Published Online: November 5, 2009

Mich. House Taps 2010 Stimulus Funding for Schools

The Michigan House voted Thursday to tap federal stimulus money set aside for next year to soften a cut in school funding now, but it's unlikely the move is going to win the support of the state Senate.

By a mostly party-line vote of 74-29, a majority of House members said the $184 million should be used to help schools avoid all but $10 of a $127-per-student cut Granholm ordered last month.

Schools still would see their funding drop by the equivalent of $165 per student. That was the decrease lawmakers passed in the school aid budget for the fiscal year that started Oct. 1.

The bill also would give back half of the nearly $52 million Granholm vetoed from 39 of the state's wealthier districts and spend an equal amount on school districts at the lower end of the scale. House Democrats say they'd pay for this with a mix of tax and fee hikes that have yet to pass the House and are unlikely to pass the Senate.

School districts shouldn't count on getting any of the money back just yet, given the reaction of Republicans who control the Senate. Granholm said Thursday she would sign the bill if it got to her desk, but she'd prefer a longer-term option.

Highlights of what the bill will do:

•Restore all but $10 of a $127-per-student cut ordered last month by Gov. Jennifer Granholm. The money would come from tapping $184 million in federal stimulus funds that were to be saved until next year. Schools still would face the equivalent of a $165-per-student cut.

•Give 39 wealthier school districts back half of the nearly $52 million Granholm vetoed while giving those at the low end of the scale $27.5 million to make school payments more equitable. The bill doesn't contain a way to pay for this.

•Require that the school aid budget be passed by June 1 each year, in line with when school district fiscal years begin.

•Restore school bus inspections with $800,000 from the general fund.

•Restore some money for early childhood programs.

"Using Recovery Act dollars merely kicks the can down the road and creates a bigger problem for the school aid fund next year," Granholm spokeswoman Liz Boyd said.

The Democratic governor has urged lawmakers to restore the $127 per student by raising taxes on tobacco products other than cigarettes, reducing certain business tax breaks and eliminating an inflationary increase in the state income tax personal exemption.

A Senate Republican spokesman said the House should tap $100 million saved by freezing a tax credit for low-income workers rather than the stimulus money. A bill to do that has passed the Senate but has not been taken up by the House, in part because the bill is tied to one that would begin rolling back a business tax surcharge this year.

The House is "trying to take $184 million in federal stimulus money that we've all agreed that we're going to need to not run off a cliff in the next fiscal year ... and ignoring $100 million in revenue that's sitting there available for use," said Matt Marsden, spokesman for GOP Senate Majority Leader Mike Bishop of Rochester.

Granholm opposes giving businesses a tax break if it relies on freezing workers' tax credits, even if it means more money for schools.

The governor said she cut $127 per student because state revenues are falling, creating a $212 million hole, and she doesn't want to wait until a revenue estimating conference in January to adjust school aid payments.

Republicans dispute that the school aid budget is in the red and say any shortfall can be addressed with the extra $100 million they've suggested.

School districts have said that, regardless of the size of the cut, they'll to have to slash staff and services halfway through the school year to make ends meet. Brad Biladeau of the Michigan Association of School Administrators said lawmakers aren't living up to their vow to support public education.

"This is just more political posturing, and it's predicated on more promises," he said. "While it moves the ball down the road, it will by no means get us across the finish line."

Lawmakers voting against using the stimulus money said the state was wrong to solve its current budget problems with money it should be saving for next year, when schools are likely facing cuts of $300 to $400 per student even if the $184 million in federal stimulus funds is still available.

"We're creating false hopes out there," said Rep. David Hildenbrand, R-Lowell.

Supporters, however, said school districts simply couldn't cope this year with cuts ranging from nearly $300 per student for all school districts to more than $600 for the 39 losing the extra funding.

"Investing in our children is the best decision we can make right now," said Rep. Terry Brown, D-Pigeon, who oversees the public schools appropriations subcommittee. "With tough economic times ahead, we must do all we can to protect their future and find ways to avoid even deeper cuts to funding next year."

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