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 Memo:
Michigan's Budget Challenges & Opportunities
from Tom Watkins,
Michigan Department of Education, January 27, 2003
For more articles visit
www.bridges4kids.org.
January 27, 2003
MEMORANDUM
TO: Local and Intermediate School District Superintendents,
Public School Academy Directors and Authorizers, Education
Alliance
FROM: Tom
Watkins
RE: Michigan's Budget Challenges and Opportunities
CC: State
Board of Education
Thank you all for the work you are doing during these tough
budget times. We appreciate your continued efforts to
disseminate this message to all affected stakeholders in your
community - building principals, teachers, local school board
members, parents, and citizens. Your leadership is helping to
lift up our neighborhood public schools, our teachers, and
most importantly, our children. Your good work and
commitment make a difference.
We have many challenges confronting us including the
structural budget deficit and the implementation of No Child
Left Behind. With our collective efforts and commitment, we
are up to the challenge.
The State
Board of Education and I are interested in your creative and
innovative ideas to address this structural budget deficit.
Please forward them via our website at
www.michigan.gov/mde
or call me at 517-373-9235. It is our collective
responsibility to deliver high quality educational programs
that meet the needs of Michigan's citizens.
Two weeks ago,
Governor Granholm was forced by law (Section 11 of the School
Aid Act) to issue a proration letter to the Legislature that
notifies them that the State School Aid Fund must be reduced
by about
3.8 percent across the board in order to bring the fund in
line with actual revenues.
Spending
categories specifically protected by law will be exempted. The
legislature has the greater of thirty days or six session days
to implement alternate solutions to align the budget before
enacting the Governor's recommendation.
Together, we are committed to finding the best long-term
solution for Michigan. Governor Granholm is partnering with
the Legislature to preserve resources that will strengthen our
families, our communities, and our children.
Our
neighborhood public schools are the bedrock of our democracy.
They are the true Statue of Liberty. Who else takes the tired,
poor, hungry and students who speak English as a second
language and gives them hope and opportunity? We stand on the
shoulders of innovators who built a strong foundation for
Michigan's public school system.
Along with Governor Granholm, we are committed to finding the
best long-term solution for Michigan. Governor Granholm is
open to working with the Legislature to preserve resources
that will strengthen our
families, our communities and our children.
I have attached some background material that may be useful as
you address the state budget challenge with your community.
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Big Picture Budget Buzz
· The budget is the state's plan to deliver results that
citizens care about.
· Making budget decisions is a process that should occur in
the light of day. The state will not create budgets in the
dark of the night or in a backroom. We want and need citizens'
input.
· The people
of Michigan deserve to know how their money is being spent and
that it is being spent wisely.
· We will
challenge every dollar of spending to ensure that it delivers
at least one dollar of value to our
citizens.
· There are no
easy answers - only tough decisions.
· We will
prioritize our resources to build a stronger Michigan, one
community, one family and one child at a time.
School Aid
Fund/Proration Key Messages
· Education is Governor Granholm's number one priority. She is
committed to ensuring that the School Aid Fund budget is built
on a stable, reliable foundation.
· Schools
cannot educate kids on promises - the money has to be there.
The state's General Fund for this fiscal year is short $143
million. Similarly, the School Aid Fund is short approximately
$127 million for the fiscal year according to the Senate and
House Fiscal Agencies and the Department of Management and
Budget. The budget situation for the General Fund and School
Aid in FY 03-04 is even bleaker.
· Because of the structural deficit thrust upon her, the
Governor was forced to act in a quick and decisive manner. She
issued the proration letter to the Legislature reducing the
State School Aid Fund by an estimated 3.8%.
· Under the School Aid Act, the Governor is required to reduce
expenditures whenever it appears that actual revenues for a
fiscal period will fall below the revenue estimates on which
state appropriations for that period were based.
· Under state
law, the Legislature has the greater of thirty calendar days
or six session days to discuss and implement alternate
solutions to align the budget before enacting the Governor's
recommendation.
· Governor Granholm stressed that the cuts were "painful" to
her as both a parent and as a leader.
· Schools were notified immediately to give them as much time
as possible to prepare.
· Because
there is also a shortfall in revenue in the state's General
Fund, schools and our children who attend them, will not feel
the pain alone - every department and every agency in Michigan
will feel the crunch. The Governor will issue an Executive
Order shortly ordering all of state government to cut 4% from
General Fund
spending.
· Education was, is, and will continue to be the Governor's
first priority. She will present a budget for FY 03 - 04 that
reflects that priority to the Legislature by the first week in
March. She believes strongly that Michigan's educators and
school personnel are among the finest and most resourceful in
the country and that their commitment to the children of our
state remains rock solid no matter what fiscal woes the state
faces.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Why is the budget such a mess?
For too many years, the state has simply been spending
more than it is taking in. Tax revenues have been reduced, but
the programs they support have not. There are no more one-time
fixes or rainy-day funds to raid to shore up popular programs.
Further, the slow down in the national economy has also
impacted our State's financial picture. The Governor and the
Legislature are faced with the unpopular - and painful - job
of cutting important services to Michigan's citizens to bring
the state's spending back in line with the revenue it
collects.
How dire is our current budget situation?
The deficit in the General Fund/General Purpose Fund and
State School Aid budgets totals almost $2 billion. The
majority of the state's general fund budget is focused in four
areas:
· Higher Education
· Corrections
· Family Assistance
· Health Care
There are many good reasons why these critical four areas need
immediate protection. If the State agreed to preserve funding
only in these four areas, the remaining portion of the state's
budget only equals $1.5 billion. To make up for the shortfall,
the rest of the state's budget would have to be completely
excised.
To put it
another way, if these four areas were completely preserved,
the state of Michigan could eliminate every cent from nine
different state departments, the Executive Office, the
Legislature, and 29 Michigan community colleges, and still
fall short of its obligation to balance the budget.
Is there a
tax increase on the horizon?
The Governor and the Legislature have stated numerous
times that they have no interest in raising taxes. In May,
2001, the State Board of Education and the State
Superintendent advocated hitting the "pause button" on the
scheduled rollback of the state income tax to preserve
resources needed to deliver critical services to our citizens.
There have been other suggestions from legislators and
citizens to raise new revenues or to preserve those we have.
Unlike the
federal government, we cannot borrow, spend and pretend our
way our of this budget challenge. We must redouble our efforts
to redirect all available resources to help our teachers teach
and our children learn.
What about
the Department of Education - has it been cut?
The Department
of Education had its General Fund cut by 39 percent since FY
00-01. All Departments may face additional reductions by
Executive Order by the end of January. All state Departments
will more than likely see an even more substantive cut for FY
03-04.
Where can I
find objective information about Michigan's budget challenge?
Citizens
Research Council of Michigan, a renown, respected,
independent, non partisan public policy research organization
founded in 1916 has a PowerPoint presentation detailing the
budget challenge. It is available on their website at
www.crcmich.org.
Are citizens' ideas welcome?
YES! Together we are better. We need everyone's help to
identify the best ideas to address Michigan's structural
deficit. We need to partner with the Governor and Legislature
to help solve the problem. This is our opportunity to
enhance the way our government delivers vital services to its
taxpayers. We know that all wisdom does not emanate from
Lansing. We know that we cannot get to the future by looking
out of the rearview mirror. We must be bold and forward
thinking. Please forward your ideas via our electronic mailbox
located on our website at
www.michigan.gov/mde.
T.J. Bucholz
Public Information Officer
Michigan Department of Education
MSPRA President-Elect
(517) 241-4395
bucholztj@mi.gov
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