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Rell Will Propose No Cuts In Key Education Grants

CHRISTOPHER KEATING

February 04, 2009

Gov. M. Jodi Rell will propose no cuts in the major education grant to cities and towns when she reveals her two-year budget plan today.

"This was one of the governor's highest priorities," Rell's budget director, Robert Genuario, told The Courant Wednesday night. "She doesn't want to raise taxes, and a reduction in municipal grants passes the burden to local property taxpayers."

Rell will, however, call for a 5 percent cut in public higher education, and she would defer construction projects at the University of Connecticut and all public colleges by one year, sources said.

Keeping municipal funding at the same level as the current year will be a stunning — but happy — development for local officials. Mayors and first selectmen across the state have been fearing cuts as high as 20 percent as the state struggles to close a gap of $1.35 billion in the current fiscal year and more than $8 billion to fund current services during the next two years.

Genuario said cuts will be made in other areas of the budget to avoid reducing the amount sent to cities and towns.

The full details of the budget will be revealed today during a presentation by Genuario and during a speech by Rell at the state Capitol. Rell's budget team had kept the municipal funding proposal a secret from reporters, and even avoided mentioning it during closed-door briefings on the two-year fiscal plan.

In the $18.4 billion budget for the current fiscal year, the state sends about $2.8 billion annually to cities and towns, and the biggest portion by far is $1.889 billion for the education cost-sharing grant, known as ECS. Educators and legislators have been fighting for years over the ECS formula, which some say provides uneven funding levels to meet educational needs across the state.

"There will be no reduction to ECS," Genuario said. "Towns will get what they got last year." In addition, there will be no cuts in transportation grants for buses that carry children to public and private schools. Children who attend a private school in their own hometown now receive free bus transportation, but those who live out of town must find their own way to school.

Rell is also preserving funding for adult education, which is about $19 million this year, and the Local Capital Improvement Program, which is $30 million. Grants through the Mashantucket Pequot and Mohegan Fund, along with the payments in lieu of taxes — or PILOT funds — will be flat-funded, compared with the current fiscal year, but will not be as high as they were during a one-time peak from the surplus of the 2007 fiscal year.

The immediate question is: How can Rell balance the budget without any major cuts to municipalities? Genuario said that answer will not come until later today, when the full picture is revealed.

A key Democrat in the coming budget battle, Rep. John Geragosian of New Britain, has said he would oppose cuts in funding for cities and towns because he believes that would translate to a local property tax increase.

"Then he should like this," Genuario said of Geragosian, the new co-chairman of the budget-writing committee.

For months, the state's public colleges and universities have feared a cut of 10 percent in their annual subsidies, but insiders said the proposed reduction will be 5 percent instead.

None of the cuts can be enacted without approval by the Democrat-controlled legislature in an overall budget package that likely will not be finalized until June.

UConn's $2.3 billion bonding program, which started in 1995 and has transformed the university, is expected to be deferred by one year. The projects that are underway would continue, sources said. The second half of the program, known as 21st Century UConn, would be extended for another year.

Like UConn, the Connecticut State University system has been on a major construction spree with state dollars; those programs also would be delayed by one year. The state would save millions in debt service for the year because of the interest rates on the bonds. For example, the $2.3 billion UConn program will likely eventually cost more than $4 billion when the interest costs are paid.

UConn's president, Michael J. Hogan, told the university's board of trustees in November that a 5 percent cut in the annual state subsidy would translate to a tuition increase of 13.6 percent. A 10 percent cut would have led to a tuition increase of nearly 27 percent, but a state law limits tuition increases to 15 percent.

The state provides about 35 percent of the university's operating budget; tuition and fees cover another 32 percent. The rest of UConn's $939 million operating budget is federal grants and other funds.

In a televised address to the state this week, Rell announced that she will be proposing "painful" cuts that would lead to "times of trial and tears in the weeks and months ahead." The cuts are necessary because the state is facing a projected deficit of $1.35 billion in the current fiscal year, which ends June 30, according to the latest estimates by the legislature's nonpartisan fiscal office. The projected deficits would be $4 billion in the next fiscal year and $4.71 billion in the following year.

In addition, Rell will present a new jobs program that is similar to President Franklin D. Roosevelt's Civilian Conservation Corps from more than 70 years ago, insiders said. The plan would cost an estimated $7.5 million to help reduce the state's unemployment rate, which recently shot up to 7.1 percent.

Workers would be employed on state and local public works projects, including cleaning beaches, parks and contaminated "brownfields." Some of the funds could come from President Barack Obama's stimulus plan, which the U.S. Senate is debating.