Budget Deal Closes Current Year’s Shortfall

Gov. Gretchen Whitmer and legislative leaders announced a deal on Monday evening to address the current year (Fiscal Year 2020) budget shortfall in part by allocating funds from the federal CARES Act sent to Michigan earlier this year.

Monday’s announcement only deals with the current year budget gap – this does nothing to solve next year’s (FY21) shortfall. The deal gives K-12 schools about $512 million in CARES funds to deal with increased costs from the pandemic; higher education will receive $200 million.

To address the FY 2020 shortfall of $2.2 billion combined between the General Fund and School Aid Fund, the state will use a combination of money from the budget stabilization (or “rainy day”) fund, cuts to state government, and some reductions to state education spending – $256 million from K-12 and $200 million from higher education.

MEA experts continue to analyze the particulars of the deal, which will not be finalized until the Legislature returns the week of July 20. At a basic level the pact avoids massive funding cuts for the school year that has already wrapped up, and leaves K-12 schools with about $256 million in additional funding to help manage pandemic costs.

“While we are certainly not out of the financial woods yet, the short-term funding of education in Michigan appears to be secured,” said MEA economist Tanner Delpier, who along with MEA lobbyists will monitor developments in the coming weeks, as well as any special requirements for how CARES funds can be used by districts under this agreement.

After Monday’s announcement, MEA President Paula Herbart issued a statement, saying,“I applaud Gov. Whitmer and legislative leaders for working together to minimize the negative impact on schools, students and public education employees in the wake of the COVID-19 pandemic. This budget agreement prevents massive education funding cuts for the current fiscal year and, looking ahead, will help finalize plans to safely reopen schools in the fall.”

At a Tuesday press conference to announce her Return to Learning plan, Gov. Gretchen Whitmer said, “This agreement proves that in times of crisis we can come together and build a budget that reflects a bipartisan commitment to the things we value most as Michiganders. We worked together on a strong budget that supports our students, educators and families, and I know we all share a commitment to addressing the remaining shortfalls in next year’s budget.”

The deal also includes $53 million to provide a $500 “hazard pay” bonus for teachers, which MEA is arguing targets the school community too narrowly.

“MEA will be advocating that these funds be divided fairly among all school employees – not just teachers – in recognition of the efforts of education support professionals throughout this pandemic, including sanitizing facilities, making and delivering meals, and completing other critical work to keep students learning,” Herbart said.

While this announcement is coming from the Governor and Legislative leaders, the Legislature is not slated to return to Lansing until July 21.

Big work remains to address looming shortfalls in next year’s budget, so it’s essential the U.S. Senate act quickly on HEROES Act funding to help maintain a quality public education for students throughout next school year, Herbart said.  This federal aid will shore up next year’s state education budgets, which would otherwise be devastated by COVID-related economic losses – at a time when additional funding is needed to ensure students’ physical, emotional and academic needs are met.

As part of Monday’s budget deal, Republican legislative leaders joined Whitmer in calling on federal officials to address unprecedented challenges faced by states amid a global pandemic.

Herbart noted MEA’s members have been lobbying both Congress and state legislators on this point. “We’re pleased to see some progress with GOP leaders in Michigan; now it’s time for Washington to act,” Herbart said.

MEA members should continue calls to action with the U.S. Senate.

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