The $120 million needed to keep the state’s promise in the next fiscal year could be funded by tightening tax loopholes and extending a tax to pop and bottled water. The tax plans were suggested by Rep. George Cushingberry, D-Detroit, who chaired the House committee, and are not listed in the House bill, said Griffin Rivers, Cushingberry’s chief of staff.

The $7 million in stimulus funding could ease tuition increases, fund financial aid or some combination of both, MSU officials said. The money would come from the state through funds in President Barack Obama’s American Recovery and Reinvestment Act.

“They’re designed to help institutions boost their operational budgets,” said Paul Hassen, spokesman for the Association of Public and Land-Grant Universities.

State deliberations

The fate of the Michigan Promise Scholarship will be tested when the House bill reaches the Republican-controlled Senate.

“If the Democrats hold fast, it will come out of the House, but we don’t know about the Senate,” Rivers said.

A higher education conference committee comprised of both senators and representatives voted Wednesday to eliminate the scholarship along with another $60 million in cuts to financial aid. Thurday’s House bill remedied the cut by adding another piece of legislation that provided $120 million in funding for the scholarship.

Legislators are working to meet an Oct. 1 deadline to balance the state budget to avoid a government shutdown. The budget, which totals about $40 billion, faces a $2.7 billion shortfall.

Gov. Jennifer Granholm has fought to keep the scholarship while the Senate has proposed eliminating the program altogether.

House Republicans suggested keeping it at 2009 funding levels. Cutting it would trim about $140 million from the state budget.

Those opposed to funding the reinstated $120 million grant said the problem with the appropriation committee bill is how the money might be raised.

“If (Cushingberry) doesn’t have a funding source, I don’t see how this could pass,” said Rep. Dave Agema, R-Grandville.

But that does not necessarily mean the grant will be eliminated, Agema said. Figuring out where the money comes from must be a priority, he added.

And some Senators share the same concerns, said Matt Marsden, spokesman for Senate Majority Leader Mike Bishop, R-Rochester.

“Where are they going to get the money?,” he said. “There is no $120 million to budget in.”

When there is more money, Bishop plans to introduce legislation to reinstate the scholarship. But until that happens, promises can’t be kept, Marsden said.

If the state can’t figure out how to balance the budget, MSU students and the university might hang in the balance until a decision is reached.

Journalism sophomore Sam Meux said she took the Michigan Merit Exam and deserves her money.

“If the government is going to promise scholarship money for doing well and then take it away whenever they feel like it, there was no point in me taking the exam in the first place,” she said.

If the scholarship isn’t funded by the state, the university will have to figure out how to fill in the gaps left by the missing funds, MSU Board of Trustees member Colleen McNamara said.

“If the scholarships don’t come through, we’ll have huge issues around scholarships and affordability,” she said.

“I have no doubt we’ll have a very serious discussion about putting more money into financial aid.”

Stimulating students, MSU

If MSU receives the proposed $7 million in stimulus funding from the state, MSU has three possible plans as to how it could be used. According to MSU budget guidelines, if stimulus money is received in the general fund, the funds could be allocated to lessen the 2009-10 tuition increase. The funds also could be used to mitigate any reduction in Michigan’s financial aid, or a combination of easing the tuition increase or the reduction in financial aid.

But officials are uncertain if they’ll get the money or if they’d have to use it for something else. There might be preliminary plans, but there is no clear guideline for how it could be used.

“Everything is up in the air,” McNamara said.

The MSU Board of Trustees decided in May that students could see as much as a 10.1 percent increase in tuition during the next two years, to fit with 2009-10 university budget guidelines.

MSU officials said if the university receives federal stimulus money, the increase could be reduced to about 2.5 to 3 percent for in-state undergraduates.

Although an extra $7 million for the university would be helpful, it would not represent a long-term fix, Hassen said.

“This is very definitely a short-term fix,” he said. “This is a one-time handout to the colleges through the governor’s office.”

If the university receives the funds, officials will have to manage it wisely, MSU Trustee Donald Nugent said.

“There’s no question $7 million is going to be very helpful to the university and will help this year,” he said. “If it’s not recurring then next year we’re going to just be short that much more.”

Students might receive refunds, depending on how the stimulus money is used if the university is allocated the funds. This could help offset the $9 million cut the university was facing for its operating budget.

“My perception is that (the stimulus money) will be part of the general fund,” McNamara said.

“I don’t think it has any earmarks that we’re required to spend it for anything.”

Any refund would not be immediately sent to students, Nugent said.

“Even though it’s ordered doesn’t mean the money’s in the bank today,” he said.

“We can’t just say we got $7 million and everybody’s going to get a check for $1,000.”

MSU spokesman Terry Denbow said all decisions on the allocation of stimulus funds have yet to be determined.

“I think we’re evaluating those alternatives and probably will not make a final decision until we assess and know a lot more about the state’s commitment to financial aid,” he said.

The stimulus dollars are ultimately meant to help students, Hassen said.

“(They’re designed) with the idea of trying to just provide the funds necessary so that with this economic turmoil that’s going on, the institutions don’t pass on additional budget cuts to the student in the form of higher tuition,” he said.

As the university experiences changes because of tight budgets, MSU officials will do what they can to lighten the load for students, Nugent said.

“Anything we can do to keep education more affordable for students … the president, the board and her staff are absolutely committed.”