Senate Committee Approve Plans to Cut $118 Per Pupil

March 25, 2010

LANSING — The Senate and one of its key committees approved budget plans Wednesday to cut state aid to schools by $118 per pupil but save school districts an estimated $480 million next fiscal year in a move that sets up a showdown with the state House.

The Senate, with mostly Republican votes, approved a $12.6-billion school funding plan that would reduce basic state aid to all school districts by $118 per pupil. The plan assumes $480 million in savings for schools by forcing tens of thousands of teachers into retirement and requiring those still working to pay 3% more of their salaries toward their retirements.

Also, those who don’t retire under the incentive plan would lose future dental and vision benefits when they retire at a later date.

The two related issues — school funding and teacher retirement reforms — are possible barriers to an agreement on a 2010-11 budget and erasing a projected $1.5-billion deficit.

The Senate also cut $107 million from the Department of Community Health next year. That would cut Medicaid payments to physicians by 4% and drop 18- and 19-year-olds from Medicaid coverage.

So far, majority Senate Republicans have ignored Gov. Jennifer Granholm’s proposals for a sales tax on services and a 3% tax on physicians’ gross incomes. Those plans would generate an estimated $554 million more for public schools and $700 million more for Medicaid payments.

"We have kept our promise of balancing the budget without raising taxes and burdening Michigan residents further, even though we realize not all of the cuts we made will be popular," said state Sen. Ron Jelinek, R-Three Oaks.

The Senate Appropriations Committee approved bills that would make state and school employees pay more into their retirement plans, and coax those with 30 years of service or more and age 55 and up into retirement. The Senate is expected to act on the bills today. Unlike similar proposals by Granholm, the Senate versions don’t include a modest pension formula sweetener to entice eligible employees to retire.

Sen. Irma Clark-Coleman, D-Detroit, said the bills would force many of Detroit schools’ best, most experienced principals and teachers to retire, which would hurt the troubled district’s efforts to improve academically.