March 29, 2017

In This E-Mail: School Aid Budget Update

Senate K-12 Appropriations Subcommittee Votes Out Proposed Budget


This morning, the Senate K-12 Appropriations Subcommittee released its version of the 2017-18 School Aid budget.  With the release of the House K-12 Appropriations Subcommittee version, and now seeing the Senate K-12 Appropriations Subcommittee proposal, we can see that there are some distinct differences that will need to be debated to bring these proposals down to one. This follows the recent trend that we see all three initial proposals (the Governor, House and Senate) before the legislature breaks for their spring recess. There is still a long way to go, but at least we have an indication of all three sets of priorities as we continue to follow how these budgets could affect local school budgets.

Senate K-12 Appropriations Subcommittee Proposed Budget

The proposed budget from the Senate K-12 Appropriations Subcommittee looks different from the Governor’s plan and the House plan although all three seem to be prioritizing an increase to the foundation allowance and At-Risk funding. 

Based on the Senate Chair’s recommendation as passed by the Subcommittee, following are some highlighted priorities of the Senate plan, which may differ from one or both of the other proposals (more detailed information appears at the end of this update):

  • Adds an extra foundation increase of $38 to $76 to the Governor’s proposal using the 2x formula by eliminating the $100 million Sec. 147(a)(1) cost offset dollars.  The net effect of the added foundation and reduced MPSERS offset will differ district by district.  Some districts will be winners and some losers.   
  • Expands and increases At-Risk funding by $100 million:
    • An extra $54 million essentially using the same Free Lunch criteria as the current year,
    • $41 million for all districts based on Economically Disadvantaged students, and
    • $5 million for English Language Learners.
  • Maintains Cyber School funding at current levels - no limitation on foundation allowance.
  • Limits the Shared-Time FTE calculation to a maximum of .75 FTE per pupil.
  • Although the Senate eliminates funding for Sec. 147a MPSERS Cost Offset, they do add funding to hold districts harmless from the increase in the MPSERS normal cost for the lowering of the assumed rate of return from 8% to 7.5%.
  • No funding for High School Bonus of $50 per pupil.
  • No new funding for Declining Enrollment.
  • No funding for Partnership Model Districts.
  • No funding for Educator Evaluations.
  • Maintains funding for Financial Data Analysis Tools and adds an additional $250,000.
  • Maintains Non-Public School Reimbursement at current level of $2.5 million.
  • Intermediate school districts receive a 1.5% increase in Sec. 81.
  • Cyberschools would receive Federal IDEA Part B funding directly from MDE.
  • For Public School Academies educating special education pupils outside the student’s ISD of residence, PSA cannot bill for SE added costs unless they have an agreement to do so.

Summing It All Up
Both the House and Senate K-12 Appropriations Subcommittees have now approved their respective school aid bills and moved them out to the full appropriation committees.  Both chambers will continue their budget work after the legislature takes their spring break, but will wait to wrap-up each budget until the May Consensus Revenue Estimating Conference (CREC) is held May 17, 2017. 

Please stay tuned, as more information will be coming! Don’t forget to check our link to the School Aid Fund FY2017-18 budget page. We have posted many budget-related documents already and will update the site continuously with additional reports as we receive them!

We are including some of the detailed differences in the proposed School Aid bills below. There are many other changes and if you know of certain sections of funding that your district receives but is not listed, please see the reports posted on our webpage dedicated to the 2017-18 School Aid Budget  which give greater detail to be sure how the language may have changed and might affect your district.

David and Bob

2017-18 Budget Proposal Comparisons:
Governor, House Appropriations Subcommittee and Senate Appropriations Subcommittee

Sec. 3 and 4 Definitions  
GOVERNOR: All references to “Achievement authority” and “Education achievement system” are eliminated in the bill. (page 2 and 4 of full bill text)
HOUSE: Concurs with Governor. (page 2 and 4 of full bill text)
SENATE: Concurs with Governor. (page 2 and 4 of full bill text)  

Sec. 6(4) Pupil Membership Definitions
GOVERNOR: Blended pupil membership is 90% current year fall count and 10% prior year spring count. (page 5 of full bill text)
HOUSE: Concurs with Governor. (page 7 of full bill text)
SENATE: Concurs with Governor. (page 7 of full bill text)

Sec. 6(4)(h) Pupil Membership Definitions
GOVERNOR: Current language with exception of the elimination of “education achievement system or an achievement school.” (page 7 of full bill text)
HOUSE: Considers a pupils participation in Cyber School educational program as regular daily attendance and a participation in a virtual course regular daily attendance for a district of PSA student. (page 10 of full bill text)
SENATE: Concurs with House. (page 10 of full bill text)

Sec. 6(4)(II) Pupil Membership Definitions
GOVERNOR: No change.
HOUSE: Allows for Middle College Program student to be counted for more than 1.0 FTE under certain circumstances. (page 22 of full bill text)
SENATE: Adds language that limits part-time pupil in nonpublic school (Shared Time) in Grades 1-12 FTE calculation to a maximum of .75 FTE. (page 22 of full bill text)

Sec. 8b (3) District Codes for Public School Academies
GOVERNOR: Determines which intermediate district is required to provide programs and services to students in a school of excellence that is a cyber-school. (page 20 of full bill text)
HOUSE:Concurs with Governor with minor language change. (page 30 of full bill text)
SENATE: Concurs with Governor. (page 30 of full bill text)

Sec. 11(1) Total Appropriations
GOVERNOR: Total allocation of $12.288 billion including a GF/GP transfer to SAF of $215 million and $72 million appropriated from the Detroit Public Schools Trust Fund (tobacco settlement money). (page 20 of full bill text)  
HOUSE:Total allocation of $12.295 billion including a GF/GP transfer to SAF of $215 million and $72 million appropriated from the Detroit Public Schools Trust Fund (tobacco settlement money). (page 30 of full bill text) 
SENATE: Total allocation of $12.295 billion including a GF/GP transfer to SAF of $195 million and $72 million appropriated from the Detroit Public Schools Trust Fund (tobacco settlement money). (page 30 of full bill text)

Sec. 11S Flint Emergency Declaration
GOVERNOR: Continues funding for services and programs for children who reside in Flint due to declaration of emergency. (page 22 of full bill text) 
HOUSE:Concurs with Governor. (page 36 of full bill text)
SENATE: Concurs with Governor. (page 36 of full bill text)

Sec. 15(2) State Aid Allocation Adjustment
GOVERNOR: No change.
HOUSE: Adds language that if the result of a membership audit affects payments, the department may waive all or a portion of the adjustment if the department determines the district would have significant hardship satisfying financial obligations, providing instruction to students or the district has already taken action to ensure circumstances will not recur. (page 42 of full bill text)   
SENATE: Concurs with Governor. (page 41 of full bill text)

Sec. 20(1) Foundation Allowance Calculation (Including Sec. 22a Prop A Obligation and Sec. 22b Discretionary Payment)  
GOVERNOR: The basic foundation allowance for 2016-17 will be $8,279, an increase of $50. The minimum foundation allowance for 2016-17 will be $7,611, an increase of $100. 2x Formula. (page 32, 47, 52 of full bill text)
HOUSE:The basic foundation allowance for 2016-17 will be $8,329, an increase of $100. The minimum foundation allowance for 2016-17 will be $7,611, an increase of $100. Across the Board. (page 53, 74, 82 of the full bill text)
SENATE: Concurs with Governor and adds $100 million from 147a MPSERS allocation to be distributed using the 2x formula. The basic foundation allowance for 2016-17 will be $8,367, an increase of $88. The minimum foundation allowance for 2016-17 will be $7,687, an increase of $176. 2x Formula. (page 53, 76, 84 of full bill text)

Sec. 20(6) Foundation Allowance Calculation
GOVERNOR: Establishes a 80% limit on foundation allowance for a school of excellence that is a cyber-school. (page 36 of full bill text)
HOUSE:Language not included.
SENATE: Language not included.

Sec. 20F Categorical Offset Payments  
GOVERNOR: Maintains funding at $18 million and per pupil at same levels as 2016-17. (page 41 of full bill text)
HOUSE: Concurs with Governor. (page 68 of full bill text)
SENATE: Concurs with Governor. (page 68 of full bill text)

Sec. 20M Additional Calculation for Hold Harmless Districts   
GOVERNOR: Rolls majority of $9 million current funding into affected district foundation allowances rather than being separate calculation. (page 43 of full bill text)
HOUSE:Concurs with Governor. (page 70 of full bill text)
SENATE: Concurs with Governor. (page 70 of full bill text)

Sec. 21 Supplemental Payments to Districts with Schools under SRO Oversight
GOVERNOR: Maintains current funding of $5 million and expands entry of CEO to school. (page 44 of full bill text)
HOUSE:Eliminates funding and repeals section. 
SENATE: Appropriates $100 placeholder and does not expand CEO (page 71 of full bill text)

Sec. 21H Partnership Model Districts
GOVERNOR: $3 million for the purposes of assisting eligible districts assigned by the State Superintendent to participate in a partnership to improve student achievement. (page 45 of full bill text)
HOUSE: Language not included.
SENATE: Appropriates $100 placeholder. (page 73 of full bill text)

Sec. 21J Academic Early Warning Model
GOVERNOR: No change.
HOUSE: Concurs with Governor.
SENATE: Appropriates $8 million for academic early warning system. (page 76 of full bill text)

Sec. 22D Isolated District Funding  
GOVERNOR: Maintains current $5 million appropriation. (page 54 of full bill text)
HOUSE: Concurs with Governor. (page 87 of full bill text)
SENATE: Concurs with Governor. (page 89 of full bill text)

Sec. 22M Technology Regional Data Hubs

GOVERNOR: $2.2 million for the purposes of supporting the integration of local data systems based on common standards in compliance with the Michigan Data Hub Network. (page 55 of full bill text)
HOUSE: Concurs with Governors language but reduces allocation to $1.2 million. (page 89 of full bill text)
SENATE: Concurs with Governors language but reduces allocation to $1.1 million and adds competitive in nature and awarded on a geographical diverse basis. (page 91 of full bill text)

Sec. 22N High School Per Pupil Bonus
GOVERNOR: $22 million for 2017-18 for additional payments to district for higher instructional costs of educating high school students.  Payments equal to $50 per pupil for all grade 9 – 12 students. (page 56 of full bill text)
HOUSE: Language not included.
SENATE: Language not included.

Sec. 23F Shared Time Pupils
GOVERNOR: $60 million for state foundation allowance payments to districts for educating non-public part-time pupils enrolled in grades K-12, commonly referred to as “shared-time” agreements. (page 58 of full bill text) 
HOUSE: Language not included; current law in Sec. 22a and Sec. 6.
SENATE: Language not included; current law in Sec. 22a with exception of a cap on maximum per pupil FTE of .75 in Sec. 6.

Sec. 29 Declining Enrollment Support
GOVERNOR: $7 million for additional payments to districts for declining enrollment assistance.  Specific criteria identified for eligibility. (page 62 of full bill text)
HOUSE: Language not included.
SENATE: Language not included.

Sec. 31a “At-Risk” Pupil Support
GOVERNOR: Increased funding by $150 million for a total of $539.7 million.  Expands number of eligible students based on definitional changes and would include hold harmless districts.  Estimated to be a $105 per At-Risk pupil increase and an expansion to serve 131,000 additional students. (page 62 of full bill text)
HOUSE: Increased funding $129 million for a total of $518.8 million. Provides allocations to Hold Harmless and Out-of-Formula equal to 50% of amount calculated prior to any proration.  Intent language added for 2018-19 allowing for funds to be used for out-of-district student transportation via voucher or passes. (page 98 of full bill text)
SENATE: Increased funding $100 million for a total of $490.2 million. Provides a per pupil “hold harmless” allocation to any district receiving less than $8,229 combined State and local funding for 2016-17 that allows the same per pupil allocation in 2017-18 for all “economically disadvantaged” students.  Additionally, ALL districts would receive an equal allocation per economically disadvantaged student to a limit of $41 million statewide.  Adds $5 million for English Language Learners. (page 101 of full bill text)

Sec. 51a(1) Total Special Ed Funding  
GOVERNOR: Appropriates funding based on anticipated costs for 2017-18 (page 97 of full bill text)
HOUSE: Concurs with Governor. (page 154 of full bill text)
SENATE: Concurs with Governor and adds language stating that a PSA that enrolls a student who resides outside the ISD in which the PSA is located, may not bill the resident or non-resident district or ISD for special education added costs if no agreement is in place.  Also adds language requiring the ISD in which a PSA is located to ensure compliance with special education regulations.  Administrative function to be funded by MDE.  (page 166, 178 of full bill text)

Sec. 61c Career & Tech Ed Equipment Upgrade
GOVERNOR: $20 million for eligible districts and intermediate districts for the CTE Equipment and Innovation Competitive Grant Initiative funding restructuring to be a competitive grant program. (page 114 of full bill text)
HOUSE: Concurs with Governor’s language and adds priority for leasing of equipment but only allocates $10 million in funding. (page 182 of full bill text)
SENATE: Appropriates $7.5 million distributed to career education planning districts as current law; no competitive grant restructuring. (page 196 of full bill text)

Sec. 64b Dual Enrollment Incentive Payment to District 

GOVERNOR: Maintains funding at $1.75 million for 2017-18. (page 117 of full bill text)
HOUSE: Concurs with Governor. (page 187 of full bill text)
SENATE: Concurs with Governor. (page 200 of full bill text)

Sec. 78 Statewide School Drinking Water Quality Program
GOVERNOR: $4.5 million for the reimbursement of water testing and other approved items limited to $950 per school building for public and registered non-public schools. (page 122 of full bill text)
HOUSE: Language not included.
SENATE: Language not included.

Sec. 81 ISD Operations Support
GOVERNOR: Maintains funding at $67.1 million. (page 122 of full bill text)
HOUSE: Concurs with Governor. (page 196 of full bill text)
SENATE: Concurs with Governor and increases funding by $1 million, which equates to a 1.5% increase. (page 207 of full bill text)

Sec. 95a Educator Evaluations  
GOVERNOR: Appropriates $7 million for payment to districts and ISD’s to support the implementation of local evaluation systems for teachers and administrators. (page 128 of full bill text)  
HOUSE: Language not included; repeals section.
SENATE: Language not included; repeals section.

Sec. 99h FIRST Robotics
GOVERNOR: Maintains funding at $2.5 million. (page 135 of full bill text)
HOUSE: Concurs with Governor. (page 214 full bill text)
SENATE: Concurs with Governor but increases allocation by $500,000 and includes nonpublic schools as eligible grantees. (page 226 of full bill text)

Sec. 102d Data Analytical Tools  
GOVERNOR: Language not included; repeals section.
HOUSE: Maintains current funding of $1.5 million. (page 228 of full bill text)
SENATE: Increases funding to $1.75 million for 2017-18 and includes reimbursement to ISD’s that use a system or purchases a system on behalf of constituent districts.  (page 239 of full bill text)

Sec. 147 MPSERS Rates

GOVERNOR: MPSERS retirement rates. Basic/MIP with premium subsidy increased to 25.56% for FY2018, an increase .62 percentage points. For all rates, please see page 9 of issue papers. (page 156 of full bill text)
HOUSE: Concurs with Governor. (page 252 of full bill text)
SENATE: Concurs with Governor. (page 265 of full bill text)

Sec. 147a MPSERS Cost Offset
GOVERNOR: Maintains $100 million allocation for MPSERS participants already receiving. Adds an additional $48.9 million for districts AND intermediate districts for 2017-18.  Allocation of the new funding is meant to offset the cost of lowering the expected rate of return on retirement system investments and is based on the districts payroll as a percentage of statewide payroll totals. (page 157 of full bill text)
HOUSE: Concurs with Governor. (page 255 of full bill text)
SENATE: Eliminates funding of $100 million and moves to the foundation using 2x formula under Sec. 22b. Concurs with the Governor for the additional $48.9 million for 2017-18. (page 267 of full bill text)

Sec. 147c MPSERS Unfunded Liability State Share
GOVERNOR: MPSERS rate cap funding decreased to $960.1 million, a decrease of $22 million. The average MPSERS rate cap equivalent is estimated at $640 per pupil. (page 158 of full bill text)
HOUSE: Concurs with Governor. (page 256 of full bill text)
SENATE: Concurs with Governor. (page 267 of full bill text)

Sec. 152b Reimbursement for Nonpublic School Mandates 
GOVERNOR: Language not included; repeals section.  (page 159 of full bill text)
HOUSE: Maintains current funding at $2.5 million and adds additional $250,000 for competitive grants for nonpublic schools to participant in FIRST Robotics. (page 259 of full bill text)
SENATE: Maintains current funding at $2.5 million. (page 271 of full bill text)

Sec. 164g Legal Action Against State  
GOVERNOR: Language not included.
HOUSE: Adds language preventing the use of State funds for any expenses relating to legal action against the State. (page 262 of full bill text)
SENATE: Concurs with Governor.

Sec. 164h Collective Bargaining Agreement Penalty   
GOVERNOR: Language not included.
HOUSE: Adds language of a 5% penalty for any collective bargaining agreement that does any of the following:

  • Establishes racial and religious preferences for employees.
  • Automatically deducts union dues from employee compensation.
  • In conflict with any State or Federal law regarding transparency.
  • Includes a method of compensation that does not comply with the requirements of section 1250 of the Revised School Code, MCL 380.1250. (page 262 of full bill text)

SENATE: Concurs with Governor.



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