Tuesday, Apr 24, 2018
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Increased school aid tied to tax collection

Michigan school districts would get the $6,700 a student they were promised in the fiscal 2003 school year, but taxpayers would have to pay their property taxes in the summer to fund it under a proposal announced yesterday by Gov. John Engler.

The governor, who once warned of possible cuts in education funding because of a severe budget deficit, instead has proposed raising the minimum foundation payment by $200 from the current $6,500 a student.

In addition, Governor Engler recommended restoring funding at current year levels for ancillary programs which serve at-risk, school readiness, vocational education and career preparation, intermediate school operations and millage equalizations, adult education and learning, bilingual education, math/science centers, gifted and talented, and others.

“That's quite a relief, because we were hearing he was going to cut us,” said Superintendent Jim Goebel, of Bedford Public Schools.

Mr. Goebel said he and many other superintendents feared that the governor would propose raising the foundation grant, but would cut the ancillary money to achieve the $6,700 a pupil figure.

“We were afraid he was going to be giving with one hand and taking with the other,” he said.

To get the money to fund his recommendations, Governor Engler recommended that all of the state education tax be collected in the summer beginning in July, 2003, instead of being collected in July and December each year.

The change would result in additional fiscal year 2003 revenue of nearly $500 million, the Engler administration estimated, providing enough money to support the increased foundation allowance to $6,700 a student.

To ease the pain the earlier collection date might pose for some property owners, the governor proposed a one-time tax cut totaling $266 million for taxpayers by reducing the millage rate from the current six mills to five mills for one year only.

Local treasurers who must change their schedule for collecting education property taxes so they can receive those taxes in the summer will be given $4.6 million to ease the transition.

State Treasurer Doug Roberts said some property owners might be asked to pay more escrow earlier so their mortgage companies can meet the summer 2003 deadline for tax payments. About 700,000 property owners pay at least a portion of their education taxes in December.

Rich Ames, superintendent of Hillsdale Community Schools, said he was not sure how taxpayers in his district would respond to switching the semi-annual tax collection to a single bill in July, but added the switch would aid districts by bringing in money when districts need it most. Districts receive 11 payments from the state each school year, with the first coming in October and the last in August. Districts in Michigan operate on a July 1 fiscal year, while the state begins its fiscal year October 1.

“Because of the [current] tax collection situation, we have to end up borrowing money each year in order to get through the first month of the school year ... ,” Mr. Ames said. “[The governor's proposal] is new, and until people experience it, they're going to be a little bit hesitant.”

Teachers and education groups welcomed the proposal. But it drew derision from Senate Democrats and criticism from the state superintendent, who warned it could leave future governors and lawmakers with an even bigger shortfall down the road.

“I give him [Governor Engler] an `A' for his creative bookkeeping strategy,” state Superintendent Tom Watkins said. “... [But] this is still a short-term fix for a long-term problem.”

Even after dealing with the school aid deficit, the budget still faces a nearly $700 million hole in its $9.3 billion general fund. Budget director Donald Gilmer will present the spending plan this morning to a joint session of the House and Senate Appropriations committees.

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