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Education Finance, Standards Rank High on Governors' Agenda

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Lansing, Mich--Gov. James J. Blanchard has frozen more than $216 million in state aid to schools in a bid to help solve the state's severe financial crisis.

Governor Blanchard's move--which also indefinitely delayed $280 million in aid to colleges and local governments--came just eight days after his inauguration as Michigan's first democratic governor in 20 years. And it prompted stunned school officials to warn that a lengthy delay in aid payments could lead to layoffs or payless paydays.

In announcing the aid freeze, Governor Blanchard warned educators to prepare for more bad news.

"I do hope that these are indeed deferrals," he said.

"But it's quite possible--depending on how we handle the fiscal problem--that they may turn into cuts as well."

The Governor described last week's action as just a first step in a comprehensive four-year financial recovery package he will outline on January 26.

Michigan currently has a 17.6-percent unemployment rate--the highest in the nation. A blue-ribbon budget investigation panel, headed by former U.S. Secretary of the Treasury Michael Blumenthal, has estimated the state's current deficit at more than $750 million and urged the new government to consider raising the state income tax.

Detroit Hardest Hit

Hardest hit by the aid freeze is the 200,000-student Detroit school district, which must now cope, at least temporarily, without its $53-million February aid payment.

"Things will be very tight, but hopefully we can squeeze by if our revenues from property taxes come in on time this month," said Clement Sutton, chief financial officer for the Detroit Public Schools. "Beyond February, however, we have no way to meet our payrolls without state aid."

"The open ended aspect of this order is of particular concern to us," he added.

Reaction in other Michigan school districts ranged from lack of interest to alarm. Under the state's school-funding formula, wealthy districts receive almost no state aid and will barely be affected by the order.

But middle- and low-income districts were up in arms.

Buildings Closed

"We have already closed three buildings, cut teacher salaries 13 percent, shortened class days to five hours, and let go our support personnel," said William Bedell, superintendent of the Romulus district in a blue-collar Detroit suburb. "What more can we cut?"

Mr. Bedell warned that the $400,000 withheld from Romulus could force him to disobey state laws that require districts to balance their budgets and to offer 180 full days of instruction.

In the Utica district in suburban Detroit, the deferral of $2.2. million will force officials to dip into district savings, costing about $25,000 per month in lost interest.

Support Called Inadequate

During his campaign for governor last fall, Mr. Blanchard criticized outgoing Gov. William G. Milliken for failing to provide adequate support for public education.

Under Mr. Milliken, state aid for elementary and secondary schools fell from $1.45 billion in 1978-79 to $1.17 billion in 1981-82.

About $1.22 billion had been earmarked for schools this year before Governor Blanchard's deferrals.

Many longtime political observers in Lansing suggested that the new governor's frightening words to schools were designed to soften the blow of the anticipated tax increase.

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