This week, the final details were released on the agreement between Governor Whitmer and legislative leadership to address Michigan's 2019-20 budget shortfall. The broad strokes of the deal and most of its impact on schools were clear before the July 4 holiday (see MASSP's earlier article). What we got this week was confirmation that what we learned in June was correct and the additional specifics of which $60 million in K-12 line items will get a haircut.
The bottom line for schools is that there will not be a proration or similar after-the-fact funding reduction for schools for the 2019-20 school year. Some programs will see cuts, but as a whole the deal provides more, rather than less, total funding for schools. This ensures that districts can look forward to next year rather than trying to figure out how to retroactively absorb a cut for a school year that is already in the books.
There is still no agreement on how to address the remaining deficits for FY21 and we don’t expect a budget deal on that until at least mid-August, after the third Consensus Revenue Estimating Conference.
The Details
The School Aid Fund budget for FY20 currently has a $1.09 billion deficit. To close this hole, the deal primarily cuts the foundation allowance and reduces the School Aid money currently being diverted to higher education and community colleges. It then backfills those cuts with a combination of other state and federal revenue. The net effect is that the operating expenditures for schools will be replaced 2 to 1 in Coronavirus Relief Fund (CRF) dollars ($512 million) and 1 to 1 for universities ($163.7 million) and community colleges ($36.3 million) with the state's rainy day fund ($350 million) and a handful of other smaller pieces backfilling the rest of the gap.
Most of the other cuts simply eliminate money that was budgeted for things like spring testing that never happened. However, there are two exceptions Principals may want to know about. The deal eliminates all $10 million originally allocated for school safety grants and $800,000 in remaining funding for FIRST Robotics. And because next year's budget picture is currently hazy, it is unclear if those items will return.
The reductions in state spending come through Executive Order 2020-155 while the bulk of the new money is being added in SB 373, which passed both the Senate and House on Wednesday and is now on its way to the governor’s desk.
Hazard Pay
The final deal also includes the previously announced $500 per teacher hazard pay bonus. The money is still only for teachers...paraprofessionals, bus drivers, administrators, and other schools employees are excluded. However, in committee, Sen. Curtis Hertel (D-East Lansing) offered an amendment to the proposal to express intention that future hazard payments include more school employees. The amendment was adopted with bipartisan support.