Cuts in School Funding on Hold

LANSING - Michigan's public schools are getting a temporary reprieve from deep cuts in funding. This afternoon Governor Granholm announced that she is pausing the $127 per-pupil reduction in school aid payments to districts.

So where did the governor find the extra money?
Here's the breakdown: The state has around $150 million dollars more than expected in the school aid fund.

Various districts returned $50 million to the state because they didn't spend it on special education and other programs during the last school year.

The other $100 million dollars is money the state doesn't have to pay to districts that got more than expected from commercial and industrial property taxes.

"Districts clearly have been tightening their belts, therefore they lapsed-- they gave money back to the school aid fund because they weren't spending as much as was authorized," said Governor Granholm at a press conference at the Capitol Thursday. "That fact and the unusual circumstance of having higher property taxes are two reasons why we are going to slow down those last cuts from taking effect."

The decision does not effect the $165 per-pupil cut contained in the 2010 budget or the potential for a multi-million dollar shortfall in the 2011 school year.

A 30-year economics veteran for the state is telling districts to spend down their rainy day funds instead of making tough mid-year cuts.

He says this is why districts put those funds aside-- especially since the state cannot guarantee schools will get back all of that $127 dollar per-student payout.

- Beeen economist for state for 30 years
"You don't want to make cuts in the middle of the school year that adversely affect the children," says Mark Haas, Chief Deputy State Treasurer. "Some districts have a rainy day fund. It's a rainy day. This is the time to use those."

Haas also reiterated that 2011 will be just as bad or worse for schools and any cuts districts make now should be cuts they know they'll have to make in 2011.

If not, it's best to have continuity for the students for the rest of the year.

Granholm explained that the decision was made today because tomorrow was the deadline to decide how much school districts will get. All seemed to agree it was in the best interest to be adults and let districts handle the extra money they saved, now.

"In light of what the schools are facing, 'Would you like us to wait or would you rather have the money now?'" Granholm said. "Everybody said, 'We want the money now!' Because we are in the middle of making decisions of having to lay people off."

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