Today, State Budget Director Chris Kolb detailed a budget agreement between the House, Senate, and Gov. Gretchen Whitmer. The deal closes a $2.2 billion hole in the current year budget (FY20) for the General Fund and the School Aid Fund through a series of transfers, reductions, and spending of federal Coronavirus Relief Fund (CRF) dollars. The key takeaway for schools – there will not be a proration for schools for FY20, a budget that is already in the rearview mirror for Michigan’s schools. This allows us to move on to next year with at least a modicum of budgetary certainty. There is still no agreement on how to address the remaining deficits for FY21 and we don’t expect a budget deal on that until at least mid-August, after the third Consensus Revenue Estimating Conference.

The Details

The School Aid Fund budget for FY20 currently has a $1.09 billion deficit. To close this hole, the deal would use $712 million in CRF dollars, $350 million from the Budget Stabilization Fund (BSF) or the rainy day fund, $9.7 million transferred from the Talent Investment Fund, $211 million in General Fund support, $30 million from the MPSERS Reserve Fund, and $3.9 million in lapsed work project funding.

In terms of School Aid Fund reductions, the proposal would reduce the following line items:

  • Per pupil allocation by $256 million
  • University operations by $163.7 million
  • Community college operations by $36.3 million
  • MPSERS expenditures by $14.2 million
  • State assessments by $6 million
  • CEPI operations by $400,000
  • School Safety Grants by $10 million
  • FIRST Robotics program by $800,000

The operating expenditures for schools will be replaced 2 to 1 in CRF dollars ($512 million) and 1 to 1 for universities ($163.7 million) and community colleges ($36.3 million).

Of note, the previously announced deal included $500 in hazard pay for Michigan’s teachers. In committee, Sen. Curtis Hertel (D-East Lansing) offered an amendment to the proposal to express intention that future hazard payments include more school employees. The amendment was adopted with bipartisan support. The reductions in state spending come    through Executive Order 2020-155, which was approved by both appropriations committees this morning.

The vehicle bill for the School Aid Fund deal, SB 373, is expected to pass all the way to the governor’s desk this week. For all the details of today’s agreement, see the Senate Fiscal Agency Analysis.

Look for more information on this deal in this week’s Legislative Update.