March 24, 2016

2016-17 School Aid Budget Proposals Overview

Yesterday, the Chairman of the Senate School Aid Appropriations Subcommittee formally presented his budget plan for the 2016-17 School Aid Fund.  Although Senator Geoff Hansen’s proposal looks similar to the Governor’s Executive Budget proposal and the House Subcommittee’s version, there are some differences in budget priorities that can be seen in each of the proposals.

Here are the high points and differences between the Governor’s plan, the House Subcommittee proposal and the Senate Subcommittee proposal…

• Section 22a and 22b - Foundation Allowance
• Governor
• Increase in foundation of $60 to $120 per pupil using 2x formula.
• Included language to fund 20j
• Proposed additional $72 million in Detroit Public Schools (DPS) Trust Funds (redirected from Tobacco Settlement funds) to support the foundation allowance costs of the newly proposed Detroit Community district to offset the loss of local school operating millage revenue, which would be redirected to pay off debts of the former district.  
• House Subcommittee
• Concurs with Governor
• Senate Subcommittee
• Concurs with Governor and House on foundation increase and 20j but does not include the $72 million in DPS funding.  
• Adds language providing a $300 per pupil foundation allowance increase for two years as an incentive for districts that consolidate or are part of an annexation, and that receive a grant under Section 22g Consolidation Grants. 

• Section 6 - Blended FTE Count for School Aid
•  Governor
• Change weighting to 50% prior February count, 50% current October count
• Included language to fund 20j
• House Subcommittee
• Change weighting to 15% of prior October count and 85% of current October count
• Concurs with Governor on 20j language
• Senate Subcommittee
• Change weighting to 25% prior February count, 75% current October count
• Concurs with Governor and House on 20j language

• Section 81 - ISD General Operations
• Governor
• Increase of ISD Operational Funds (Section 81) by 1.6%
• House Subcommittee
• Concurs with Governor
• Senate Subcommittee
• Concurs with Governor and House

• Section 31a - At Risk
• Governor
• Continues FY 2015-16 allocation and changes language from “at risk pupils are reading at grade level” to “at risk students are proficient in English language arts.”  
• House Subcommittee
• Concurs with Governor on language change but adds an additional $18 million in funding and a boilerplate language change to allow both Hold Harmless and Out-of-Formula districts to be eligible for funding if more than 50% of their prior year membership pupils were eligible for Free Lunch.
• Senate Subcommittee
• Concurs with Governor and adds language that a district or PSA must review chronic absenteeism in order to be eligible and that funding would be withheld for those pupils until they return to school

• Section 25e - Pupil Transfer Process
•  Governor
• Repeals this section
• House Subcommittee
• Concurs with Governor
• Senate Subcommittee
• Does not repeal but updates for fiscal year reference

• Section 101 - Days and Hours of Instruction Report
• Governor
• Deletes the districts reporting and replaces it with a certification to MDE that district is in compliance or the district reports each instance of noncompliance.
• House Subcommittee
• Concurs with Governor
• Senate Subcommittee
• Concurs with Governor

• Section 31c - Gang Prevention and Intervention
  
• Governor
• Repeals this section
• House Subcommittee
• Increases the allocation by $3 million for a total of $4 million
• Senate Subcommittee
• Concurs with Governor

• Section 22g - Consolidation Innovation Grant
  • Governor
  • Maintains funding at $5 million and expands to include dissolutions 
  • House Subcommittee
  • Concurs with Governor and expands reimbursement to include the consolidation of operations or services between two or more districts or ISDs
  • Senate Subcommittee
  • Increases funding by $1.5 million and concurs with Governor to include dissolutions.  Restructures section to include $1 million for feasibility study grants for districts or ISD considering consolidation, annexation, or dissolution.  $3 million for transition grants for districts or ISD’s that received a feasibility study grant and the study recommended consolidation, annexation or dissolution.  $2.5 million for any transition grants remaining for districts or ISD’s that did consolidate, annex or dissolve and received funding under this section for 2015-16.

• Section 78 - Statewide School Water Testing
• Governor
• Includes a new categorical for reimbursement to schools for lead testing of building drinking water.  Estimated cost Statewide is $29 million.  2016-17 allocation is proposed at $9 million, intended to be funded for 3 years. 
• House Subcommittee
• Not included in proposal 
• Senate Subcommittee
• Not included in proposal

• Section 21 - State School Reform/Redesign
• Governor
• Proposed $5 million for CEO’s and supplemental payments to schools under the control of the State Reform/Redesign Office.
• House Subcommittee
• Not included in proposal 
• Senate Subcommittee
• Not included in proposal

• Section 95a - Educator and Administrator Evaluations
• Governor
• Proposed $10 million to assist the evaluation implementation and training. 
• House Subcommittee
• Not included in proposal 
• Senate Subcommittee
• Not included in proposal

• Section 99h - FIRST Robotics
• Governor
• Proposed a $500,000 increase in the allocation  
• House Subcommittee
• Maintains current funding level 
• Senate Subcommittee
• Concurs with Governor

• Section 99s - MiSTEM
• Governor
• Proposed a $1.75 million increase in STEM funding
• House Subcommittee
• Maintains current funding level 
• Senate Subcommittee
• Proposed $1 million increase across STEM funded programs

• Section 99t - Online Algebra Tool
• Governor
• Not included in proposal 
• House Subcommittee
• Proposed $2 million allocation to implement an online Algebra tool to assist student instruction.
• Senate Subcommittee
• Concurs with House but only allocations $100 as a placeholder

• Section 102d - Financial Data Analysis Tools
•  Governor
• Maintains current year funding of $1.5 million for district reimbursement 
• House Subcommittee
• Concurs with Governor allocation of $1.5 million and adds an additional $100,000 to include ISD’s as eligible for reimbursement
• Senate Subcommittee
• Concurs with Governor in allocation but would reimburse based on a 2 step reimbursement process. Step 1 pays for up to 50% the cost of all districts and ISD’s seeking reimbursement and Step 2 would distribute any remaining funds after Step 1 on an equal per-pupil basis.  

• Section 104 - Education Assessments – State
• Governor
• Proposed a $10 million reduction for assessment funding 
• House Subcommittee
• Proposed a $22 million reduction for assessment funding
• Senate Subcommittee
• Proposed a $8.75 million reduction for assessment funding 

• Section 152b - Nonpublic School Reimbursement
• Governor
• Not included in the proposal   
• House Subcommittee
• Proposes $1 million for reimbursement of non-public school reporting requirements costs 
• Senate Subcommittee
• Not included in proposal
•  
• General Fund/General Purpose (GF/GP) Transfer to the School Aid Fund (SAF)
•  Governor
• Proposal includes a $184 million increase from the 2015-16 SAF transfer
• House Subcommittee
• Proposal includes a $175 million increase from the 2015-16 SAF transfer  
• Senate Subcommittee
• Proposal includes a $175 million increase from the 2015-16 SAF transfer 

• Breakdown of Total School Aid Appropriations/Revenue
• Governor
• Federal Funds - $1.819 billion
• School Aid Funds - $12.062 billion
• GF/GP Transfer - $230 million
• DPS Trust Funds - $72 million
• Total - $14.183 billion
• House Subcommittee
• Federal Funds - $1.819 billion
• School Aid Funds - $12.072 billion
• GF/GP Transfer - $221 million
• DPS Trust Funds - $72 million
• Total - $14.184 billion
• Senate Subcommittee
• Federal Funds - $1.819 billion
• School Aid Funds - $12.057 billion
• GF/GP Transfer - $221 million
• DPS Trust Funds - $0 million
• Total - $14.097 billion

We have only detailed the major sections in the above comparison and there may be additional specific changes that you are interested in understanding. For details of each proposal, please see our web page dedicated to the School Aid Fund 2016-17.      

The overall total funding of the proposals is similar with the exception of the Senate Subcommittee’s version which did not include the DPS funding of $72 million.  One similarity however, is that all of the proposals include a significant “one-time” GF/GP transfer which is a cause for concern when looking at the overall affordability of the proposals in the future.  We will watch this closely during the budget process and look to the May Consensus Revenue Estimating Conference for a better picture of what funds may be available to allocate in both the GF/GP and SAF.  Remember, this is the beginning of the process for the House and Senate budget proposals and there will most likely be changes to the bills throughout the process.

With the budget process in full swing, it will be important for you to monitor our web page that is dedicated to the School Aid Fund 2016-17. We have posted the bill language for each proposal along with any summary support documents.  We will post information to the page regularly over the next few months as the budget proposals make their way to the final versions.

Enjoy your “Spring Break 2016” and get re-energized to tackle the 2016-17 budget.  We are excited about the MSBO Annual Conference which is being held in Grand Rapids, April 26-28.  If you haven’t signed up yet, please do so as soon as possible!  Here is a link to the information…MSBO 2016 Annual Conference Information and Registration.

David and Bob