October 22, 2009
Granholm says lawmakers have 30 days to prevent cut
LANSING - 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.
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