The MONEY to STIMULATE!

Michigan schools set to win big in stimulus

Granholm, lawmakers still debating final choices; utilities, cities want help too

BY CHRIS CHRISTOFF • FREE PRESS LANSING BUREAU CHIEF • March 6, 2009


LANSING — Detroit Public Schools stands to reap $530 million — $355 million with no strings attached — from the federal stimulus package that will hand Michigan nearly $7 billion over two or three years.

That appears to make the district, which has an estimated $150-million deficit and finances so tangled the state recently appointed a manager to take the financial reins, the biggest Michigan winner in the stimulus sweepstakes.

In all, the state and local school districts could have at least $2.5 billion to spend as they see fit, based on an analysis by the Senate Fiscal Agency.

How that money is doled out will test the political and fiscal convictions of the governor, state lawmakers, school officials and hundreds of communities and others with their hands out for a piece of the biggest federal giveaway.

Cities, townships, counties, schools, state government and electric utilities have given Gov. Jennifer Granholm their $50-billion wish list for stimulus money.

At most, there's two cents available for every dollar requested.

In addition, Michigan will get nearly $850 million for road and transportation projects to be decided by the state and regional agencies such as SEMCOG.

Liz Boyd, spokeswoman for Granholm, said no decisions have been made about the discretionary stimulus money. She said Granholm insists it be used to create jobs, improve education and promote “the new energy economy.”

Boyd acknowledged heavy demands for the money, given the state's 11.6% unemployment rate and growing need for government assistance, adding, “We are approaching this in a very prudent fashion.”

Lawmakers' ideas

Two key lawmakers represent different views of how the state should spend its stimulus money.

Rep. George Cushingberry, D-Detroit, is chairman of the House Appropriations Committee, which oversees all state spending. Sen. Ron Jelinek, R-Three Oaks, chairs the Senate Appropriations Committee.

Cushingberry said discretionary federal money should be used for public schools, expanded government-paid health care for uninsured people and an early retirement plan for state employees, although he offered no details.

In contrast, Jelinek said the money should be spent on projects that create jobs and save taxpayers money in the long run, such as roads, water lines and sewers, or repairs to schools.

“We want to jump-start the economy, put people to work or keep them at work,” Jelinek said. “Increasing someone's retirement doesn't do that.”

House freshman Rep. Bill Rogers, R-Brighton, suggests using $200 million from the stimulus money to cover the up-front costs of converting the pension program for teachers and other public school employees from a traditional, defined-benefit pension to a 401(k)-style savings plan.

Such a change would ignite a firestorm of opposition from teachers and their unions, which hold their traditional defined-benefit pension as untouchable.

Granholm wants to use $1 billion from Medicaid and education stimulus funds to help balance the state budget and to prevent cuts in state aid to public schools and universities.

That would leave $1.3 billion at the state's discretion to spend, and $1.2 billion for school districts and charter schools, according to the Senate Fiscal Agency — $2.5 billion total.

Help for low-income students

Schools also will get $888 million earmarked for special education and to help low-income students.

School districts with proportionately large numbers of low-income students will get more money.

The northern Michigan district Mio-Au Sable, with 770 students, is to receive $1.3 million because it has lots of students from low-income families. That's more than will go to the 3,000-student Riverview Community Schools in Wayne County.

For a complete list of what school districts are estimated to get, go to www.senate.michigan.gov/sfa/main/K12Grants.pdf.

Cushingberry advocates using stimulus money to reduce the gap between what the top-spending and the lowest-spending districts pay to educate each child.

He said money could be used to purchase technology to create virtual universities. He also said stimulus money should be used to provide more health insurance to laid-off workers and other uninsured people.

“As a Democratic leader, that's the most important issue to me, to make sure everybody that we can gets some kind of health coverage,” Cushingberry said.

Asked what happens to schools when the extra federal money runs out, Cushingberry said, “If this economy in Michigan doesn't turn around in the next year or two, there won't be anything we can do anyway.”

Possible trouble ahead

Jelinek said he favors more state budget cuts, not fewer, to prevent chronic budget problems in the future.

He said the potential state deficit — pegged in January at more than $1.5 billion in 2010 — is likely to grow larger as the economy continues to falter.

Gary Olson, director of the Senate Fiscal Agency, said although Michigan will receive large amounts of federal money, it could be eaten up by ordinary demands for state spending. The state spends nearly $22 billion between its general and school aid funds.

The stimulus money for schools is a blessing and a concern, said Donald Wotruba, deputy director of the Michigan Association of School Boards.

The money will help avoid some layoffs, he said. But it could give a false impression that schools are flush.

“The public will be shocked because some people will still be laid off,” he said. “That will be hard to explain.”

Contact CHRIS CHRISTOFF at 517-372-8660 or christoff@freepress.com.