Michigan lawmakers unveil $62.8B budget with cuts, shifts to meet shortfall

Beth LeBlanc
The Detroit News

Michigan lawmakers have settled on a $62.75 billion budget for the coming year that includes small cuts and shifts to federal funding in various departments as state officials seek to fill an expected $2.5 billion budget hole due to the coronavirus pandemic. 

About $17.65 billion was set aside for the School Aid Fund and $45.1 billion for the general omnibus budget that funds all other state agencies and offices, according to a budget analysis released Wednesday by the Michigan House Fiscal Agency.

Last year's budget stood at nearly $60 billion when initially passed, but increased to about $68.1 billion throughout the year and with the addition of federal coronavirus relief dollars.

Michigan House Speaker Lee Chatfield, R-Levering (left), and Senate Majority Leader Mike Shirkey, R-Clarklake, are pictured on Jan. 30, 2020. They unveiled a proposed $62.75 billion budget for Fiscal Year 2021 that they said is a model of bipartisan cooperation.

The school aid bill was reported out from committee Wednesday morning and adopted 36-1 by the Senate and 103-2 by the House. The general omnibus budget was reported out of committee Wednesday afternoon and passed by the House 101-4.

"I think it's a good budget for our state and, quite frankly, I’m very proud of the negotiations and where we ended up," said House Speaker Lee Chatfield, R-Levering. 

The budget deal with the Democratic Gov. Gretchen Whitmer administration was a "good demonstration" of what can happen when state leaders work together, said Senate Majority Leader Mike Shirkey, R-Clarklake.

"Anybody who goes through it with a fine-toothed comb will find very little surprises," he said. 

Whitmer highlighted Wednesday funding for skills training, pregnancy health and child care for low-income families. 

"Saying that the development of the 2021 budget has been difficult would be an understatement, but I am very proud that we’ve been able to work together with the Legislature to put together a budget that moves Michigan forward," Whitmer said. 

The budget includes no reduction in K-12 public schools funding and no decreases in revenue sharing for local government, a key part of the agreement between the GOP-led Legislature and Whitmer. 

The $17.65 billion school aid budget peels back a $175 per pupil decrease in last year's budget and adds another $65 per pupil allocation. The budget also sets aside $66 million for districts with increasing enrollment.

The foundation allowance for students remains the same, between a minimum of $8,111 per pupil and a maximum of $8,529.

The budget includes programs to improve and study distance and virtual learning, another $5.6 million for school mental health grants and $5 million in teacher retention stipends for teachers serving their first year during the current school year.

The school aid bill also allocates roughly $195 million to the Michigan Public School Employees' Retirement System.

The increases in per-pupil aid and other programs amid COVID-19 reductions was funded in part through a balance in the school aid fund

"I’m extremely excited that we were able to do that,” said Sen. Jim Stamas, the Midland Republican who chairs the Senate Appropriations Committee. "It makes me nervous for next year coming up, but at the same time we’ll take each year as we go.”

The Education Trust-Midwest applauded the budget deal but urged lawmakers to ensure "greater funding accountability and transparency."

"A similar bipartisan focus now must be a priority to address the structural inequities in Michigan’s school funding system, particularly to avoid worsening the devastating opportunity and achievement gaps that were prevalent long before the school shutdowns this past spring," said Amber Arellano, executive director for the association.

The general omnibus bill included about $270 million in reductions from the prior year, according to a House Fiscal Agency analysis.

But like the school aid budget, federal funding and some savings from the prior year helped to mitigate those reductions. There also were reductions and administrative efficiencies realized across most departments. 

Among the reductions in this year's omnibus budget, is about $18.5 million from original projections for the Michigan Department of Corrections. The January closure of the Detroit Reentry Center announced Tuesday will save about $12.3 million, while another $7 million was cut for the elimination of community substance use disorder treatments and about $2.5 million was saved in purported administrative efficiencies. 

One of the largest expenditures involved Medicaid spending increases to deal with increased caseloads. The spending plan hiked traditional Medicaid by $896 million and Healthy Michigan by $994 million. About $222 million will come from the state general fund.

The Michigan Health and Hospital Association called the Medicaid increase a "vital funding sources for patients."

"This support is crucial as our members continue to respond to the COVID-19 pandemic while providing lifesaving services throughout our state every day," the association said.