Lansing-area schools face COVID-19 and thousands in budget cuts heading into next year

LANSING — Lansing-area schools are heading into the next term facing historic budget cuts thanks to the coronavirus outbreak.

Michigan is set to lose $3.2 billion in state revenues this year due to the pandemic. That includes an estimated $1.2 billion loss in the School Aid Fund for this fiscal year, plus another $1.1 billion loss in the 2020-21 fiscal year, according to an estimate from the Michigan House and Senate fiscal agencies and the state Department of Treasury.

A $1 billion loss translates to a loss of $685 per student for most schools from the $8,111 they receive in state funding, according to a worst-case scenario included in a memo from State Superintendent Michael Rice and other education leaders distributed ahead of the Consensus Revenue Estimating Conference on May 15. 

It would be the largest funding cut since 2011, when per-pupil funding dropped by $470, and schools also could be forced to cover a retroactive cut this year to help make up the estimated $1.2 billion loss.

State or federal aid could help cover the losses, like the funding already distributed from the Elementary and Secondary School Emergency Relief Fund through the Coronavirus Aid, Relief, and Economic Security Act. 

But it may be months before districts learn just how much funding they will lose. School districts have to approve their budgets by June 30. Legislators are mandated to present Gov. Gretchen Whitmer a budget by July 1 and have until Sept. 30 to approve it.

'We’re going to have to be very careful'

For the Lansing School District, a $685 loss per pupil would amount to a cut of more than $6.8 million, or about 4% of the district's $165.3 million budget for the current fiscal year.

“Our money comes from revenues and the revenues aren’t there right now,” said Sam Sinicropi, Lansing schools' interim superintendent. “We’re going to have to be very careful about what we do and how we go about doing things next year.”

Jon Laing, the school district's chief financial officer, shared four of the many scenarios the district is planning for during a virtual meeting Thursday, ranging from state funding remaining the same to a loss of 25% of per student funding and more than $20 million from the district's coffers.

The district can “probably” get by if more moderate cuts are made, Sinicropi said, but he hopes not to empty school fund now and impact how the district responds to future scenarios, like preparing for school to resume in the fall.

Lansing's budget scenarios do not consider $6.4 million in Elementary and Secondary School Emergency Relief Fund money the district is going to receive or any further government funding. 

Without that funding and with projected losses, their general fund balance could dip to shortfalls of $263,000 for a $500 per student loss, $2.2 million with a $700 per student loss and $15.8 million if legislators cut funding by 25%, according to Laing's presentation.

Sinicropi also expects a 500 to 700 student drop in enrollment as a result of the pandemic, bringing an estimated loss of another $3.9 million.

He still hopes to keep the instructional division intact.

"We are working on FY-21 budget right now. We're getting somewhere, but we have some really tough decisions to make," Sinicropi said during a board of education meeting Thursday. 

'Bad, badder, baddest'

East Lansing Public Schools have started preparing for losses of $300, $500 and $700 per pupil.

“It’s bad, badder, baddest,” said Superintendent Dori Leyko. 

A $500-per-pupil cut would mean a $2.9 million hit for the East Lansing schools and send the district scrambling to make it up. The district approved a more than $42 million budget for the current fiscal year.

Personnel expenses make up at least 80% of the budget, Leyko said, so officials would look for empty positions to cut, for positions vacated by retiring educators to temporarily cut or replace retirees with lower-paid employees.

In February, before the coronavirus became a serious concern, Whitmer proposed increasing K-12 funding by $150 to $225 per pupil as part of her 2021 state budget. It would have been the largest increase in two decades.

'The federal government should...help'

The Michigan Education Association is advocating against education cuts altogether, especially since Michigan ranks last in the country in funding growth for K-12 schools since 1994, said spokesperson David Crim.

The federal government has already begun bailing out large corporations, airlines and cruise lines, he said, and schools need that same support.  

"We understand that state revenue is down," Crim said. "We believe that the federal government should and will help alleviate the need to cut school funding significantly.

"If not, we could see a lost generation for students with these kinds of cuts, basic cuts in curriculum, classroom teachers, things that could affect kids for the rest of their lives."

Randy Liepa, Wayne Regional Educational Service Agencies superintendent, continued the call for federal help in the form of another stimulus package. The state could also draw from its $1.2 billion rainy day fund.

"If none of that happens, you're looking at devastating reductions," Liepa said. 

Looking to the state, feds for help

"It's just grim," said Eaton Rapids Public Schools Superintendent Bill DeFrance. 

Teaching classes remotely has saved his district and others some money by keeping buses parked, not having to hire substitute teachers and no longer paying to send teachers and staff to seminars and conferences.

But, on the flip side, the district had to buy internet hotspots with service plans to ensure all students could access schoolwork remotely. 

The district has gotten nearly $248,700 in funding through the Elementary and Secondary School Emergency Relief Fund. That will help them get through this year, but DeFrance questions how districts can continue operations next year with potentially massive state funding cuts. 

Eaton Rapids Public Schools prepared two potential budgets for next year, DeFrance said, one where the district "tightens our belts" and returns students to the traditional school experience and another if distance learning continues. Both budgets are tight.

DeFrance hopes state and federal legislators will step in, get creative and find ways to solve the funding dilemma. 

"Other than legislators getting creative — there’s some creative financing that can be done legislatively — I really think that’s the place where we’re going to have the most impact," he said. 

Contact Mark Johnson at 517-377-1026 or at majohnson2@lsj.com. Follow him on Twitter at @ByMarkJohnson.