Granholm slashes school funding by $212 million

Gov's order takes effect unless Legislature finds money to fill revenue gap

Mark Hornbeck and Karen Bouffard / Detroit News Lansing Bureau

Lansing -- Reeling public schools suffered another body blow Thursday when Gov. Jennifer Granholm ordered an additional cut of $127 per student.

The governor said the cuts were necessary because tax receipts that feed the school aid fund are down and lawmakers have not approved enough revenue to support the education spending bill they passed earlier this month.

Letters were sent to school superintendents and lawmakers Thursday informing them of the latest reduction, which follows a $165 per student cut in the school spending bill passed by the Legislature and signed by the governor Monday. The combined $292 per pupil cut takes a 4 percent bite out of the $7,316 minimum per student grant.

On top of that, 39 high-spending school districts lost a total of $52 million when the governor vetoed money earmarked for them. Per-pupil spending reductions in some of these districts surpass $600.

The order takes effect in December unless the Legislature identifies and appropriates revenue to fill the shortfall and Granholm signs the measure.

Treasurer Robert Kleine said sales tax collections -- the main source of school funding -- are down $90 million from May estimates that were thought to be conservative. He projects school aid revenue will be off $212 million for the fiscal year. Kleine said he didn't have a choice but to advise the governor to make the cuts.

"It's been a very difficult week for K-12 schools in Michigan," Granholm said. "We have never seen times in Michigan like this where we've had to cut like this."

She made a plea to parents to contact their legislators and ask for more funding for schools, while Republicans called her order a political stunt designed to ratchet up the pressure for a tax hike.

In Royal Oak, Superintendent Thomas Moline was dumbstruck. With calculator in hand, he totaled his district's losses at $553 per pupil -- about $3 million, and 7 percent of the district's annual budget.

"As we moved into September, we thought we might have to absorb the $165," Moline said. "The elimination of (money for high-spending districts) was a complete surprise and devastating enough. But now, we add another $127 per pupil. I think that's devastation."

The Royal Oak school board called an emergency meeting for 8 a.m. Oct. 31, to discuss what to do.

Under the latest cut, Detroit would lose $25 million, Utica $8.5 million, Plymouth-Canton $5.6 million, Walled Lake $4.6 million and Rochester $4.4 million. Walled Lake also is losing $4.7 million as part of the $52 million cut to money some districts were promised under Proposal A reform.

Granholm, GOP spar

Granholm said she wants lawmakers to pass revenue increase bills that would cover the $212 million shortfall as well as the $52 million reduction to high-spending districts. She said she hopes preserving children's education overcomes political concerns about raising taxes.

"They've got to represent their districts in the best way that they deem possible," Granholm said. "And when they put on the scale what is more important, is it more important to fund public education in my district or is it more important to never ever, ever, ever, ever, ever raise any, any, any revenue whatsoever, it is my hope that children will weigh more."

Asked whether political considerations went into the timing of her reduction order, Granholm said: "The numbers don't lie. The numbers are the numbers."

Republicans slammed the move, saying it's a political calculation intended to boost support in the Legislature for a tax increase. Matt Marsden, spokesman for Senate Majority Leader Mike Bishop, R-Rochester, called the cut "ridiculous."

"We have passed a balanced school aid budget. Why propose such a ridiculous cut now?" Marsden said. "It's not only unnecessary, it's a stunt."

Said House Republican Leader Kevin Elsenheimer, R-Kewadin: "Since the beginning of the budget discussions, the governor has been looking for a way to force a tax increase. Now she's joined the budget discussion at the eleventh hour, doing her best to blow away a bipartisan agreement to balance the budget without a tax increase."

Budget experts disagree

Budget experts disagree on the financial problem facing public schools.

While Kleine projected the school aid pot will be short $212 million, Senate Fiscal Agency Director Gary Olson sent a memo to senators on 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.

Olson said it's premature to abandon the May projections less than a month into the fiscal year. He said revenue figures were weak in May and June and picked up in July, August and September. He advised waiting until January when the next revenue estimating conference is scheduled.

"The governor has every right to make pro rata cuts based on advice from the treasurer. But I'd recommend waiting until January when we know more," he said.

Kleine disagreed, saying the only positive blip in revenue the past few months was an uptick in car sales because of the "cash for clunkers" program.

"I haven't seen any rebound," the treasurer said. "Sales tax is down 10 percent compared to a year ago. We expected it to be down 8 percent."

He said tax receipts for the general fund are down $110 million for the 2009 and 2010 fiscal years compared to the spring estimates.

State Budget Director Robert Emerson said waiting to fix the school aid problem will only make the situation worse. He said legislators have waited too long.

"It seems that their desire is to wait on everything in hopes that things will get better," Emerson said. "This should have been enacted six months ago and we wouldn't have been in this situation."

House Speaker Andy Dillon, D-Redford Township, said it's time for lawmakers to set partisanship aside.

"Michigan's budget crisis is now at the point where it is posing a serious threat to the education of our kids and our state's future," he said.

"The need for elected leaders in Lansing to work together to protect education and programs vital to our state's turnaround is now."

mhornbeck@detnews.com (313) 222-2470