDs to identify practices that provide children ages 0-5 with quality early learning experiences that promote school readiness. The Senate did not include this new section. NEW - Sec. 32h
School Readiness Competitive Grants. Governor appropriated $14,650,000 for FY 2008-09. The additional funding is to increase the number of children served by the program. Changes proposed for defining teachers qualified to teach in the program. The Senate appropriated current year funding of $12,650,000; concurred with the Governor's proposed changes in defining teachers qualified to teach in the program; and added language detailing and effective recruitment and enrollment process, and requiring an income-eligible child to be referred to Head Start. Sec. 32l
MSRP Per Pupil Allocation. The Governor proposed a three-tier formula. Step l: fund the lesser of children in need (calculated in Section 38) or capacity. Step 2: ensure districts receive at least prior year funding. Step 3: distribute remaining funds. Caps a new program at 32 children. The Senate concurred. Sec. 39
Advanced and Accelerated Programs. The Governor increased the appropriations to $1,000,000 for FY 2008-09, with the grants up to $17,500 for each ISD. The Senate increased funding by $65,000 to $350,000, and increased grants from $5,000 to $6,100. Sec 57
ISD Operational and Targeted Funding. The Governor increased funding for ISD operations to $83,812,000. ISD would receive a 1.2% increase in basic funding, and the remaining $1,929,000 would be for ISDs to collaborate with the Department to strengthen curriculum and instruction related to the Michigan Merit Curriculum in high schools not achieving AYP. The Senate proposed a 1.1% increase with no new language included. Sec. 81
21st Century Schools Fund. The Governor included language and guidelines for the proposed 21st Century Schools Fund, including eligibility and grant funding. The Senate included a different infrastructure proposal, providing per pupil grants for paying down capital debt, deposit into a sinking fund, or immediate building repair equal to approximately $16 per pupil. (Sec. 11n)
Center for Educational Performance and Information (CEPI). The Governor appropriated $6,755,400 from GF/GP in FY 2008-09. Adds a requirement that the CEPI coordinate the electronic exchange of students among K-12s and postsecondary institutions. Appropriated 1,793,200 in FY 2008-09 from Federal funds. The Senate increased CEPI's funding by $2.3 million and clarified that this applies to the extent funding is available. (Sec. 94a)
Michigan Virtual University. The Governor added requirements that the MVU work with postsecondary groups to develop an outreach plan with access to online resources designed to increase postsecondary enrollments, and that MVU provide a report on schools served, courses offered, and number of online enrollments. The Senate concurred. (Sec. 98)
Math and Science Centers. The Governor continued State appropriations of $3,500,000 and increased Federal funds to $5,249,300. The Senate increased State funding by $1,000,000 to $4,500,000. The increase is for those centers that can offer credit recovery and remedial assistance in math and science courses. The Senate concurred with Governor's increased Federal funding.
Sec. 99
Assessment Funding. The Governor revised the FY 2007-08 SAF appropriation upward to $29,322,400 and replaced Federal funds transferred out of the Department of Education Budget. Federal funds in FY 2007-08 are revised downward to $5,477,600. For FY 2008-09, State funds increased to $30,872,800 and Federal funds increased to $8,512,900. The Senate concurred with Governor on FY 2007-08 SAF and Federal appropriations. For FY 2008-09, several changes (listed below) are anticipated to reduce State costs by $2,000,000, to $28,872,800. Federal funds are concurred in. Policy changes include requiring all non-free lunch eligible students to pay for Merit Exam retakes, restricting any Merit Exam writing exams to only the ACT writing test, and requiring all three WorkKeys components to be administered. Also, the Department is required to identify specific grade level content expectations to be taught before and after the middle of 11th grade, so that teachers will know what content will be covered within the Merit Exam. Sec. l04
Schools of Choice (Contiguous ISDs). The Governor changed "15 day period" to "at least 15 calendar days but not more than 30 calendar days". Required enrollment to be not later than the end of the first week of school. Required the written agreement regarding special education costs to address how the agreement shall be amended in the event of significant changes in the costs or level of special education programs or services required by the pupil. The Senate concurred with the calendar day change, but does not include the written agreement regarding special education cost requirement. Instead, language is included stating that the enrolling district under this section is responsible for all costs of a special education student, without any costs borne by the resident district. Sec. 105c
Adult Education. The Governor included a new requirement that Adult Education programs determine educational gain by testing participants before enrollment and at the end of the instructional period, using assessments approved by the Department. The Senate did not concur, and retained current law. (Sec. 107)
Michigan Public School Employees Retirement System Rates. The Governor reduced the contribution rate from 16.72% in the current year to 16.54% in fiscal year 2008-09. The Senate Concurred. Sec. 147
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Senate's Higher Education Budget Proposal for 2008-09
The Senate Appropriations Subcommittee on Higher Education rejected Governor Granholm's incentive-based funding formula and instead proposed a 3-percent increase to all 15 public universities. However, they appropriated the exact same amount as the Governor, a $1.8 billion Higher Education budget for Fiscal Year 2009. Below are specifics in Senate Bill 1099:
State University Operations. The Governor provided a total increase of 3.0%, with individual university increases ranging from 2.3% to 6.2%. The increases were distributed based on three factors: 1) number of undergraduate Pell Grant awards; b) amount of research and commercial licensing activity; and c) number of academic degrees conferred, with a higher weight given to math, science, engineering, and health degrees. The Senate provided an increase of 3.0% for each university, to rebuild base appropriations. Sec. 468
Tuition Restraint Language. The Governor added expectation that universities will limit resident undergraduate tuition increases to 2.3%. The Senate retained FY 2007-08 language linking increases for tuition and financial aid. Sec. 436.
Per Student Floor Funding. The Governor deleted intent to provide $3,775 per student. The Senate retained this language. Sec. 450
Michigan Promise Grant Program. The Governor recommended $90.5 million for Michigan Promise Grants for students from the graduating classes of 2007 and 2008. The Senate concurred.
Michigan Merit Award Program. The Governor recommended an additional $5.2 million for students from previous classes eligible for Michigan Merit Awards. The Senate concurred.
Tuition Incentive Program (TIP). The Governor increased funding by $4.1 million to $25.2 million to fund increasing numbers of TIP recipients and higher tuition costs. The Senate concurred.
Tuition Grants. The Governor maintained funding at FY 2007-08 level of $56.7 million, changed application deadline from July 2 to June 1, and deleted reference to a grant amount and carry-forward provisions. The Senate retained FY 2007-08 language and added intent to secure a 3.0% increase. Sec. 402
Grants and Financial Aid. The Governor and Senate recommended $3.3 million in fund shifts from State restructured revenue to State GF/GP. Except for the adjustments for Merit Awards, Promise Grants, and TIP, there were no other changes from the FY 2007-08 total funding levels.
Other Student Financial Aid Programs. The Governor retained current funding of $114 million for state competitive scholarships, tuition grants, Michigan work-study, nursing scholarships, and other student financial aid programs. The Senate Concurred.
Project GEAR UP. The Governor continued current funding of $3,000,000 to target 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. The Senate concurred.
Timely Student Graduation. The Senate added intent for universities to provide counseling and not change general graduation requirements. Sec. 471
2007 Delayed Payment. The Senate added intent to penalize universities that did not provide promised tuition rebates. Sec. 472
Universities represented by AFT Michigan would receive the following Operations appropriations:
| State University Operations |
Governor's
Proposal for
FY 2009 |
Senate's
Proposal for
FY 2009 |
| Michigan State University |
$297,991,200 |
298,844,000 |
| University of Michigan - Ann Arbor |
333,629,800 |
333,143,100 |
| University of Michigan - Dearborn |
26,771,900 |
26,053,900 |
| University of Michigan - Flint |
22,581,500 |
22,021,300 |
| Wayne State University |
225,984,000 |
225,617,900 |
| Eastern Michigan University |
79,562,900 |
80,107,300 |
| Western Michigan University |
114,700,800 |
115,485,600 |
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Senate's Community College Budget Proposal for 2008-09
The Senate Appropriations Subcommittee concurred with the Governor's proposal to appropriate $302.2 million for the fiscal year 2009 Community College Budget in Senate Bill 1093.
Operations Funding. The Senate concurred with the Governor's increase of 3%. Funds would be distributed using the funding formula developed by the Performance Indicators Task Force which considers enrollment and completion rates. Individual college increases range from 2.4% to 3.9%.
Community Colleges represented by AFT Michigan would receive the following Operational appropriations:
| FY 2009 Community College Operations |
Henry Ford
Community College |
$21,086,400 |
Lansing
Community College |
$30,051,900 |
Kirtland
Community College |
$2,873,700 |
Wayne County
Community College |
$16,041,400 |
At Risk Student Success Program. The Senate concurred with the Governor's recommendation to maintain $3.3 million in funding to assist academically at-risk students. Sec. 401. (1)
Community Colleges represented by AFT Michigan would receive the following At-Risk appropriations:
| FY 2009 Community College At-Risk Funding |
Henry Ford
Community College |
$161,900 |
Lansing
Community College |
$153,500 |
Kirtland
Community College |
$125,400 |
Wayne County
Community College |
$132,600 |
Renaissance Zones. The Governor increased funding from $3,025,000 to $3,480,900, to reimburse colleges that lose property tax revenue as a result of the establishment of Renaissance Zones. The Senate reduced this line by $100.
Nursing Programs. The Senate included a $100 placeholder for nursing programs.
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School Board Members Allowed to Serve as Volunteers
House Bill 4220 (Espinoza, D-Crosswell) has been signed to become Public Act 22 of 2008. This act permits a school board member to serve as a volunteer coach or supervisor of an extracurricular activity, under certain conditions.
Current law prohibits a public officer or public employee from holding two or more incompatible offices at the same time, with some exceptions. Under Public Act 22 of 2008, that provision would not prohibit a member of a school board from being appointed to or serving as a volunteer coach or supervisor of a student extracurricular activity if all of the following conditions were present:
- The school board member received no compensation for that service.
- During the period he or she served as a volunteer, the member abstained from voting on issues before the school board concerning that program.
- There would be no qualified applicant available to fill the position if the school board member were excluded.
- The appointing authority had received the results of a criminal history
check and criminal background check from the Department of State Police or
the FBI for the member.
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Proposed Fiscal Year 2008-09 Foundation Allowances
Download .pdf copy of FY2008 Foundation Allowances
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Lobby Day 2008
Tuesday, April 22
Lansing Center, Lansing, Michigan
Register now at www.aftmichigan.org
REGISTRATION DEADLINE: APRIL 1, 2008 |
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