June 17, 2003
June 17, 2003
Standing with lawmakers from both sides of the aisle and members of the education community, Governor Jennifer M. Granholm today announced legislation to create a School Aid Rainy Day Fund. The fund, which will act as a savings account for Michigan’s schools, is intended to prevent mid-year prorated cuts during periods of economic downturn. Fiscal relief for states provided by the federal government enables the state to save $98.4 million from the General Fund in the account.
“Despite the current budget crunch, we continue to think long-term and plan for the future,” said Granholm. “This new fund will allow us to stay true to our commitment to education, both in good times and bad. By exercising restraint and protecting available dollars, we can reduce the impact a struggling economy has on our schools and our children.”
The School Aid Rainy Day Fund would be created as a separate and dedicated account within the School Aid Fund. Currently, a deficit in the School Aid Fund triggers prorated cuts to funding for school districts. Instead, the School Aid Rainy Day Fund would set aside specific dollars that are automatically drawn in the case of a future deficit; a shortage in school aid revenue triggers the School Rainy Day Fund to release funds and cover the shortfall. This measure could prevent future prorated cuts as experienced earlier this year.
Representative Aldo Vangnozzi (D-Farmington Hills) and Senator Mickey Switalski (D-Roseville) will sponsor identical bills in the Senate and House this week. They will be joined by a bipartisan group of cosponsors.
“Families understand this – when bills are draining your checking account, sometimes you need to tap into your savings to make it to the end of the month,” said Granholm. “In this case, the School Rainy Day Fund will help school districts make it to the end of the fiscal year without being asked to make painful cuts.”
