Brief: Budget hangups

*Negotiations on a school aid budget for FY2011 ground to a halt as House and Senate conferees split on what to do with the projected School Aid Fund surplus.* After months of uncertainty, closure appeared near on the school aid budget for the 2010-11 fiscal year. A deal in principle was reached among House and Senate members on the conference committee reconciling the differences in "the two chambers' versions of the budget bill, SB 1163":http://legislature.mi.gov/doc.aspx?2010-SB-1163. The Senate version, passed before the "optimistic news from the May revenue estimation conference":http://www.miparentsforschools.org/node/127, had included further cuts of $118 per pupil plus larger transfers from the cash-strapped general fund. The revenue conference projections, however, allowed lawmakers to consider making no cuts at all for fiscal 2011. The news was good enough, in fact, that the School Aid Fund might emerge with a surplus when all was said and done. And that is where the trouble began. In an effort to close the FY10 general fund budget deficit, Senate Republican leaders proposed a budget that would shift much of the projected SAF surplus over to the general fund to support higher education and community colleges. Republicans in both houses have been looking for ways to close the still-significant general fund deficit without raising new revenues. Appropriating the projected SAF surplus of $240 million would make a large dent in that deficit. The Democratic leadership in the House has rejected such a move, however, and has insisted that the SAF surplus remain available for K-12 education spending. The general fund deficit, they argue, should be solved some other way - possibly including new revenue. This significant detail aside, both sides seem to have come to a basic agreement about school aid spending this year and next. For the current fiscal year (which ends on September 30), K-12 districts would get back $11 per pupil of the $165 per pupil cut they received last fall. (The added money would be paid in the last state aid payments of the year.) Similarly, rather than facing further cuts, schools would receive a modest increase of $11 per pupil for next year (2010-11). This will come as good news to most districts, which had to go through their budgeting process this year expecting substantial cuts. It may, however, mean that some districts have cut programs or other spending that might have been saved. Lawmakers had hoped to finish negotiations in advance of a large school funding rally in Lansing this Thursday; the rally has been organized by the state teachers' union and includes teachers, parents and other school officials. But progress on the bill seems stalled until some agreement on the general fund budget can be reached.