CRC Addresses the Recent Passage of the FY2011 School Aid Fund Budget
July 7, 2010, Before embarking on its traditional 4th of July two-week recess, the Michigan Legislature passed the Fiscal Year 2011 (FY2011) budget for the School Aid Fund (SAF), which provides operating funding for Michigan's local and intermediate school districts. July action on the SAF budget this year breaks with recent history, during which the state budget (SAF and General Fund) has not been enacted until late September or even after October 1, the start of the new state fiscal year. The legislature's "early" adoption of the budget provides schools with a greater degree of certainty as they begin their fiscal years on July 1. Observers should be cautious about placing too much importance on the recent legislative action, however, as a number of major budgetary issues, both for this year and next, remain to be resolved.
The Citizens Research Council of Michigan's recent report, The Fiscal Year 2011 School Aid Fund Budget: A Day Late and a Few Million Dollars Short, looks at the impetus, issues, and implications surrounding the adoption of the new state school-aid spending plan.
"Given the fiscal struggles of FY2009 and FY2010, coupled with the loss of $1.3 billion in temporary federal stimulus funding from the budget, crafting a balanced budget that did not further reduce per-pupil spending is a significant accomplishment." said Craig Thiel, CRC's Director of State Affairs. "However, the adoption of this "early" budget was aided greatly by the significant positive change in the official SAF revenue estimates and the fact that major General Fund budget shortfalls were not addressed at the same time."
With the passage of the FY2011 SAF budget now complete, the legislature will turn its attention to the General Fund budget, which is in much worse shape. Current projections indicate that the General Fund faces a shortfall of at least $220 million in FY2010, with only three months in the fiscal period remaining. For the upcoming FY2011, the state budget is in deficit by $500 million. Legislative deliberations on the General Fund were stalled during the development of the SAF budget and will resume sometime in late July or early August, following the July 4th recess.
Click here to read the CRC Analysis
IN THE NEWS
CRC's Con-Con Series Analyzes Article VII - Local Government
July 9, 2010, The tenth in the Citizens Research Council of Michigan's series of papers about state constitutional issues focuses on local government -- Article VII of the 1963 Michigan Constitution.
In addition to providing authority and power to the different branches of state government, the Michigan Constitution authorizes and empowers local governments. These provisions range from establishing the structure and governance fo counties and townships to the provision of home rule powers for cities, villages, and counties.
One of the most significant issues a constitutional convention may address is balancing the powers of the state to empower, oversee, and control local governments and the local governments’ interest in exercising the home rule powers currently provided in the constitution. Legislative action, administrative rules, and court rulings have eroded the spirit of home rule as it was originally envisioned by the drafters of the 1908 and 1963 Constitutions. Delegates to a 2011 convention would likely provide clarity to the proper balance of the state and local government powers.
"With the financial troubles facing local governments and the ever-present need for economic development," said Eric Lupher, CRC's Director of Local Affairs, "a constitutional convention is likely to spend time looking at the structure of local government. Potential reforms would likely focus on reducing the number of governmental units and streamlining the provision of governmental services."
The current provisions for county boards of supervisors are inoperable because they violate the 'one person, one vote' principle of the U.S. Constitution. It could be expected that a convention would attempt to provide greater direction on the conflict between the authority of local governments to control the use of their highways and public places by utilities and the power of the state to regulate those same utilities. Finally, a convention may choose to examine the need to address constitutional provisions related to multipurpose special authorities and the removal of public officials.
In looking at each article of the Michigan Constitution, CRC takes no position on the question of calling a constitutional convention. It is hoped that examination of the matters identified in this paper will promote discussion of vital constitutional issues and assist citizens in deliberations on the question of calling a constitutional convention.
Article VII -- Local Government can be accessed at www.crcmich.org/PUBLICAT/2010s/2010/rpt36010.html. The series of constitutional issues papers is being released on roughly a bi-weekly schedule and can be accessed at www.crcmich.org/election.
IN THE NEWS
CRC Report Addresses Financial Emergencies in Michigan Local Governments
April 21, 2010, The Citizens Research Council of Michigan has released a report exploring the options available to local governments facing financial emergencies.
"A number of local government officials in fiscally distressed communities have in recent months used the terms 'bankruptcy' and 'receivership.' Use of these words may express the level of concern those officials have, or wish to convey, about the financial condition of their communities, but they are not particularly accurate or appropriate in the context of Michigan local government," according to Senior Research Associate Bettie Buss.
Financial Emergencies in Michigan Local Governments describes the options available to fiscally distressed municipalities, including an in-depth description of Michigan's Local Government Fiscal Responsibility Act and Chapter 9 of the Federal Bankruptcy Code. The report also defines key terms including: emergency financial manager, in default, judgment levy, insolvency, bankruptcy, and receivership.
"Bankruptcy should be avoided at all costs," says CRC President Jeffrey Guilfoyle, "the bankruptcy of one of Michigan's local governments could impact the access to credit markets for all of Michigan's governments. Local leaders and the state should explore every possible option before even contemplating a bankruptcy filing, and they should never view a bankruptcy filing as an easy solution to a government's financial problems."
Read On to find the report and its summary.
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Recent Publications
Article VII -- Local Government
Article VI -- Judicial Branch
Article V -- Executive Branch
Article IV -- Legislative Branch
Article III -- General Government
Financial Emergencies in Michigan Local Governments
Article II -- Elections
Article I -- Declaration of Rights
The Fiscal Condition of the City of Detroit
Amending the Michigan Constitution: Trends and Issues
The FY2011 Executive Budget: "Déjà Vu All Over Again"
A Brief Michigan Constitutional History
General Revision of the Michigan Constitution
Public Education Governance in Michigan
Last Updated July 9, 2010
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