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Granholm will cut schools by June 1 unless Legislature acts

An angry Gov. Jennifer Granholm announced today that she is warning school administrators that they will face $125 per pupil cuts starting June 1st unless the Legislature acts to find new revenue. The Governor laid the blame for the situation on Senate Republicans, who have so far resisted any effort to find new tax revenues to solve the deficits for the current fiscal year. In fact, Granholm indicated that Senate Majority Leader Mike Bishop's refusal to move on new revenue for this year has so far stymied budget negotiations that are supposed to cover this year and next.

Spokesmen for the Senate Republican caucus accused the governor of acting with excessive haste, saying that legislation has already passed both houses that would close most of the school funding gap. However, that legislation addressed the School Aid Fund deficit as it was calculated in January. State budget officials, and economists with the non-partisan legislative fiscal agencies, all firmly expect that they will find that the SAF deficit has widened by a further $100 - $150 million when they conclude their May revenue estimation conference. Granholm's per-pupil cut is based on those revised estimates.

School officials from around the state insist that they have nearly no flexibility to cut their costs at this point in the school year; districts will have to tap into their savings, if they have any, or go into debt. Some districts are reported to be on the verge of bankruptcy if substantial cuts are made. However, some observers have cautioned that it may be hard to find any new source of tax revenue that would raise enough money before the end of the fiscal year to prevent cuts to schools.

State law requires the governor to notify the Legislature if revenues earmarked for school aid are running short of budgeted amounts; the Legislature has 30 days from the time of formal notification to find new funds, or else state payments to schools must be cut to match the reduced revenues. Clearly, however, the timing of Gov. Granholm's notice and the size of the proposed cuts were intended to increase pressure on the Legislature to consider new tax revenues. Sen. Michael Switalski (D-Rosevile), senior Democrat on the Senate Appropriations Committee, said on Wednesday that he thought the prospect of sizable cuts to school funding would prompt many Senate Republicans to back new tax revenues for school aid.

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