Michigan school leaders seek help to avert $1.2B hit to existing budgets

Faced with an estimated $2 billion revenue drop in the current and next year's state school budgets, Michigan educators said they need federal and state support to continue to pay staff, provide services to students such as meals and provide extensive safety measures for when schools reopen.

The report from Friday's Consensus Revenue Estimating Conference estimates a $1.2 billion cut to the existing year’s School Aid Fund, money that’s largely already been spent as the end of the academic year nears, and $1.1 billion in next year’s budget.

This is an empty classroom at West Bloomfield High School on Friday, March 13, 2020. Students were asked to stay home, while educators used Friday to prepared to to teach students online due as a coronavirus precaution.

Educators said they estimated seeing a $600-per-pupil reduction to local school budgets. In a school district with 10,000 students, it would amount to $6 million. The Whitmer administration has not yet proposed a budget reduction and is hoping for an immediate federal cash infusion.

Michigan is facing an unforeseen budget crisis, said William Miller, executive director of the Michigan Association of Intermediate School Administrators, who are officials that provide school services in counties. 

"Without action from Congress that allows the utilization of federal dollars to address our revenue shortfall, states will be forced to cut essential programs and services Including services for our schools and our future," Miller said.

While the Democratic-led U.S. House was voting Friday on a $3 trillion package that included hundreds of billions of dollars for state and local government budgets, the Republican-controlled U.S. Senate and the Trump administration said they are evaluating how current stimulus efforts are working and are not interested in negotiating a new, immediate federal aid package. 

If not resolved in 30 days through budget transfers or cuts, decreases to state education funding would kick in automatically through a pro-rated formula that divides the cuts among the groups receiving state aid through the School Aid Fund. 

If the the state waits the full 30 days to take action, it would push the cuts to mid-June, roughly two weeks before the the beginning of the new school year. 

State Budget Director Chris Kolb said Friday the state would be looking at solutions that would stop the pro-rated cuts from going into effect and promised to have the proposals in time for the June 30 end of the school budget year.

"We’re very cognizant that local governments and schools in the state of Michigan have a different fiscal year than the state," Kolb said. "We’ll be making decisions so they have all the information they need by that time.”

In January, the state was projecting the School Aid Fund would be about $13.9 billion, but the new estimate reduces expected revenues to $12.7 billion.

Localities cry for help

Before state lawmakers even consider cutting and future K-12 budgets, they have a responsibility to explore every other option, including using the state’s rainy day fund and calling for immediate federal stimulus relief for states, said Randy Liepa, superintendent of the Wayne Regional Educational Service Agency, a regional body that provides certain services to local districts.

"It's dire. There is no other way to put it," Liepa said. "You are talking a $600 a student cut, and (districts) are not in a position to reduce costs this year."

"Our message is clear and simple: The federal government, as it did in 2008 and 2009, they stepped up and provided states with additional funds to turn economy around, and they have to do that again. They can't ask essential services like police, fire or education to cut services now."

Kolb wouldn't say Friday whether cutting the foundation per-pupil allowance would be necessary, but continually stressed the need for federal aid. 

"We’re going to work to really protect the priorities of health, education public safety. That’s what our primary focus is," he said. 

The last pro-rated state education cuts were done in the 2002-03 fiscal year, amounting to a 3.8% reduction across the board to make up for a $126.9 million School Aid Fund shortfall, according a House Fiscal Analysis report. The shortfall came in the wake of a brief economic downturn following the Sept. 11, 2001, terrorist incidents.

The Legislature avoided pro-rated education cuts in the last recession between 2010 and 2011 by cutting per-pupil payments by $154 in Fiscal Year 2009-10 and by $170 in Fiscal Year 2010-11.

School leaders have said providing crisis services over the past two months, along with measures that will be necessary to transition back to in-class learning this fall, will unquestionably require more funding going forward.

Guidelines are being developed to safely reopen schools this fall. They include creating social distancing standards, increasing sanitation and other protocols in schools that federal and state health officials recommend.

Ken Gutman, superintendent of Walled Lake Schools, said all of these guidelines will have new costs associated with them and, if lawmakers are serious about reopening Michigan’s economy fully, they need to ensure schools have the resources to safely reopen their doors as well.

“Our schools are unquestionably going to play a key role in our state’s ability to recover from the COVID-19 crisis," Gutman said. "Lawmakers need to recognize that and ensure that our ability to safely reopen our doors this fall are their single highest priority this budget season."

'Everything is on table'

There are no easy solutions to what Michigan districts are facing financially, said Michael DeVault, superintendent of the Macomb County Intermediate School District.

"Everybody is going to look at everything, and everything is on the table," Devault said. "We have to respond to the economic disaster we are in but we need support from the federal government."

It would be irresponsible not to explore whether any items in the current budget, which ends June 30, can be deferred, he said.

"Anyone who was thinking this wasn't coming forward had to be naive," DeVault said.

Erik Edoff, superintendent of L’Anse Creuse Public Schools, said his district, like most others in Michigan, has spent its current budget dollars already.

"This year's number is more of a concern to me than next year's," Edoff said. "The ability to react this year is a difficult thing to understand. We have paid employees, and we have honored that."

He said he simply did not know how the district was going to make the cuts and his concerns were focused on the fall.

"The solutions are going to have be creative," Edoff said. "We need to have funding to open school properly. Kids need education and parents need education so they can resume activities like work as well."

Michigan’s schools are already underfunded and additional funding cuts as the state prepare to reopen the economy would make a bad situation even worse, said Robert McCann, project director at the School Finance Research Collaborative.

"We should not and cannot balance next year’s budget on the backs of Michigan students, which will further hamper their ability to achieve, succeed and compete in the 21st-century economy," McCann said.