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Future Funding For $250M Scholarship Program Is Not Guaranteed

October 18, 2022

Article courtesy MIRS News, for SBAM’s Lansing Watchdog newsletter

(SOUTHFIELD) – Gov. Gretchen Whitmer gave life to the new Michigan Achievement Scholarship program Tuesday, but there’s no guarantee the funding will be there to keep it alive through whatever economic downturns the state will face.

By signing legislation creating the $250 million program at Lawrence Technological University, the Governor committed state government to pay for a new college scholarship program into perpetuity, something it wasn’t able to do with the Michigan Promise scholarship of the ’00s.

For now, though, with $6 billion on the state’s balance sheet, Whitmer and legislators are optimistic that this time will be different.

“Obviously, none of us can predict all the different future actions of future legislators, but I think we’re going to see such great returns on this investment that it’ll make the case for itself going forward,” Whitmer said.

The program would offer maximum annual scholarships of $5,500 for eligible students attending a public university in Michigan, up to $4,000 yearly for private not-for-profit universities in the state, $2,750 per year for community and tribal colleges and up to $2,000 annually for two years at a qualified occupational training program. 

In a separate interview with MIRS, Chief Executive Officer Dan Hurleyof the Michigan Association of State Universities said that more than 75% of Michigan high schoolers graduating in Spring 2023 are anticipated to qualify for the program. He said “we’ve never seen anything like that before.” 

However, in the language of the recently signed SB 842 is a line reading: “to ensure the Michigan achievement scholarship provides ongoing supports for students, it is the intent of the Legislature to increase annual deposits into the postsecondary scholarship fund by ($50 million) per year until the fully implemented costs of the Michigan achievement scholarship are deposited annually into the postsecondary scholarship fund.” 

The aforementioned line clarifies that it is the Legislature’s intention – or objective – to boost the scholarship fund by $50 million each budgetary season until the program reaches full implementation in the Fiscal Year of 2028. At this time, the yearly price tag of the program is estimated at $560 million. 

But overall, the Legislature is not required to replenish the program with available revenues or other sources of money – in the same way the Legislature was not required to maintain the $140 million Promise Scholarship in Michigan when it ceased funding that program during the Great Recession.

Created during the Gov. John Engler administration in 2000, the Merit Scholarship was renamed the Michigan Promise Grant under Gov. Jennifer Granholm in 2006. The merit-based scholarship program offered up to $4,000 for college to 96,000 in-state students but was placed on the chopping block when the state ran out of money in 2009.

Senate Appropriations Chair Jim Stamas (R-Midland)was a freshman House member in 2009. Tuesday, he held the formally signed SB 842 as members of the press circled around, snapping photographs. 

“We always have had hard times and we will have to set our priorities. When I first got here in 2009, we certainly had our challenges, but we have the opportunity (now) to have a balanced budget, we have the dollars in the reserve and we’re actually planning on a recession,” Stamas told the press. “It’s not that we have blinders on. I think we’re prepared and we’ve been spending the dollars in an appropriate way.” 

Stamas said the big investment was first looking at the infrastructure placed forward through the program at-hand, and then comprehending the education “we’re putting forward through the scholarship.” 

“Looking at trades, looking at certificate programs, community colleges and universities . . . I think our return on investment is our kids and our Michigan families,” he said. 

Hurley said the higher education community is certainly aware of what transpired with the Michigan Promise Grant, and is willing to do everything it can to ensure the event is not repeated with the Michigan Achievement Scholarship program.   

“I will say that I think that we’re in better shape this time over the long haul,” Hurley told MIRS. “Just because of the importance to the Michigan economy of increasing degree attainment, especially at the four-year degree level, is much, much higher than even what it was back in the early 2000s.” 

He also highlighted how leaders of Michigan’s business community – like those of the Michigan Chamber of Commerce, the Detroit Regional Chamber of Commerce and other business networks – came out to back the program. 

“The (Return-on-Investment) of a higher education populace is going to be there. You’re going to see a greater proportion of Michiganders, especially younger Michiganders who have their entire careers ahead of them, have greater earnings,” he said. “And that personal income is gonna get taxed (and) that revenue is gonna go back to the state to be spent on all types of other public goods and services.” 

Hurley said that each year during the construction of a state budget, “every program should be scrutinized” and the Michigan Achievement Scholarship program will not be an exemption. 

However, he said he believes five to 10 years from now, the state will look back at Tuesday’s signing event and view it as a “turning point,” especially when it comes to making “public higher education more of a public good, rather than a privately financed consumer good.” 

“Likewise, if the program is insufficiently funded or defunded in the out years, we will also be able to look down the road 20 years from now and realize that we made as a state – or at least state policy leadership – made a very poor choice and it’s gonna hurt all of us in the long-run.” 

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