| Legislative
Update for the week of January 29 - February 2, 2007
IN THIS UPDATE:
Governor's Emergency Financial Advisory Panel Report
Gov. Jennifer Granholm recently released her special panel's report re-stating the severity of the state's dire fiscal condition. The report essentially was a call for higher taxes, less spending and more government restructuring to the entire state in an election year-like campaign.
The 12-member Emergency Financial Advisory Panel didn't recommend a specific tax increase due in part to time constraints. The panel of six Republicans and six Democrats had all of 20 days to craft their 19-page report. The first task of the panel was for the public at large to better understand what an $800 million hole in this year's state budget means to them before suggesting specific solutions. The panel laid out the reality that if taxes hadn't been cut over the last several years, the state would not be in the financial crisis it finds itself in.
The report carried some fairly familiar themes, however, the most obvious being a full replacement of the revenue being lost at the end of the year through the repeal of the Single Business Tax (SBT). The Governor has stressed repeatedly that an SBT replacement be revenue neutral.
The report calls for:
- Benchmarking the performance and value of all public agencies including K-12 and higher education institutions
- Undertaking a plan to provide access to primary and preventative health care for all, especially children
- Reforming Public Act 312, which requires binding arbitration. Local governments have long argued that this law allows unions to strong-arm them into arbitration as opposed to negotiating employee contracts. Detroit Mayor Kwame Kilpatrick called for P.A. 312 reform in his State of the City address
- Provide taxpayers annually with an understandable report card on state and local spending and taxing
Inventory all statutory regulations and apply a rigorous risk assessment to each
Important to note for School Administrators, the report tackled the issue of teacher health care and retirement benefits, a subject that's been a sticky wicket for Republican lawmakers for about a decade. The report notes how the state faces $35 billion in unfunded liability for state workers and school district employees' pensions and retiree health care benefits. Schools spend more than $1,200 per pupil a year on health insurance premiums for workers.
There was pressure from committee members that all public employees' health care and retirement benefits should match what is pervasive in the private sector. It also encourages and "if need be require(s)" the state's 1,800 local units of government and 553 school districts to share or consolidate administrative services. In addition, the committee also wanted to do away with townships and would like to reduce the number of schools districts from more than 500 to 83—one for each county. The Governor is expected to launch a series of town hall meetings to drum up support for whatever solution she finally lands on following her State of the State address.
State of the State Tomorrow!
Governor Granholm will be presenting her 5 th State of the State address tomorrow evening and it appears to be filled with education plans. In leaks to the press and the education community late last week, the administration hinted on two issues the school community should be prepared for. The first, is a plan which would work like the Kalamazoo Promise. Anonymous donors would agree to provide a match to a portion of local property taxes or what is referred to as the State Education Tax (SET). Communities have to pay the SET, which is a six-mill property tax. After a local unit of government finds a willing donor, they can then set up a Promise Zone. A Promise Zone would allow the community to take any additional SET money that is generated from increased property value and put it aside for education. The plan would be limited to areas of the state that have high poverty levels.
While the money would technically still be in the SAF, any incremental increase in that zone would be allocated for the “promise”, so the SAF will have less SET money than it would have had. However, proponents of the legislation argue the benefit for communities would outweigh any incremental loss statewide. The initial price tag could be as much as 3 million per year.
Second, the Governor is also expected to introduce a plan that calls for consolidation of services for Michigan School Districts. The plan is expected to call for consolidation of administrative services through ISD’s. The plan will offer both incentives and penalties and recognize where districts are currently working together to offer efficiencies. It is likely this proposal would go through the legislature and be linked to legislation that will produce greater cost efficiencies (Health Care and Retirement Reform). Look for more information on the Governor’s SOS tomorrow.
Addressing the SAF Shortfall
KEEP UP THE PRESSURE!!! The good news is that dialogue with lawmakers is working. There is a lot of talk in Lansing now about finding ways to address the $350 million plus shortfall. Lawmakers are looking at multiple options to help schools avoid a prorata cuts. Dialogue is ranging from legislation that would find replacement revenue from the general fund to a plan which would reduce (reset) the MPSERS rate. While the Dept of Treasury has not notified the State Budget Director and effectively started the 30 day proration window, it is likely to happen soon. Continue your conversations with your legislators, teachers and community. You will also be contacted by the MASA LEGISLATIVE ACTION NETWORK after the State of the State to begin emailing your lawmakers again.
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