With the surprising turn of events in the school aid budget a few weeks ago, many school districts, which were basing their budget decisions on an anticipated foundation allowance increase, now must determine their anticipated savings from the decrease in their MPSERS UAAL share. Because the MPSERS savings are calculated as a percentage of payroll, the amount of expected savings will vary from district to district. If you are lucky enough to be one of the districts that got more money than you budgeted for, congratulations. If you are one of the districts that must do some budget trimming, hopefully, the hits are not going to be too hard. In either case, there is a much higher likelihood you will have to amend your newly passed budget. Fortunately, the process is a bit more streamlined than the process of passing your initial budget. The Budget Hearings of Local Governments Act (MCL 141.411 et seq) requires a separate public hearing on a proposed budget with proper notice being issued six days before the hearing is scheduled. Because every school district was required to have their budgets passed by June 30, this process should have been completed already. Because you are amending a properly passed budget, there is no requirement for a public hearing first and, therefore, no requirement for a 6-day notice period, allowing for quicker action on the changes recommended by your administration.  

A greater challenge comes to your bargaining teams as they either negotiate at the table on a new contract or find they must bargain with the union to make changes to fit with the surprises the state’s budget has laid forth. Whether your district will see a windfall or loss from the state’s actions, bargaining at the table will be complex. On the one hand, understandably, if there is extra money the unions will want a piece of it. If cuts need to be made, they will want no part of it. Adding to this layer is the fact that, because the legislature did not make statutory changes to ensure the MPSERS savings are law, districts cannot rely on the money being there in next year’s budget like they could have if it was a regular foundation increase. This will likely add more friction at the bargaining table as any savings or losses to budgets could be a one-time thing.   

If you have questions about these issues or other legal matters, please contact MASB’s Labor Relations and Legal Services Team.