Monday, Governor Granholm sent letters to Michigan's public schools warning they could face funding cuts of up to $125 per student. She also put out a bulletin to health care providers stating Medicaid payments would decrease by 6 percent if a budget solution is not found in one month.
East Lansing Schools Superintendent David Chapin says, "There is no other choice but to take the cuts out of our savings account. It's called a rainy day fund, it's a rainy day." East Lansing Public Schools face a $425,000 loss.
The Lansing School District says it will also dip into its rainy day reserves if the cuts go through. Lansing faces a $2 million cut. Its reserves total $13.8 million.
"For Michigan hospitals, it means a program that roughly only pays us $0.70 on the dollar now, I guess, will pay us only $0.64 on the dollar," says David Seaman with the Michigan Health & Hospital Association. He says hospitals could choose to cut staff and services or cost shift in order to make up the money. But, they wouldn't turn away Medicaid patients because Michigan hospitals must treat everyone who walks through their door.
Even as some say the Governor is just threatening the cuts to get the legislature to act, schools and health care providers we spoke with says they will take the message seriously.