Michigan Lawmakers Approve Budget: 21st Century Jobs Fund Spared, Three Universities Receive Special Status

For the better part of the year, lawmakers in Michigan have faced the daunting task of balancing both a budget shortfall for fiscal year 2007 and a nearly $1.6 billion deficit for FY 2008. An agreement between Gov. Jennifer Granholm and lawmakers was reached in the early morning hours of Oct. 31, following a one-month extension of the deadline and a brief government shutdown.

The agreement allocates $75 million in remaining tobacco settlement revenue to continue 21st Century Jobs Fund programs, which invest in four competitive-edge technologies to grow and diversify the state’s high-tech economy. The Michigan Small Business and Technology Centers will receive $1.4 million from the funds appropriated to be used for the SBIR and STTR matching grants program. Earlier this year, lawmakers considered a proposal to cut a significant amount of funding from the 21st Century Jobs Fund to deal with the state's impeding deficit.
 
To help businesses obtain certification in aerospace manufacturing, the budget allots $500,000 for Aerospace Certification Grants. Half of the funds are dedicated to the Michigan Aerospace Manufacturers Association for organizational assistance and to promote the aerospace manufacturing community.
 
To preserve programs to provide the opportunity for future funding, the budget allots placeholders for initiatives aimed at building entrepreneurial capacity and supporting bioscience research. The agreement adds a $100 placeholder to fund a business incubator program that provides grants and loans to competitive-edge technology businesses located in economically depressed areas. If funds become available at a later date, the program will receive a $4 million boost. Additionally, the budget includes a $100 placeholder for a bioscience research center at Michigan State University.
 
Lawmakers did not include $40 million in state funds for Gov. Granholm’s new No Worker Left Behind initiative. The program, which helps displaced workers receive training in high demand areas, was initially funded by redirecting $37 million in 2007 federal grants. The FY08 budget includes a provision that requires a report on the program’s results to the legislature by July 1, 2008. Gov. Granholm unveiled the workforce initiative during her State-of-the-State Address earlier this year (see the Feb. 19, 2007 issue of the Digest).
 
No funding was included for the Entrepreneurial Training and Mentoring program to assist students enrolled in secondary and postsecondary education programs. Lawmakers also did not include funding for the governor’s Alternative Energy Initiative, a $7 million competitive grant program for gas stations to add ethanol pumps. However, two $100 placeholders are included for projects involving ethanol plants in two localities.
 
Three of Michigan’s universities receive special status under HB 4350, creating a new research university definition under the 2005 Carnegie Classifications. The University of Michigan, Michigan State University and Wayne State University will be classified as major research institutions, allowing them to receive more money in the future as the state develops collaborative partnerships. 
 
While the budget includes an average increase of approximately 1 percent in per-pupil funding for K-12 schools, it also cuts $20 million from middle school math and science programs.
 
In May, Gov. Granholm and lawmakers reached an agreement to balance the $800 million shortfall within the FY07 budget. The plan included siphoning up to $400 million from the state’s tobacco settlement funds, cutting $26 million from universities and delaying $83 million in payments to colleges and universities.