|August 16, 2012
In This E-Mail:
Although the train carrying MPSERS reform seems to have been a heavy haul freightliner rather than a high speed passenger train, it has been moving, and yesterday pulled into the next station on its way to reform. The Legislature convened on Wednesday to again deal with the issue of reforming the Michigan Public School Employees Retirement System (MPSERS). The final agreement looks very similar to the version originally passed by the House, SB 1040 with substitute (H-3) with a few minor tweaks.
Here are the high points of the final bill, which was passed by both the House and Senate, now on its way to the Governor for signature:
We have reviewed Section 147a funding language in the School Aid Bill and also discussed the matter with MDE and the passage of Senate Bill 1040 will not impact the district's allocation under this section.
The rate cap at 24.46 percent is positive for budgeting purposes, but it will mean that the School Aid Fund (SAF) will be responsible to fund any unmet required contributions determined by the actuaries. We are concerned that the state funding of MPSERS needed to keep the rate down may limit the ability for the SAF to provide any increases in the foundation allowance and other categoricals. This will be a key factor to watch over the next few years.
|Section 25 - It's Not Just "Count Day" That Matters|
The School Aid Bill that was passed by the Legislature and has since been signed by the Governor into law has many changes that will affect schools in the coming school year. An area that has been an issue for districts for quite some time seems to be somewhat resolved in the final bill. We’ve all heard the stories about students enrolling in a district and after count day, moving to back to their home district or another district with no funding following them to assist the educating district with the added cost of the additional student. The fact that we only have two funding count days certainly has its limitations to resolve this.
During the School Aid Budget negotiations we heard about legislative initiatives to expand the number of count days, go to a daily attendance, and with the latest school aid re-write initiative, have the funding follow the student. A measure that was taken to assist with the issue was the expansion of Section 25, which up until the final bill, was used only for Strict Discipline Academies when students were enrolled between count days. Many ISD’s and K-12’s had state aid payment adjustments reflecting this section last fiscal year.
In the fiscal year 2012-13 School Aid Bill, ALL districts and PSA’s will be eligible to claim funding on a daily basis for days they educate students, including those that move between districts at any time during the school year. This change certainly appears to resolve the issue of receiving students after count day with no funding following them, but at the same time, creates a whole new dimension of pupil and financial accounting issues that will need to be resolved for a smooth transition.
For more information the January 2012 and July 2012 School Aid Updates gave some explanation to how the section was implemented last fiscal year. For 2011-12, it allowed Strict Discipline Academies (about 7 in the state) to receive a prorated share of a foundation grant from the referring resident district for pupils that transfer to the strict discipline academy after the count day, provided that they were counted by a district or public school academy on the count day. MDE would then debit the pro-rated foundation for their attendance at the Strict Discipline Academy from the resident referring district.
You can find the 2012-13 School Aid Budget on the MSBO website at the following link: http://www.msbo.org/sites/default/files/sb961_fulltext.pdf Refer to page 92 where Section 25 begins. You will see that the text pertaining to alternative education programs and Strict Discipline Academies for 2011-12 has been lined out. It has been replaced for 2012-13 with text allowing the same proration of foundation under similar circumstances for any student transferring from any local or intermediate school district to another local or intermediate school district after the count date.
In discussing the matter with MDE, they are working with CEPI and ISD pupil accounting specialists to come up with an electronic solution to the reporting of student transitions and other reporting concerns. It is expected that there will be an electronic solution for this issue, but it may come at the cost of additional staff time in order to accomplish it. One thing to remember, this section is available for use by a district, but is not mandated. In other words, if you don’t want to participate in gaining state aid for students that enroll at your district after a count day, that’s your decision. However, other districts may have students that move from your district to their district and claim the days, taking funding from your bottom line.
We will keep you informed of MDE’s solution and the process by which you will need to report student changes during the year. The State Aid payments for October and November are generally calculated using estimated student counts so it seems the first possible adjustments wouldn’t be until December at the earliest, giving some extra time to develop guidance from the department.
|Best Practices - It's Not Just for Locals Anymore!|
The School Aid Budget for 2012-13 included a couple of new twists to funding for “Best Practices.” Section 22f, which is the best practice section for locals, increased the bar for implementation of best practices and now has a requirement of meeting 7 of 8 identified practices in order to receive an incentive payment of $52 per pupil for the 2012-13 fiscal year.
A quick summary of the 8 best practices for locals is as follows:
MDE released its guidance on the section 22f best practice incentive funding today and we have linked to it for your convenience “MDE Section 22f Best Practice Incentive Funding Guidance”
Also in the 2012-13 budget is an incentive for ISD’s to gain an additional 3.2% funding of their Section 81 funding. The requirements to qualify for the incentive payment can be found under Section 81 in the bill.
A quick summary of the 5 identified ISD best practices are as follows:
MDE also released guidance for the Section 81 incentive payment today and we have linked it for your convenience “MDE Section 81 Best Practice Incentive Funding Guidance”
We have had discussions with MDE on both of these sections and gave input to the guidance where appropriate. Although there may be additional questions about current practices and how those relate to any of the requirements, the guidance is written in a manner that allows credit for things you are already doing. The guidance does allow for some flexibility and local interpretation of what qualifies or even how you will post certain information. This is a better approach than being overly prescriptive.
We will be monitoring both the listserv and the calls we receive to see if a FAQ document may be needed for specific questions. At this point, please review the documents and if you have specific issues, email email@example.com or simply put it on the listserv and we’ll respond as soon as possible, or investigate to provide you an answer.
David and Bob
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