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It's September 7th: do you know where your school's funding is?

*Nearly every school district passed its budget for this year last June, our children went back to school this week, and the State's new fiscal year begins in 24 days. But, as yet, there is no agreement in Lansing on what schools will be allowed to spend this year, let alone how it will be paid for.*

You would think this would put school systems in a bind, and you would be right. Sadly, the fate of our schools and our children's education takes a back seat to larger issues, namely: who is going to take the blame for increasing taxes.

Here is the situation: At their May "revenue conference," the State's top economists estimated that revenues from the taxes that support school aid (sales tax, income tax, education property tax, etc.) would continue to suffer from the slowdown in Michigan's economy. Without action to find new funding, school aid levels would fall back to what they were two years ago, at best. (Even before such a decline, last year's "basic" per pupil allowance still lagged spending levels from five years ago, once inflation is factored in.)

Governor Granholm's budget proposals, released last winter, included an increase of 2.5% in the school aid budget, with per pupil allowances increasing $178, allowing spending to keep up with inflation. Revenue to support this spending was to come from a package of new and changed taxes, including the expansion of the 6% sales tax to most services. Reaction to the new tax proposals was, as you might guess, less than enthusiastic.

After many months of consideration, the House Appropriations committee approved a revised version of the bill, with a smaller (1.4%) increase in overall school aid. Every district would receive an additional $100 per pupil, and districts spending less than $7,669 per pupil would also receive a further $100 per pupil as an "equity payment." The idea is that this would be a permanent bump in their allowances, addressing complaints that efforts to equalize school spending have stalled. The House bill depends on yet-to-be-determined tax increases, and it passed the House essentially along party lines. (Senate school aid budget bills, one Democratic and one Republican, went off to Senate Appropriations, never to be seen again.)

Now the time has come for the two houses to consider one another's budget bills. With the House Democratic and Senate Republican leaderships unable to agree on what an acceptable mix of revenue increases and budget cuts might be, each house moved quickly to resolve the impasse by "zeroing out" the other house's budget bills, replacing all numbers with token amounts. This leaves all the real work to the conference committees, where picked members from each house will cut the deals necessary to craft a new budget. We can only hope.

The issue driving all this is that neither the House nor Senate leaderships want to go out on a limb and increase taxes to help plug the combined $1.7 billion hole in the fiscal 2008 budget. House Democrats want to raise revenue to help fix the budget, but they want a few GOP votes to give them cover (which are not yet forthcoming). Senate Republicans refuse to introduce any tax increases, and insist that the House cross that bridge first. They have indicated they would let tax measures come up for a vote, and perhaps allow them to pass narrowly, but will stay as hands-off as possible. But without new revenue, school funding will continue to decline.

A press release announcing a forthcoming report from the Citizen's Research Council notes that, without policy changes, spending pressures for school aid will increase by 5% on average while revenue to the School Aid Fund will increase only 3% on average over the next ten years. The release says: "The State has avoided making major decisions leading to eliminating the structural gap between revenues and expenditures, instead relying on $8 billion in one-time fixes from Fiscal Year 2001 through Fiscal Year 2007 to meet the Constitution’s balanced budget requirement." The CRC's conclusion, that the one-time fixes are exhausted and that the system has to change, should surprise no one. Our schools, our communities, and our state, deserve better.

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