Senate passes Engler education plan

Michigan senate approves legislation to pay off school districts

As all Democrats voted in vain for their party's plan, which has cleared the state House in part, the Senate passed on 21-16 and 20-16 party-line votes three bills to implement Gov. John Engler's alternative proposal.

The votes set up key negotiations on how to repay school districts for the so-called Durant case, in which 84 public school districts sued the state in 1980 over inadequate special education funding. Officials said Engler and key lawmakers already were discussing a compromise.

"If you're going to treat children fairly, you have to have a plan that treats (school) districts fairly," said Senate Majority Leader Dick Posthumus, (R-Alto.)

But Democrats labeled Engler's plan a "shell game."

"It's a way to mesmerize ourselves that things are OK," said Sen. Joseph Conroy, (D-Flint).

The dispute in large part boils down to whether the state takes money out of the "rainy day" Budget Stabilization Fund - the Democratic plan - or whether it sells bonds to pay off school districts - the Republican plan.

In short, Democrats argue that bonding would be too expensive and more debt should not be authorized; Republicans contend the BSF should be protected from such use and should be saved for the inevitable economic downturn.

"This is very good news for schools," John Truscott, a spokesperson for Engler, said after the Senate action. "It's a huge infusion of cash. Now it remains to be seen if the House is going to play politics with this."

Engler has proposed, and the Senate-passed legislation calls for, dipping into the Budget Stabilization Fund for about $211 million, over three years, for the court-ordered payments to 84 district which actually filed the lawsuit.

He is urging the selling of $768 million in bonds to pay off other districts in the same situation, but did not sue. The payments would be in one year, but the bonds would be paid off over 15 years.

The legislation also includes language calling for one of Engler's pet proposals - offering education employees the choice of a "defined contribution" retirement system. That proposal is strongly opposed by many Democrats and is unlikely to win approval anytime soon in the state House.

Such a system - different from the current "defined benefit" system - would guarantee the level of state contribution for retirement programs but not the ultimate benefit to the retired worker.

The Senate-passed bills also would:

n Reinstate some $230 million in "at-risk" funding for districts which have large numbers of disadvantage students at risk of failing or dropping out of school. Engler this summer vetoed about $250 million of such funds as his administration worked to pay off the Durant verdict.

- Permit students to transfer out of their district when they suffer violence or harassment. Such legislation has been introduced separately, but the Senate voted 37-0 Wednesday to include it in the funding bills.

Engler's plan also would fund a "small class-size" program - planning money of $100,000 in 1997-98, and funding of $20 million in 1998-99; ensure that special education money is not cut for any district and there are no special education program reductions; pay off bonds over 15 years, at a cost of about $1.2 billion; restructure school aide operating payments into 11 equal payments; add $37 million to the state "foundation grant;" and increase the assumed rate of return to 8.3 percent from 8 percent to reflect historic earnings rates. Schools would set aside $240 less a year for retirement; the state would reduce state school aid by the same amount.

10-02-97