Revenues are down, as reported repeatedly by the House and Senate Fiscal Agencies, mostly recently reported here back in late July. Today, Governor Granholm ordered an additonal $127 cut to reflect the reality of the drop in revenue - and the Republicans want to continue to use those outdated May revenue estimates in hopes that the Magic Revenue Pony will come galloping in and save them from having to do their jobs when it comes to funding the schools.
Here is the release from the Governor's office:
Governor Jennifer M. Granholm today announced that state Budget Director Bob Emerson has notified state lawmakers that based on declining revenue in the school aid fund, state aid payments to school districts will be prorated by approximately $127 per student.
Emerson’s action follows a letter from state Treasurer Robert Kleine indicating a $212 million gap between the spending called for in the K-12 school aid budget and the School Aid Fund revenues available to pay for it.
“We’re facing a crisis in funding K-12 education in our state,” Governor Granholm said. “The K-12 school aid budget that is just days old is woefully underfunded. The Legislature needs to act now to find the revenues that are critical to our schools.
“We won’t solve the serious school-funding problem we have in Michigan today unless we are honest about its magnitude,” Granholm said. Proration will be reflected in the December 20 school aid payment unless the new revenue to make up the shortfall is identified and appropriated through a new law passed by the legislature and signed by the Governor within 30 days.
In a letter to the state budget director, Treasurer Kleine explained that at the consensus revenue estimating conference held on May 15, 2009, the Department of Treasury, the House Fiscal Agency, and the Senate Fiscal Agency jointly determined that $10,563,000,000 would be available in state School Aid Fund revenue in fiscal year 2009-2010. Combined with an estimated $171,000,000 in revenue carried forward from fiscal year 2008-2009, $10,734,000,000 would be available for expenditure from the state School Aid Fund in fiscal year 2009-2010.
The state school aid budget for fiscal year 2009-2010 as approved by the Legislature and presented to the governor on October 9, 2009, (Enrolled House Bill 4447) authorized expenditures from the state School Aid Fund totaling $10,793,954,100. The amount authorized by the Legislature in Enrolled House Bill 4447 therefore exceeded the amount available for appropriation from the state School Aid Fund based on the May 15, 2009, consensus revenue estimate by $59,954,100.
As signed into law and enacted by the governor, House Bill 4447 (now 2009 PA 121) authorizes expenditures from the state School Aid Fund totaling $10,741,605,400. Item vetoes by the governor of state School Aid Fund expenditures totaled $52,348,700. Including the item vetoes, state School Aid Fund expenditures authorized by 2009 PA 121 exceed revenues available based on the May 15, 2009, consensus revenue estimate by $7,605,400.
In addition to this shortfall, since the May 15, 2009, consensus revenue estimate for the state School Aid Fund was determined, state School Aid Fund revenue has declined and not kept pace with projections. The Department of Treasury now projects that state School Aid Fund revenue available for expenditure in fiscal year 2009-2010 will total $10,529,600,000, including $10,434,300,000 in revenue for fiscal year 2009-2010 and $95,300,000 in revenue carried forward from fiscal year 2008-2009 into fiscal year 2009-2010.
Under these projections, total state School Aid Fund revenue generated in fiscal year 2009-2010 will be $128,700,000 lower than the May 15, 2009, consensus revenue estimate, and revenue carried forward from fiscal year 2008-2009 into 2009-2010 will be $75,700,000 lower.
Given these projections, the amount appropriated from the state School Aid Fund for fiscal year 2009-2010 under Section 11 of 2009 PA 171 ($10,741,605,400) exceeds the amount available for expenditure from the state School Aid Fund in fiscal year 2009-2010 ($10,529,600,000) by $212,005,400.
Got all that? No? In other words - we are short. It's not likely to get better. Any delay in action will cause school districts to have to make even more drastic cuts towards the end of their fiscal year, and they were hopping mad already that the budget was as late as it was. So, the governor is taking this action now so schools know where they stand, and no surprises are thrown at them when it's too late to make changes later.
Bishop is off somewhere right now, throwing an absolute fit about this, and claiming that they should stick with those inacurate May numbers. You'll hear a bunch of nasty things being said - but all the name-calling and finger-pointing in the world doesn't erase the fact that we need more money to fund our public schools.
Period. And it's up to the legislature to figure it out. If not, wave goodbye to public education as you know it.
UPDATE: Here is the DNews initial take on this story, and note the words in bold.
House Fiscal Agency Director Mitch Bean said school revenues are down about $200 million compared to May estimates and Treasurer Bob Kleine said the shortfall is $264 million because the lingering recession is slamming sales tax and other revenue harder than expected.
But Senate Fiscal Agency chief Gary Olson sent a memo to Senators Wednesday saying that based on May revenue projections and promises to pass $100 million in additional revenue, the school aid fund should have a $123 million surplus by the end of the fiscal year.
The K-12 budget that was passed had $100 million in unspecified revenue. The Senate answer to that was to freeze tax credits for the poor, mess with the film industry, and give business a tax cut that would have left a bigger deficit down the road. The House has not acted on that measure, or any others for that matter - and therefore this $100 million that Republicans claim balances the K-12 budget does not exist.
UPDATE 2: As usual, Peter Luke has the best report on this story - including a rumored $500 per pupil cut in the next budget, and a rare quote from Speaker Dillon. Check it out.