GRAND RAPIDS, MICH. — "Where's the money?"
It's a question posed to FOX 17 back in January 2023, when Michigan student teachers were still waiting to receive a stipend from the state government set aside to help them with their semester of unpaid student teaching.
In July of 2022, Governor Gretchen Whitmer announced the MI Future Educator Stipend of $9,600, which could be used for expenses including tuition, rent, health care, transportation and childcare, among other costs associated with student teaching.
"Student teaching is a full time job," says Hollie Stephenson, a Student Teacher Field Placement Coordinator with Ferris State University. She explained the stipend is meant to assist future teachers, so they don't have to take another job while they're student teaching.
"We have a sizable population, as do most universities in the state of students who are non traditional. So they are caring for families, and they have obligations that don't allow them to just move home and let someone else take care of their expenses. So getting this stipend is what's going to allow them to put gas in their car food on their tables and pay their rent during the time that they're student teaching, without having to take on that task and work nights and weekends to provide for their families." - Hollie Stephenson.
Over the course of January, February and March of 2023, several students and academic advisers expressed frustration to FOX 17 that the funds hadn't been distributed. They'd been under the impression that they'd get the stipend while teaching in the fall, or ahead of the spring semester to help pay for tuition in advance.
After almost eight months, in February of 2023, Gov. Whitmer announced that the first payments had gone out, totaling $3.9 million of the $50 million set aside for the stipend. For those student teaching this spring — that's about eight weeks into the semester.
As Stephenson explains, the timing of funding distribution is key. She says while many students are able to live with their parents during their student teaching, that's not an option for everyone, and some have to help support their families while also paying for general living expenses on top of tuition.
"If the goal of the program is to help supplement living expenses, it doesn't help the students if they receive the funding mid-semester." - Hollie Stephenson
So why did it take nearly eight months from promise to payment? After an investigation, FOX 17 learned this is simply a lesson about the pace of government.
Robin Lott, the Bureau Director for the Office of Post Secondary Financial Planning, says the Department of Treasury had to build an entirely new system before they could officially roll out the stipend. That includes building the website and application portal.
"Once the legislature approves something like that, the funds are available. It's just a matter of us getting our ducks in a row to actually get the program administered, so that we have the process to get the funds to the appropriate place," says Lott.
She says they started working on that new system as soon as the stipend program was announced. But unfortunately for fall student teachers, according to Lott, funding for the new fiscal year wasn't available until October 1st and the application portal didn't go live until October 31st.
To delay things further, Lott says even though applications were ready, "significant work continued to build the system" before they were ready to distribute funds by February. She says the first payments were released by the Treasury on February 15th.
Abby O'Connell, a Music Education major at Northern Michigan University, says she applied the day the application portal opened, but didn't receive her $9,600 until February 28th — 8 weeks after she began student teaching at Hudsonville High School.
O'Connell tells FOX 17 about half a dozen of her classmates got their stipend around that same time, including people who had already student taught last fall.
Joel Burns, a Music Education major at Michigan State University and current student teacher at East Lansing High School, says he applied in November and got his payment on March 23rd. That's about 12 weeks after he began student teaching.
This delay, compared to distribution for Abby O'Connell, is actually tied to each individual university participating in the program.
Lott explains that payments could only be issued after an institution gets certified, which is when the institution formally tells the Department of Treasury that the student is eligible to receive the stipend.
Moving forward, the Department of Treasury is now scheduled to release funds every week, Lott says. "If we see a lot still sitting in the hopper, we will certainly go ahead and release the funds as quickly as we can."
However, frustration over distribution of the money is only one piece. But what happens when the money finally does hit bank accounts?
As previously mentioned, the stipend can be used for tuition and various living expenses. But according to the MI Future Educator FAQ webpage, "your stipend will be subject to tax if you use the funds for general living expenses."
The webpage later gives some advice on nontaxable uses of the stipend. "The stipend may be nontaxable if you use the funds for tuition, fees, and/or books, and supplies required for courses. If you spend your stipend on nontaxable expenses, be sure to maintain sufficient evidence that the award was used for these nontaxable purposes."
When we asked Lott how students should proceed, she encouraged students to consult with a tax adviser.
FOX 17 spoke to Tripp VanderWal, an attorney with Miller Johnson and their Chair of Employee Benefits and Executive Compensation Practice. He clarifies this stipend is not going to be taxed as wages from an employer. This means the money is not subject to federal or state income tax withholding.
VanderWal says because of this, recipients could be subject to paying some of it back, depending on the state of their finances.
But as a reassurance, he adds that "even though $10,000 is a significant amount, I'm not thinking it's probably enough to generate estimated tax payments, especially if you're otherwise expecting a refund."
While this stipend aims to help students, VanderWal says it's still important to consider the reality and be smart about how you manage your money.
"You got to start with the premise that almost any income that you receive is going to generally be taxable." - Tripp VanderWal
If students need to spend their money on living expenses, he advises them to keep a papertrail of documentation for at least three years, which is how far back the IRS usually goes if an audit is conducted.
Four months after FOX 17 began poking around, the clogs in the system appear to be opening up. The Department of Treasury says as of April 3rd, 2,075 students have been awarded stipends, totaling nearly $23 million.
"I'm really excited that we are able to finally get those funds out and help those folks that need it, and I'm hoping that they will continue their endeavor and their journey to become great Michigan teachers." - Robin Lott
Hollie Stephenson says, at the end of the day, she's glad students are finally getting these funds and that the state government is helping support future educators, especially as schools struggle to staff classrooms in the ongoing teacher shortage.
