Committees cut per pupil funding, drop Promise Grants

Mark Hornbeck and Karen Bouffard / Detroit News Lansing Bureau

Lansing -- Per pupil funding would be cut by $218 under the budget approved in conference committee this afternoon, a reduction districts must deal with several weeks into the school year.

It's the second blow to education programs as earlier in the day another committee eliminated Promise Grants from the higher education budget. The grants provide up to $4,000 over four years to 96,000 college students.

Meanwhile, a separate panel restored 55 laid off-state police troopers and said funding may be there to bring back 18 to 25 more. The committee also directed the state to buy the controversial state police headquarters building rather than rent it. The negotiators hammering out the community health budget is discussing taxing doctors to pay for growing Medicaid costs.

Under the plan to cut funding for K-12 education, school districts would be allowed to choose the programs in which they take the reduction rather than dealing with a simple reduction in the state's foundation allowance.

The unanimously approved budget includes nearly $483 million in cuts, including a 25 percent cut in early childhood grants, reductions to math and science centers, and complete elimination of many programs, including school bus inspections and Gov. Jennifer Granholm's "small schools" initiative.

Funding for intermediate school districts -- which provide special education, vocational training and other programs for school districts -- was slashed by 44 percent, about $33.3 million. That cut must be taken out of administration and will not directly affect special education and vocational education students, officials said.

Rep.Terry Brown, D-Pigeon, described the cuts as "devastating" but notes school districts will have more latitude than they've ever had to decide how to distribute the pain.

State Budget Director Robert Emerson said he needs to gauge the impact of the budget before advising Granholm what to do with it, but said he wonders "whether we're destroying our seed corn."

Don Noble, lobbyist for the Michigan Education Association, said, "The $218 is a big hit. Since the school year has already started, it's going to mean massive layoffs, reshuffling students, increasing class size and elimination of some programs."

A plan to raise several taxes to offset $290 million in cuts was rejected by the conference panel.

Committee drops Promise Grants

The budget also eliminates $60 million from financial aid, including Michigan Competitive Scholarships, the work-study program and grants for nurses, graduate students, private college students and others.

The higher education conference committee chair, Rep. Joan Bauer, D-Lansing, in an unusual move voted against approving the conference report. Sen. Jim Barcia, D-Bay City, also opposed the plan, but it passed 4-2 and goes to the Legislature.

"We made a promise to students," Bauer said. "If we don't fund this in any way, those students who planned on this will not have the money and will have to come up with the money to pay that back."

George Cushingberry Jr., D-Detroit, said he voted in favor of the plan, saying it's time for lawmakers to "pay the piper."

"I need to cut 1.8 billion (out of the budget), and I need to do it now," Cushingberry said. "You can't have your cake and eat it, too. At some point, we have to come to some conclusion that you have to pay as you go."

Cushingberry said lawmakers will look to come up with a funding source for some form of scholarship to replace the Promise grant, but it may be need-based.

Emerson said: "Clearly, the Promise Grant is one of the governor's highest priorities. We're extremely concerned they felt the lowest priority in the higher education budget was the students."

He said since the Promise Grant is not funded at all in the budget, Gov. Jennifer Granholm can't use a line-item veto to restore it.

Operating budgets for the state's 15 universities will be cut by 0.4 percent under this plan. Without an infusion of $67 million in federal stimulus money, the cut would have been steeper. The total cut to universities is $147 million.

Michael Boulus, executive director of the Presidents' Council of State Universities of Michigan, said the Promise Grant is now not a promise at all. He added that cuts in financial aid in this budget move Michigan from the top one-third in financial aid per student to the bottom one-third.

The full House passed its first funding bill this afternoon, voting to approve $299.4 million for community colleges. Negotiators had agreed to fund the colleges, considered to play a key role in training state workers for high-demand jobs, at the same level as this year.

Legislators confident of budget

Legislators are expected to agree on all state budget bills by the end of today, putting the Legislature on track to meet a Sept. 30 deadline to avert a government shutdown, House Speaker Andy Dillon said this morning.

The committee also cut funding for nursing and graduates students and those attending private college. The

Senate Republicans are prepared to quickly approve the budgets if they move out of conference committees today, according to Matt Marsden, spokesman for Senate Majority Leader Mike Bishop, R-Rochester.

Lawmakers must agree on how to meet a $1.279 billion target for spending cuts set by House and Senate leaders. The agreements are part of a plan to address a $2.8 billion shortfall in the fiscal year that starts Oct. 1. If a budget isn't in place, the state government faces a possible shutdown until it's resolved. Using federal stimulus money or raising taxes or fees would be considered to make up the difference after the cuts are made, legislative leaders and Gov. Jennifer Granholm's administration have said.

The state Community Health, Human Services and general government budget, which includes revenue sharing to local governments for police, fire and other services, are the biggest sticking points among negotiators, said Dillon, D-Redford Township. The Corrections budget is also problematic, he added.

"I think we're going to get them resolved (today)," Dillon said, noting he expects it to be a late night for lawmakers.

Marsden said this afternoon: "We're confident there is nothing in the way that will keep us from completing the budget."

He said the Senate intends to meet in marathon session beginning Thursday morning and into Friday afternoon.

Tax on doctors considered

Lawmakers negotiating the community health department's budget are considering a health care provider tax to help pay for Medicaid coverage for the poor, a co-chair of the House-Senate committee working on the budget bill said today.

Rep. Gary McDowell, D-Rudyard, said key legislators are looking at a tax ranging from 1.7 percent to 4 percent that would be paid by doctors and other health care providers.

"The lower the rate, the better chance we have of getting it passed. But it will be very, very difficult," he said. "We're looking at how soon we could implement it. We're hoping we could get six months of revenue."

The money generated by the tax on doctors would allow the state to raise Medicaid reimbursement rates to physicians and hospitals and draw additional federal match money, McDowell said. As it stands, the budget bill for community health would cut reimbursement rates.

McDowell said doctors whose patient list comprises 3 percent Medicaid recipients would be winners under the tax plan.

"The ones who will object will be those who don't have Medicaid patients, and they tend to be the high-end doctors," he said.

Jessy Sielski, spokesman for the Michigan State Medical Society, said the organization is opposed to the physician tax.

"It doesn't solve the problem of Medicaid under-funding and further punishes physicians participating in the Medicaid program who are only getting 60 cents on the dollar for the services they provide," Sielski said.

"Doctors already pay the income tax, and many pay the small business tax," he added.

Troopers restored.

The governor ordered the layoff of 100 state police troopers in July and the conference committee today found funding to bring 55 of them back and possibly 18 to 25 more in the coming months. At the same time, 29 civilian staff would be laid off. Most of those would be administrative support staff, state police officials said.

The panel allocated enough money to pay rent on the controversial headquarters building in downtown Lansing for a month while the state negotiates to buy the building using bonding authority funds.

Emerson said buying the building, to be used for central administrative staff, would save the state about $50 million over the term of the lease agreement.

Wetlands protection saved

The state wetlands protection program is saved, and the departments of Natural Resources and Environmental Quality are combined under a budget bill approved today by a House-Senate panel.

The spending plan approved by the conference committee also cuts some environmental protection programs, which prompted Sen. Liz Brater, D-Ann Arbor, to refuse to sign the panel's report.

"Under this bill, the pollution of our streams and lakes will go unregulated," Brater said, adding, "I hope we will be able to breathe the air in the state of Michigan."

Rep. Mike Lahti, D-Hancock, said he would like to have preserved all the protection programs.

"But we have to work with the budget we have. It's a fact of life," he said.

Gov. Jennifer Granholm had proposed turning the wetlands protection program over to the federal government to save the state nearly $2 million, but lawmakers balked at the plan. Bottle deposit collections will be used to fund the wetlands program.

A conference committee also approved the Department of Energy, Labor and Economic Growth budget today.

mhornbeck@detnews.com (313) 222-2470