June 15, 2018

2018-19 School Aid Budget Finalized

With just a few clouds in the sky and temperatures on the rise, isn’t it nice to be getting to summertime?  You know, the time of year when you can kick back and enjoy a lighter workload?

How many times have you heard this one lately…. “What are you doing this summer?”  Wouldn’t it be great to say,” Besides the budget finalization, audit, FID, bond reporting, Municipal Finance Act compliance, loading payroll for next year and making sure the summer work detail will be complete by the start of school, I’m not doing anything?”

At least one good thing is that HB 5579 (H-1) CR-1 was passed by both the House and Senate earlier this week and is now on its way to the Governor for review and signature.  Not to say there isn’t a chance for a veto, but this proposal is all but done and should allow you to get your budget finalized in the coming days and weeks.

You received highlights late last week now we have the final bill and the analysis from both the House and Senate Fiscal agencies.  We posted those documents on the MSBO webpage dedicated to the FY2018-19 School Aid Budget.

Highlights
Here are the highlights, followed by a more detailed review of many of the changes.  We recommend that you review the entire bill for additional sections not covered in our analysis.

  • Foundation Allowance: $120 - $240 distributed on the 2x formula.
  • Shared Time Instruction for Non-Public Pupils: Current law with new limitations on growth of district programs.
  • Foundation Allowance for Cyber Schools: Current law; No changes for FY2018-19. 
  • ISD General Operations: Provides a 2% increase for ISD General Operations.
  • Financial Data Analysis Tools: Maintains current year appropriation and limits vendors to those approved in FY2017-18. Approved vendors include Eidex, Ernst & Young, Forecast5 Analytics, Munetrix, and Tangenz.
  • MPSERS: Continues 147 allocations; with the exception of 147c2 as expected.  Does not include ISDs in 147a(1) as recommended by Senate.
  • Non-Public School Reimbursement: Section 152b reduced to $250,000 and provides work project language.

Section-By-Section Review

Sec. 6(4) Pupil Membership Definitions
Blended pupil membership is 90% current year fall count and 10% prior year spring count. (page 4 of full bill text)

Sec. 6(4)(q) Pupil Membership Definitions
Updates full-time equated membership to include a pupil’s time while engaged in an internship or work experience. (page 11 of full bill text)

Sec. 6(4)(ll) & (MM) Pupil Membership Definitions
Caps shared time growth at 10% if shared time exceeds 5% of district non-shared time membership. If shared time is less than 5% of district non-shared time membership, growth is capped at the greater of either 5% of non-shared time membership or 10% growth in shared time. If a student resided out-of-state in the immediately preceding year (FY2017-18), the district cannot count the pupil in membership in FY2018-19 AND charge the student tuition in FY2018-19; it’s “either/or”, NOT BOTH!  (page 20-21 of full bill text)

Sec. 6(8) Pupil Membership Definitions
Changes definition of “class” by removing legally qualified substitute teacher and replacing it to include an individual working under a valid substitute permit, authorization, or approval issued by the department. (page 26 of full bill text)

Sec. 11(1) Total State Appropriations
Total allocation of $12.8 billion in addition to a GF/GP transfer to SAF of $60 million, $31.9 million from the MPSERS Retirement Obligation Reform Reserve Fund and $72 million appropriated from the Detroit Public Schools Trust Fund (tobacco settlement money). (page 29 of full bill text)

Sec. 11m Cash Flow Borrowing
Increases funding for the cost of cash flow borrowing to $24 million, up from $18 million. (page 31 of full bill text)

Sec. 11S Flint Emergency Declaration
Reduces funding for services and programs for children who reside in Flint due to declaration of emergency by eliminating $5.5 million allocated to the Genesee ISD for early childhood services and Great Start Readiness Programs. (page 32 of full bill text)

Sec. 15(2) State Aid Allocation Adjustment
Eliminates the ability for MDE to waive all or a portion of a state aid adjustment due to audit of pupil membership.  Continues the ability of MDE to grant up to an additional nine years for repayment in cases of hardship. (page 37 of full bill text)  

Sec. 15(4) State Aid Allocation Adjustment
Adjusts MDE’s ability to audit all district records from the prior three years to just the immediately preceding fiscal year. (page 38 of full bill text)  

Sec. 17C Grant Funds 
New section requiring the MDE to open grant applications by September 1 of each fiscal year. Also specifies that grants will be awarded by December 1 of each fiscal year.  Information on grants awarded must be placed on the State Board of Education agenda in August of the preceding fiscal year. (page 39 of full bill text)

Sec. 18(2)(b) Spending and Audit Requirements
Changes requirement to post two “pie charts” of summary of district expenditures to two “visual displays.” (This information is received directly from CEPI for district posting and should not hinder district compliance.) (page 41 of full bill text)

Sec. 18(6) & (7) Spending and Audit Requirements
Changes the districts submission of the SE-4096 to CEPI instead of MDE.  Adds requirement for the SE-4094 and SE-4096 to be audited by an intermediate district prior to submitting to CEPI. (page 46 of full bill text)

Sec. 18(12) Spending and Audit Requirements
Updates language on reporting virtual learning to include cyber schools and summer programming.  Form and manner of reporting to be determined by MDE.  (page 48-49 of full bill text)

Sec. 19(2) Reporting Deadlines
Changes due dates for high school graduation reports and state and federal accountability reports to the last business day in June rather than June 30.  (page 50 of full bill text)

Sec. 19(3) Reporting Deadlines
Changes due date for information related to educational personnel to the last business day in June from June 30.  (page 50 of full bill text)

Sec. 19(5) Reporting Deadlines
Limits the appeal process for district accountability designations under No Child Left Behind to calculation errors used in the preparation of accountability metrics.  (page 52 of full bill text)

Sec. 20(1) Foundation Allowance Calculation (Including Sec. 22a Prop A Obligation and Sec. 22b Discretionary Payment)
The basic foundation allowance for 2018-19 will be $8,409, an increase of $120. The minimum foundation allowance for 2018-19 will be $7,871, an increase of $240 based on the 2x formula. (page 53, 79, 87 of full bill text)

Sec. 20(6) Foundation Allowance Calculation
No % limitation on foundation allowance for a school of excellence that is a cyber-school. (page 57 of full bill text)

Sec. 20F Categorical Offset Payments 
Maintains funding at $18 million and per pupil at same levels as 2017-18. (page 66 of full bill text)

Sec. 21H Partnership Model Districts
$7 million (increase of $ million) for the purposes of assisting eligible districts assigned by the State Superintendent to participate in a partnership to improve student achievement. (page 76 of full bill text)

Sec. 22D Isolated District Funding
Allocates funding of $6 million, an increase of $1 million, and adjusts eligibility to districts with 7.7 or fewer pupils per square mile from the current 7.3 or fewer pupils per square mile. (page 93 of full bill text)

Sec. 22M Technology Regional Data Hubs
Maintains $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 92 of full bill text)

Sec. 22N High School Per Pupil Bonus
Maintains $11 million for 2018-19 for additional payments to district for higher instructional costs of educating high school students.  Payments equal to $25 per pupil for all grade 9 – 12 students. (page 96 -97 of full bill text)

Sec. 22P Amended Partnership Agreements
New section requiring Partnership Agreement Districts eligibility for 22b funding to include measurable academic outcomes and accountability measures as part of an amended partnership agreement.  Failure to meet expectations may lead to reconstitution of the school.  Gives the state superintendent the authority to a close school if reconstitution attempts fail. (page 97 of full bill text)  

Sec. 25H High School Dropout Reduction 
New section allocating up to $100,000 to an eligible district for a program to reduce the number of high school dropouts.  Several requirements included a pupil membership of greater than 15,000. (page 109 of full bill text)  

Sec. 31a “At-Risk” Pupil Support
Maintains current year funding at $499 million for FY2018-19. Eligibility expanded to include grades K-12, from K-3, shall use resources to address early literacy and numeracy through an evidence-based framework that uses data-driven problem solving though a multi-tiered system of supports.  Adds language that for schools in which more than 40% of pupils are identified as At-Risk, a district may use the funds it receives to implement schoolwide reforms that are guided by the district’s comprehensive needs assessment and are included in the district improvement plan.  Allows for up to 5% to be used for professional development.  (page 112-123 of full bill text)      

Sec. 31M School Mental Health and Support Services Fund
New section creating a separate account in the state School Aid Fund for the fund to be used to support efforts to improve mental health and support services for K-12 pupils in the state.  A deposit of $30 million is allocated for this purpose.  (page 133-34 of full bill text)  

Sec. 32d(20) Great Start Readiness Program – Parent/Guardian Accompanied Transportation 
Provides for reimbursement of parent or guardian accompanied transportation services.  Subject to submittal of documentation to the department. (page 147 of full bill text)

Sec. 35a(1) & (6) Early Literacy
Language added that specifies staff or contracted employees funded under this section shall be designated as “critical shortage.”  Requires September 1 reporting of students and pupil proficiency and growth data.  Provides for reimbursement of parent or guardian accompanied transportation services.  Subject to submittal of documentation to the department. (page 153-159 of full bill text)

Sec. 54D State Early On Services Pilot Programs
New section that appropriates $5 million in grant funds for intermediate districts to provide pilot programs for children from birth to 3 years of age with developmental disability and/or delay.  Eligibility based on application and funds distributed according to the department’s Early On funding formula. (page 190-191 of full bill text)

Sec. 61c Career & Tech Ed 
Reduction in funding from $7 million to $2.5 million to eligible career education planning districts for CTE skilled trades.  Eligibility includes that at least 50% of the area served by the CEPD must be located in an intermediate district that did not levy a vocational education millage in 2018.  In addition, at least 50% of the funding allocated to each eligible CEPD shall be used to update equipment in the highest 5 career cluster rankings. (page 205-206 of full bill text)

Sec. 61D CTE Incentive Payments
New section funded at $5 million that provides $25 per pupil in grades 9-12 that are counted in membership in a district and enrolled in at least one CTE program.  An additional $25 per pupil in grades 9-12 that are counted in membership in a district and enrolled in at least one CTE program that provides instruction in critical skills and high-demand career fields as defined in this section. (See section for listing of CIP codes) (page 209-211 of full bill text)

Sec. 81 ISD Operations Support
Increases operational funding by 2% for 2018-19 totaling $68.4 million. (page 223 of full bill text)

Sec. 99h FIRST Robotics
Maintains funding at $3 million and adds intermediate districts as eligible for the competitive grant program. (page 243 of full bill text)

Sec. 102d Data Analytical Tools
Maintains current funding of $1.5 million. Vendors approved for 2017-18 are approved for 2018-19. (page 260-261 of full bill text)  

Sec. 147 MPSERS Rates

Rates adjusted with Basic/MIP with premium subsidy increased to 26.18% for FY2018, an increase .62 percentage points. For all rates, please see (page 299-300 of full bill text)   

Sec. 147a MPSERS Cost Offset
Maintains $100 million allocation for MPSERS participants, and adds an additional $88.9 million for districts AND intermediate districts for 2018-19.  Allocations of the new funding is meant to offset the cost of lowering the expected rate of return of retirement system investments and be based on the district’s payroll as a percentage of statewide payroll totals. (page 301 of full bill text)   

Sec. 147c MPSERS Normal Cost Offset
MPSERS rate cap funding set at to $1.03 billion, an increase of $72 million. The average MPSERS rate cap is estimated at $690 per pupil. (page 304 of full bill text)  

Sec. 147e MPSERS Additional costs P.A. 92 of 2017
$37.6 million allocated for 2018-19 as a district reimbursement for additional retirement costs for specific qualified participants due to P.A. 92 of 2017. (page 307-309 full bill text)

Sec. 152b Reimbursement for Nonpublic School Mandates
Maintains section but reduces funding to $250,000 and designates as a work project with unexpended funds carryover provisions. (page 310 full bill text)

Sec. 166b Shared Time - Non-Public/Home-School
Adds language that specifies curricular offerings to non-public and home schooled pupils are restricted to nonessential elective courses, and optional experiences associated with those offerings, for inclusion in pupil membership for state aid purposes. (page 316 full bill text)

Sec. 167B School Violence Tip Line
New section that requires any district that operates a School Violence Tip Line to report information regarding the structure, connectivity and personnel associated with the tip line.  The information will be used for studying “best practices” for the service. (page 321 full bill text)

Sec. 169a(1) & (4) Michigan Schools for the Deaf and Blind
Adds language that requires any board member, official, or employee of the district or intermediate district shall provide any information received from the Michigan schools for the deaf and blind about its residential program to parents and guardians of pupils who are deaf, blind, or hard of hearing and to any resident of the district or intermediate that requests the information.  Establishes a 5% penalty of state aid for non-compliance.  (page 322 full bill text)

Sec. 201 Community College Appropriations
School Aid Fund funding of community colleges increased to $408 million for 2018-19.  That equates to $275 per K-12 Pupil. (page 322 full bill text)

Sec. 236 University Appropriations
School Aid Fund funding of higher education (universities) increased to $500 million for 2018-19.  That equates to $338 per K-12 Pupil. (page 348 full bill text)

Links to data:

Community College and University Funding versus General Fund/General Purpose School Aid Fund contribution

Community College and University Funding per K-12 Pupil

We will continue to add documents to our webpage as we receive them. 

David and Bob


You received this e-mail as a member of MSBO. MSBO is a professional organization that provides programs and services to those in school business. MSBO promotes the highest standards of school business management practices and provides professional growth opportunities to achieve the most effective use of resources in the education of children.

Please do not click "Reply" to this e-mail. For any questions or concerns, please write to MSBO at: msbo@msbo.org.


© 2018 MSBO, 1001 Centennial Way, Suite 200
Lansing, Michigan 48917 • Ph: 517.327.5920 • Fax: 517.327.0768