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Bridges4Kids LogoWatkins Pleased With Bush Meeting
MIRS, March 23, 2004
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State Superintendent of Public Instruction Tom WATKINS and some of his colleagues met with President George W. BUSH to discuss the federal No Child Left Behind Act (NCLB).

While stating that the members of the Council of Chief State School Officers would have liked to have left the meeting with firm commitments and more money, Watkins said that he was overall pleased with the discussion.

The Superintendent said among the topics discussed, the School Officers expressed the need for greater flexibility in the NCLB requirements that only one percent of a school's student body is allowed to take an alternative test. Other issues included:

- Having the President use his bully pulpit to stress that the NCLB isn't about "failing schools," but about lifting performance.

- Provide greater flexibility on the highly qualified teacher requirements of the Act.

Watkins said he enjoyed the meeting, but when asked if this meant Bush sought his endorsement, he laughed.

"I wouldn't go that far."

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McManus Expects Slow Action on Groundwater Fees
Gongwer News Service, March 23, 2004

An agreement will likely be reached on fees to fund the state's groundwater discharge program, but it will not likely be before the April 1 deadline the Department of Environmental Quality has set for continuation of the program, Michigan Sen. Michelle McManus told Gongwer News Service.

Ms. McManus, chair of the Senate Appropriations DNR/DEQ Subcommittee that addressed the bills in that chamber, said the changes made by the House affected the ability of the fees to meet the needs of the program.

"The Senate's been committed to the bills that we sent over," she said of the groundwater program and other Department of Environmental Quality fees proposed by Governor Jennifer Granholm. "The groundwater's a bigger issue because the House did a lot of exemptions."

Discussions are ongoing to develop a compromise, she said. "Before spring break? Probably not," she said.

Matt Resch, spokesperson for House Speaker Rick Johnson (R-LeRoy), agreed there is slow movement on the agreement. "It's getting pretty close. We are working to move forward," he said.

But he also stood by the House's exemptions to the groundwater fee. "A lot of these fees would affect farmers and church groups and Boy Scouts," he said. "A lot of members don't want to tack fees on top of these groups."

He also charged that the DEQ has the funds to continue the groundwater program until an agreement is reached. "The program's been able to go forward without this additional money," he said. "If the administration wanted to make it a priority (there would be money to fund it)."

DEQ Director Steven Chester has insisted that the program will run out of funds on April 23 unless fees to support it are enacted by April 1 to give time to have the funds start flowing.

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First Budgets Reported by Michigan Senate Appropriations Committee
Gongwer News Service, March 23, 2004

Disagreements over how the state allocates payments to hospitals with large Medicaid patient populations marked action on the Department of Community Health 2004-05 budget as the Senate Appropriations Committee sent that and two other budgets to the full Senate on Tuesday.

Also approved by the committee, along with SB 1063, were budgets for the Department of Natural Resources, SB 1068, and Michigan's community colleges, SB 1062.

In enacting the DNR budget the committee restored most of the travel funding that, when cut by the subcommittee, department officials had warned could cripple the ability of conservation officers to patrol.

The Community Health budget still includes the additional $513.4 million in general funds over Governor Jennifer Granholm's recommendation because it takes no position on whether the governor's proposed cigarette and liquor tax increases will be approved. Much of the revenues raised by those taxes, if passed as introduced, will go to the Medicaid Trust Fund.

The budget therefore totals $9.74 billion, a fractional increase over the current year's budget. The general fund portion totals $2.97 billion.

Among the major changes in the budget, the committee restored full funding for Medicaid services for adult dental care, podiatric, chiropractic and hearing services, but cut Ms. Granholm's proposed increases in the state's Healthy Michigan programs by $26.8 million. An effort to restore some of the cuts to the Healthy Michigan fund failed.

But the committee's attention focused mostly on a provision that would change allocations for the so-called "disproportionate share hospital payments" made to hospitals with large Medicaid patient populations. Now $45 million is allocated to hospitals, with most the funding going to large urban hospitals.

Under the bill, $40 million would be distributed to hospitals by paying them eight/ninths of what they had received in 2003/04, while the remaining $5 million would go to hospitals that received less than $900,000 in the payments.

Committee members from urban areas said the provision would provide a significant cut to their hospitals, while not providing large benefits to the other hospitals. Sen. Deb Cherry (D-Burton) said Hurley Hospital in Flint could lose $300,000 under the provision while a hospital in Deckerville would receive just $44.

But committee chair Sen. Shirley Johnson (R-Royal Oak) said all Michigan's hospitals are hurting because the current proposal focuses funding on Detroit hospitals.

Sen. Michael Switalski (D-Roseville) said the way to solve the problem would be to add $5 million to the disproportionate payment program, not siphon off $5 million to other hospitals.

In the DNR budget, instead of cutting the travel budget by 50 percent-as the Senate is attempting to do in all its budgets-the budget would cut total travel by some 6 percent. That would restore the full budget to about $253.4 million, close to the total appropriation for the current year.

The other major change from the current year is that the committee concurred with Ms. Granholm's proposal on payments in lieu of taxes to local governments. The provision would use some funds now set aside for local revenue sharing and cap the number of mills assessed on the property, as well as freeze the value of state-owned land. The total changes would save the state some $8.3 million.

The community college budget totals $285.7 million, all of it in general funds, and the primary change in the measure is the expectation that all the state's two-year colleges will keep tuition increases at the level of inflation for 2005, which would add $8.5 million to the budget's total.

The budget also assumes, said Sen. Ron Jelinek (R-Three Oaks), that the inflation level used will be for calendar 2005, instead of fiscal 2005, which means the colleges could raise tuition by 2.4 percent instead of 2.3 percent.

If tuitions were raised by 2.3 percent, then students would also be eligible for tuition tax credits that would not be available at 2.4 percent. The slightly higher tuition would save the state another $50 million.


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Agreement Stuck On Water Fees/Admin Rules
MIRS, March 24, 2004


The governor and legislative leaders today announced an end to the logjam on the state's new water pollution fees by agreeing to give the Department of Environmental Quality (DEQ) the ability to draft rules, but giving the Legislature more time to look at them.

As first reported by MIRS on Feb. 25, Gov. Jennifer GRANHOLM and the Legislature had been working on a compromise to a dispute over National Pollutant Discharge Elimination System (NPDES) permit fees and who would control the administrative rules part of the process.

In February, Senate Majority Leader Ken SIKKEMA (R-Wyoming) and Speaker Rick JOHNSON (R-LeRoy) pushed through legislation establishing the fees. However, the bill also took away the DEQ's ability to draw up any rules the department would feel is necessary to administer the process. Granholm held a news conference the same morning the Senate passed the bill and blamed the Republicans for sinking the funding source for wastewater inspections.

If an agreement had not been struck by April 1, the DEQ would have run out of money to administer the program and be forced to turn over the program's reigns to the federal government.

Today's agreement streamlines the administrative rulemaking and hearings processes, allowing the Granholm administration to implement policy while the Legislature now gets 15 session days to review rule changes as opposed to the current 21-calendar-day window.

"This agreement takes a significant step forward in protecting our citizens and our water from the harmful effects of pollution, while allowing us to better implement policy," said Granholm. "This agreement will consolidate the functions of government to make it more efficient and to save taxpayers' money by requiring permit holders to pay for their discharge permits."

The legislation to implement the agreement includes SB 252 and HB 5670.

SB 252, sponsored by Sen. Liz BRATER (D-Ann Arbor), sets up $5.4 million in new fees for the NPDES program and the stormwater program. It passed the House and Senate last month but was held up because of a change added in conference committee that would have eliminated the ability of the DEQ to promulgate rules. Both chambers agreed to the fees raised by the bill that will allow the DEQ to administer and monitor the permit program.

HB 5670, sponsored by Rep. John PAPPAGEORGE (R-Troy), will give the executive branch complete responsibility for the processing and promulgation of administrative rules. However, the legislation will extend the time period for review of administrative rules from a mandatory 21 calendar days under current law, to an optional review period of up to 15 legislative session days.

But in a change from current law, the Joint Committee on Administrative Rules (JCAR) will be allowed to waive a portion of the review period. Also, the bill would also allow administrative rules to take effect immediately upon filing, permit the centralized processing of notices on behalf of agencies issuing rules, and make it easier for the Legislature to dump a proposed administrative rule change by concurrent resolution.

In addition, Granholm will issue an executive order consolidating administrative hearing functions and officers and transferring administrative rule processing functions currently performed by the Office of Regulatory Reform into a new State Office of Administrative Hearings and Rules within the Department of Labor and Economic Growth.

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Panel Probes Possible ISD Stonewalling
MIRS, March 24, 2004

Today, Republicans on the House Subcommittee To Review Intermediate School Districts (ISDs) asked subpoenaed witnesses about the Oakland ISD's public relations response to the scandals that rocked it in the autumn of 2002 and the summer of 2003.

More specifically, they want to find out how much the ISD has, and is, spending on public relations and lobbying efforts, and whether it has engaged in efforts to conceal information from the Legislature.

One angle that could potentially translate into legislation was whether a public entity, such as an ISD, can avoid disclosing lobbying and public relations expenses by contract for such service through a legal firm.

According to Subcommittee Chair Ruth JOHNSON (R-Holly) she issued a FOIA (Freedom Of Information Act) request with the Oakland ISD, and at first appeared to be denied the information because the public relations-lobbying firm had been hired through the ISD's attorneys at Thrun, Maatsch, Nordberg, Pollard & Albertson, L.L.P.

However, among the documents sent in response to one of Johnson's FOIA requests (she has filed several over the past couple of years) the Subcommittee did obtain a copy of an invoice, dated Sept. 1 addressed to Oakland County ISD Assistant Superintendent Danford AUSTIN.

The invoice states that it is a billing through Aug. 20, 2003. It lists the following items: General File - $656, Oakland Press - $49.50, Subpoena Power For Legislative Subcommittee - $6,211.50, Vocational Technical - $82.50, Legislative Review, House Subcommittee (Total fees for this matter) - $1,558, and Disbursements for this matter - $22,393.50.

The total invoice came to $30,951.09.

Today, after establishing that on July 8, 2003, the Oakland ISD board had basically voted to allow Austin to hire as many law firms as he deemed necessary, Johnson questioned Austin about the invoice.

"Why was the lobbyist hired through the law firm?" Johnson asked.

"I think it was a matter of expediency," Austin replied, stating that he believed the law firm already had a relationship with the lobbyist.

"Was it because by doing it in this way it effectively kept the related documents from being (subject to FOIA) and kept the ISD Board from being fully informed about it?" Johnson asked

Austin replied that, "No," these weren't the reasons.

Rep. Ken BRADSTREET (R-Gaylord) asked Austin if the invoice period covered July 2003.

"I'm not sure," Austin said. "It may include some of August, as well."

Bradstreet asked if the ISD Board had been informed of the invoice breakdown, regarding the public relations and lobbying costs.

"Not in that much detail," Austin said. "I do report the legal costs (the full $30,951) to the board,"

In response to a Bradstreet question, Austin said that the lobbyist was GCSI (Governmental Consultant Services Inc.), specifically Michael HAWKS.

Bradstreet asked Austin what differentiates legal fees from "disbursements," as listed on the invoice.

"I would say legal fees for work done on legal opinions," Austin said. "Disbursement would be other activities."

The subcommittee has requested more information on the ISD's overall lobbying and public relations costs for the period following the newspaper accounts that brought the scandals to light.

If it has received that information, the panel has yet to release it to the news media.

Meanwhile, Bradstreet told MIRS that he wants to first find out if Oakland ISD's initial interpretation that information pertaining to third party arrangements made through a law firm is exempt from FOIA, before he proceeds with potential legislation.

The primary scandal, which became public in the fall of 2002, was over the use of funds from a voter-approved tax levy that were supposed to be earmarked for special education, but were used for a multi-million dollar building. The district fired former Oakland ISD Superintendent James REDMOND a few months later. The initial information that brought the misuse of funds to light came from ISD employees who took their complaints to the ISD board.

In addition to Austin, the ISD panel also questioned Oakland County ISD Director of Communications and Marketing Shelley Yorke ROSE.

Rose was responsible for responding to FOIAs up to Oct. 27, 2003.

Bradstreet opened his questioning of Rose by asking her if she had been coached by attorneys in preparation for her testimony.

"Not coached," Rose responded. "We did have some attorneys in to talk to us about it. We've never done anything like this before."

Johnson asked Rose about documents the subcommittee had received through FOIA that had certain information, such as dates, "blacked out."

"It may have been information that was highlighted, but came out that way on the copies," Rose explained. "Not everything reproduced well."

Johnson then read an e-mail the panel had obtained.

"[We] have to go through and remove all e-mails, including Roger CAMPBELL's," Johnson read. "What was this about?"

"Pollard (the law firm), as legal counsel, had advised us that personal e-mails were not subject to FOIA," Rose responded.

Bradstreet asked if she had any trouble differentiating between a personal e-mail and an e-mail that wasn't personal.

"No," Rose assured him.

Rep. Mike NOFS (R-Battle Creek) asked Rose if she had ever been directed or had asked how she was to deal with the bad press generated by the scandals.

"We were in crisis so long that everything (plan) committed to writing was subject to change in five minutes," Rose responded.

Nofs asked if outside sources had been brought in to help the ISD cope with public relations.

"Pollard brought in an outside firm," Rose said. "It was Kelly ROSSMAN."

"Was that paid for with ISD funds?' Nofs asked.

"Yes," Rose responded.

Nofs asked if there had been a plan to discredit the subcommittee, its chairman, or anyone else on the panel.

"Absolutely not," Rose said.

Johnson read another email in which an Oakland ISD staffer suggests that if the destination were left off a travel invoice, the cost ($850) of the flight might be overlooked. The trip was to Hong Kong.

At one point Johnson spoke about repeatedly requesting all travel receipts and invoices over a period of months. She said that during those months the indications she received from the ISD was that no such information existed. But, she finally got the material.

"These are travel records, receipts and purchasing orders," Johnson said, as she lifted a full notebook, somewhat thicker than the Lansing phone book, and held it in full view. "Why was this withheld for so long?"

Rose suggested the problem could have revolved around the term "travel records."

Rep. Andrew MEISNER (D-Ferndale) asked Rose if, in hindsight, the ISD response to the FOIA requests might have been somewhat too technical in its interpretation.

Rose agreed that, knowing what she knows now, the response might have been too restrictive.

In addition the public relations and lobbying issue, the panel asked Austin how Redmond had managed to have a moral turpitude clause taken out of his contract without the Oakland ISD Board being aware of it.

"I received a call from (Mark) RAITER (Oakland County ISD Assistant Superintendent of Resource Management) on the Friday before the June 6, 2002 ISD Board meeting. "He told me that Jim (Redmond) wanted to take that out of his contract."

According to Austin, he responded by telling Raiter he strongly opposed the idea and asked to be kept posted on the situation.

However, Austin said, he didn't know the clause had been taken out of the contract until after the board had approved the new contract at the June 6 meeting.

"I looked at it afterward, and when the meeting was over I said to them (the board members) 'do you know what it is you've approved?'" Austin said.

Bradstreet asked if it had been Raiter who'd dropped the ball on the issue by not keeping Austin informed.

"No, I don't think he knew it had been taken out either," Austin answered.

Austin said he believed the board members had been told certain things by Redmond about the contract, which was up for renewal each June, but never bothered to actually read the contract before approving it.

Meisner asked Austin what he believes the Legislature could do to prevent another situation like the one that developed at the Oakland ISD.

"I don't think anything the Legislature has done would have prevented this from happening," Austin said, after stating he supports the ISD measures the House just passed. "The problem was in the procurement process. The ISD had procedures in place, but the former Superintendent could override them."

On Feb 12, the Subcommittee subpoenaed 16 witnesses in connection with its ISD investigation. The hearings are expected to continue through the spring. Ed STANILIS, Oakland County ISD Assistant Director of Fund Development, also testified today.

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Michigan School Aid K-12 Budget Moves Out of Senate Committee: Special Education Cost Estimates Resolved
MIRS, March 24, 2004

The Senate Appropriations Committee approved a $12.5 billion, 2005 School Aid budget that is now only $6.8 million in General Fund higher than what Gov. Jennifer GRANHOLM recommended.

As was reported in MIRS last week, the K-12 Appropriations Subcommittee approved a budget that was $23 million higher than the Governor's proposal. The Senate Fiscal Agency explained today that the subcommittee recommendation used a cost assumption for special education expenditures that was higher than what the governor used in her budget. Today, the full committee decided to use the governor's cost assumption instead, and, as a result, was able to trim $27.7 million from the subcommittee's special education appropriation.

The committee also restored $4 million in funding for at-risk student support. The subcommittee had cut the governor's at-risk recommendation by $13.9 million.

The Senate proposal keeps the basic foundation allowance at $6,700, as was proposed by the Governor, but scraps the governor's recommendation to change the way in which students are counted for the purpose of distributing state aid, as well as the governor's proposals to eliminate declining enrollment assistance and reduce aid to schools that receive foundation allowances over $9,000. These rejections add $33 million to the governor's recommendation.

To help offset this increase, the Senate plan reduces the governor's recommendation for at-risk student support by $10 million; cuts school readiness grants by $2 million; reduces funding for Intermediate School District operations and programs by $12.5 million; and cuts $2 million from vocational education.

Subcommittee Chair Sen. Ron JELINEK (R-Three Oaks) called the budget recommendation a maintenance budget. He said, "The goal here is not to develop new programs, or increase spending for programs, until we can maintain the programs that we put in the '04 budget."

In what might be considered as a shot across the bow of the Michigan Education Association, the committee approved an amendment by Committee Chair Sen. Shirley JOHNSON (R-Royal Oak) that requires the Department of Management & Budget and the Senate and House Fiscal Agencies to conduct a study of the feasibility of creating and requiring school districts, community colleges, and state universities to participate in a statewide purchasing pool for employee health benefits, or of including these entities in state employee health plans.

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Poll: Michigan Taxpayers Willing to Pay More For Schools
MIRS, March 24, 2004

A survey released today by Public Sector Consultants (PSC) shows that Michigan residents approve of the job being done by their local schools and might be willing to pay more in property taxes to maintain some programs.

The survey of 680 adults earlier this year found that 63 percent would choose to maintain the programs offered by their schools if it was a choice between the programs or keeping property taxes as low as possible.

Also, 12 percent of respondents gave their schools an A. Forty-two percent gave their schools a B. Forty-seven percent say the quality of their schools has "stayed the same" in the past few years. As many say their schools have "gotten better" (24 percent) as say they have "gotten worse" (20 percent).

- More than three-fourths of respondents -- 78 percent -- believe their tax dollars are a good bargain for the quality of education that their schools deliver.

"Taken together, these results demonstrate that the public has a positive view of public education that is largely unchanged over the past decade and is not averse to paying more to maintain the programs and services they value," said Melissa RIBA, senior research consultant at PSC. "The public also understands that early childhood education is an important building block for later educational success, but their support is tempered by budgetary concerns."


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