Dear Community Members,
Here is the most current information I have regarding the School Aid Fund:
During this week’s Consensus Revenue Estimating Conference, state officials and economists presented that shutdown as a result of COVID-19 has dropped state sales and income tax revenues to numbers we have not seen since 1946.
Big Picture: state revenue's loss between this year and the next fiscal year is $6.28 billion over anticipated revenue in January.
The School Aid Fund is significantly out of balance for the current fiscal year, the next fiscal year, and the following.
For FY20, the deficit is $1.09 billion, for FY21 the deficit is $963 million, and for FY22, the deficit is $334 million.
These numbers assume that spending is not adjusted in any way and shows a long-term positive outlook — we'll be back in balance by FY23 without any changes in spending. This is the silver lining.
On paper, the SAF is out of balance by about $900 per pupil for the current year, but Sec. 296 of the School Aid Fund spells out how a proration works, and using that process, we are looking at roughly $650-700 per-pupil proration for FY20.
These numbers hold true absent any federal dollars or changes to state spending. For IPS this would equate to a proration for our current fiscal year (FY20) of approximately $2,100,000 and an additional cut of approximately $1,850,321 in FY21.
In order for a proration to occur, the State Treasurer must notify the State Budget Office (SBO) that expenditures exceed revenues.
The SBO would next notify the legislature of the deficit, and the legislature would have 30 calendar days or six consecutive session days to:
Enact legislation appropriating additional funds from the general fund, Budget Stabilization Fund, or other sources to fund the projected shortfall, OR
Reducing appropriations in order to avoid a proration
The proration amount is determined by calculating the percentage of SAF that the specific groups receive and multiplying that percentage by the total proration amount.
Certain protected sections must remain fully funded. For more details, see the House Fiscal summary on the topic.
This is not the first time the state has dealt with a proration. In FY 2002-03, state aid payments saw a 3.8% across-the-board reduction.
We also have two similar situations that occurred in FY 2009-10 & 2010-11. In those years, the legislature avoided an automatic proration by reducing payments through a new section, Sec. 11d.
However, in those years the per-pupil reduction was only $154 and $170, which is significantly less than what we are potentially facing.
What options are there? Right now, not many.
We continue to advocate to Congress regarding the need for additional federal stimulus dollars, and we ask that you keep an eye out for those advocacy alerts.
The legislature could also use money from the Budget Stabilization Fund to help prevent or limit the impacts of a proration in the current fiscal year.
Additionally, lawmakers could move out of the SAF funding for community colleges and higher education to help soften the blow to the K12 system.
The top question on your mind is about proration for this year. As of now, it looks rather likely.
Your follow-up question relates to continuing to pay staff in the context of a proration. It is likely that clarification will be needed but unlikely that you'll be held to the exact same expectation under a proration.
More information on this issue with details should be coming soon.
May is Teacher Appreciation Month. I am proud of the work our staff and parents are doing to educate our children during this pandemic.
Thank you for the work you do every day to enrich the lives of our students. You all play an essential role, and your efforts have not gone unnoticed. You are all heroes in my book.
Together, we can make a difference in the lives of our students and the community.
— Ron Wilson is superintendent of Ionia Public Schools. The views expressed in this column do not necessarily represent the views of Ionia school elected officials, employees or students. You may contact Ron by email at firstname.lastname@example.org.