School Deficit Expected to Drop to $4 Million Under New Budget Plans

The governor and legislative leaders announced a tentative deal Thursday that would lessen planned cuts to schools and put aside money in the state's rainy day funds.

For Birmingham Public Schools, it's both good and bad news. The good news: the district's projected deficit would be reduced from around $7.7 million to $4 million, said Superintendent David Larson. The bad news: they're still in the hole.

"This makes the budget more manageable," Larson said. "But it's still a challenge, a predicament."

Gov. Rick Snyder, Senate Majority Leader Randy Richardville and House Speaker Jase Bolger made the announcement in Lansing Thursday.

"It's a new day in Michigan," Snyder said in a news release. "We're leaving gridlock and negativity in the past. Michigan has not been well served by the annual budget dramas that have taken government to the brink of shutdown. We will have a timely, balanced budget in place so that our municipal and school partners can accurately plan for the coming year, avoiding the chaos that too often has been foisted upon them due to Lansing's inaction."

The terms of the deal include:

• A per-pupil cut that would be less than $100. The original cut proposed by Snyder was to be $470 per student.
• $310 million in funding for K-12 schools more than was originally proposed. $150 million of that would be distributed on a per-pupil basis to districts that meet "specified financial best practice measures as defined in the K-12 appropriations bill." The schools would also get a one-time $160 million to help defray retirement system costs.
• $30 million in additional funding for local units of government, half of which goes to cities, villages and townships as part of the Economic Vitality Incentive grants, and the other half going for county revenue sharing.
• $50 million for the Michigan Strategic Fund for economic development activities, including brownfield redevelopment and historic preservation incentives. 
• A $25 million cap on incentives for the film industry.
• Money for the the state's rainy day funds, including $255 million for the  Budget Stabilization Fund and $133 million to a School Aid Fund reserve account.

The governor had asked for a deal by May 31.

"We will have a timely, balanced budget in place so that our municipal and school partners can accurately plan for the coming year, avoiding the chaos that too often has been foisted upon them due to Lansing's inaction," Snyder said in a statement.

Larson said the district's budget plans won't change too dramatically with the news: the district is still planning on dipping into its fund equity and reducing transfers from its capital projects account. Running schools is a human enterprise, Larson said, and costs will continue to increase.

Even with the original $470 per-pupil cut, Larson said the district had found ways to preserve programs and key services, and there were no anticipated cuts to classrooms. Still, there is work to be done.

"If the governor wants to leads Michigan economically," Larson said. "He has to take care of K-12 education."

House Rep. Chuck Moss (R-Birmingham) said the deal is a good step toward completing a budget before June 1. "This shows we mean business about getting our own house in order," Moss said Friday.

According to Moss, many of the changes in school funding are meant to address long-term structural problems — such as retirement costs — rather than throw money at a short-term fix. In addition, he said Birmingham schools should easily qualify for funds distributed for "best practices," which includes competitively bidding out services, having a consolidation plan and providing district report cards.

Moss said the budget could come before the House Thursday or Friday, with the intent to wrap things up before the Memorial Day weekend.