This week, Governor Whitmer, Senate Majority Leader Mike Shirkey, and Speaker of the House Lee Chatfield announced in a joint statement that they had reached agreement on how to address Michigan's current year budget shortfalls. The deal relies on a combination of state budget reductions, federal CARES dollars, and state Rainy Day Fund money to close the projected $2.2 billion shortfall for FY 2019-20. The upshot for K-12 education is that the net effect will be an increase in education spending in the current year of $256 million that districts can use to cover some of the increased costs they will face in planning for next year. Teachers will also receive a one time $500 per person payment that is being called "hazard pay." And the Democratic Governor and Republican legislative leaders all signed onto a joint statement calling on Congress to pass more federal aid (the first time the state's political leadership has all been on the same page on this issue).
This is all pretty good news for schools. Still, this being politics, it's not quite as simple as that.
The Fine Print
Setting aside everything else in the deal except K-12 education, here's the step by step of how the agree will impact schools:
- In the near future (the exact timeline is TBD), the Governor's office will use her emergency spending authority to allocate $512 million in additional federal CARES money to schools. We are told the new money will come in the form of a flat per pupil allocation.
- When the Michigan Legislature returns to session in late July, they will pass a negative budget supplemental that will reduce state School Aid spending by $256 million dollars in the form of a flat, per pupil reduction.
- The net effect is how schools come away with $256 million or roughly $175 per pupil in additional money.
Here's the catch: the CARES dollars can only be spent on COVID-19 related expenses. That could mean PPE, technology for remote learning, or even payroll costs if (and this is the dicey part) those payroll costs cover time spent preparing for remote learning or other activities directly related to COVID-19.
Spending the additional money to cover new costs for the 2020-21 school year won't be too difficult, but how will districts be able to fill the FY 2019-20 cut? Well, the amount of money we're talking about equates to roughly the cost of operating school for one week. And during the 2019-20 school year, every district was credited one week of PD and planning time to gear up for remote learning. So in theory, part of the federal mony your district receives could be used to backfill the cut and the rest applied to costs for preparing for fall. But exactly how your district is going to use these resources will have to be a local decision, so talk to your superintendent or business official for more information.
There is general recognition in Lansing that the additional money is not enough to cover the increased costs schools face next year. However, if you make that point to a state politician right now, but prepared to hear in return that schools are getting $2 for every $1 they are getting cut, which is more than any other department, agency, college, university, or local government body.
The Other Stuff
There are two other major pieces to the budget deal: hazard pay for teachers and categorical cuts.
- Hazard Pay: This is a concept first floated by the state Legislature in SB 690, a supplemental budget they passed prior to leaving for their summer recess. The money equates to an estimated $500/teacher, but is only for teachers...paraprofessionals, bus drivers, administrators, and other schools employees are excluded. While the details are yet to be determined, the expectation is that the state will distribute this money to local districts and local districts will be expected to pass it along to teachers. The timeline is unknown.
- $60 million in categorical cuts: All that is clear from the agreement is the dollar amount. There is no agreement as to which categoricals are going to see reductions or how much they will be reduced. This lack of detail is pretty common place for a deal at this high level.
This deal only solves the 2019-20 budget hole. It does nothing to address the looming $3.5 billion projected deficit in the FY 2020-21 budget, which currently seems unlikely to be finalized until September. But Congress is returning to session in July, the rest of the nation is facing the same budget crisis as Michigan, and the state's political leaders from both parties are now calling on the federal government to pass additional funding to backfill state coffers. So stay tuned and keep advocating for Congress to take action.
As for this budget deal, there are plenty of details yet to be ironed out, but expect those to come clear in the next weeks before the Legislature returns to session in late July. MASSP will, of course, follow the issue closely and update members as details become available.