Budget accord restores some aid to schools

AUGUSTA — A breakthrough agreement reached by state budget negotiators in the early-morning hours Monday would restore $12.5 million in state aid to local schools, causing jubilation among educators and town officials.

“I’m excited. It’s wonderful,” said Leonard Ney, superintendent in SAD 64 in East Corinth and president of the Maine School Superintendents Association. “We’ve got to really be thankful that the Legislature and governor were able to hang in there and come up with something.”

The restoration of about 45 percent of the school aid that was to be cut came as the Legislature entered its final days of action to balance the state budget in the face of a two-year shortfall estimated at $210 million.

The plan agreed to by the Legislature’s Appropriations Committee and Republican Gov. John R. McKernan will restore $10 million of $22 million in general-purpose school funds that had been earmarked for cutting from next year’s budget.

The plan also will restore $2.5 million of $9.5 million in adjustments to the state-aid formula that also would have been cut. The $2.5 million to be restored will go to a low-income adjustment that benefits school districts where property values have risen so fast that state aid has plummeted.

A final committee vote on the package was put off, with more discussions slated for Tuesday morning.

Before recessing, the budget panel also expressed support for moving up the tentatively delayed start of a new Maine Health Program, which would provide some cost reimbursement to hospitals and subsidized health insurance for those unable to afford private coverage, from next April to this fall.

Implementation of the program, which Gov. John R. McKernan had proposed putting off to save some $13 million to help offset a $210-million revenue shortfall, would occur at least by October, and possibly by September.

In order to raise the $12.5 million for school aid, negotiators agreed to move ahead by about 10 days the date each month that employers must turn employee withholding taxes over to the state.

By changing the date of income-tax collections in the fiscal year starting July 1, the state will be able to collect an estimated $12.5 million in June 1991 that normally would not have been collected until the 1992 fiscal year.

School teachers, superintendents, school boards, and town officials all had lobbied McKernan and the Legislature very hard to restore some of a total of $31.5 million that had been slated for cutting from next year’s state aid.

If all those cuts had gone into effect, educators said property taxes would be forced upward and local school boards would have to lay off teachers, increase class sizes, and eliminate programs such as fine arts and foreign-language classes that were the heart of the state’s school-reform movement.

Municipal groups had pushed for an increase in the state sales tax, or a county-by-county option to increase the sales tax, to make up for the loss in state aid, but McKernan and Democratic leaders of the Legislature had refused to do that.

“This is really great news for the towns,” Daniel Calderwood of the Maine School Management Association said of the money being restored.

A weary Sen. Michael Pearson, D-Enfield, Senate chairman of the Appropriations Committee, said the breakthrough agreement on moving forward the date of income-tax collections came at about 2 a.m. Monday.

As for the 1991 budget as a whole, Pearson said, “We think we’ve got everything ironed out. There’s just a few kinks here and there.”

McKernan and Education Commissioner Eve Bither had told school officials that even with the cuts, they still would see a 10 percent increase in state aid next year. But Bither had recommended a 14.2 percent increase, based on 2-year-old operating costs.

“I am delighted,” Bither said of the plan to restore $12.5 million. “I couldn’t be more thrilled.”

She said it would be a week or more before the education department could supply figures on how much state aid each school system could count on for next year. The revised budget document still needs to printed and ratified by the Legislature.

Some school budget-setting has been put on hold while the Legislature and McKernan administration grapples with the shortfall.

McKernan said he thought “a fair agreement” had been reached and noted that restoring aid to local schools had been his top priority if money could be found.

“I think the fact we’ve reached a budget agreement is going to be looked at very, very favorably by the bond-rating agencies,” McKernan said.