March 22, 2016

House K-12 Chair Releases 2016-17 Budget Proposal

Today, the Chairman of the House School Aid Appropriations Subcommittee formally presented his budget plan for the 2016-17 School Aid Fund. Although Representative Tim Kelly’s proposal looks very similar to the Governor’s Executive Budget proposal, there are some subtle differences, which could be beneficial to school operations.

Here are the high points and differences between the Governor’s plan and the House Appropriations K-12 Subcommittee Chair’s proposal…

• Foundation Allowance - The good news is the foundation allowance increase of $60 - $120 per pupil distributed on the 2x formula, including the 20j language the Governor proposed, is included in the House’s plan.
• Blended FTE Count for School Aid - A major shift in the House Subcommittee’s proposal is that the pupil counts would be a blend of 15% of the prior October count and 85% of the current year October count. This suggests that there may be no need for a February pupil count day which would is a big step in the right direction in the elimination of reporting requirements! The change to using the October count would also help address the loss of revenue for migrant students and for declining enrollment districts although minimal, it acknowledges the issue and attempts to ease the financial impact of the loss of students.
• ISD General Operations – The Governor recommended a 1.6% increase in ISD Section 81 funds which is also the recommendation of the House subcommittee.
• At Risk – An additional $18 million in funding and a boilerplate language change is proposed under the House plan 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.
• Pupil Transfer Process – This section (25e) is eliminated in both budget proposals.
• Days and Hours of Instruction Report – 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.
• Gang Prevention and Intervention – The Governor’s plan eliminated the categorical however the House Subcommittee’s version increases the allocation by $3 million for a total of $4 million for 2016-17.
• Statewide School Water Testing – The new categorical proposed in the Governor’s plan to test for lead in school building drinking water is not included in the House Subcommittee’s plan, freeing up the $9 million allocation for other purposes.
• State School Reform/Redesign – The Governor proposed $5 million for CEO’s and supplemental payments to schools under the control of the State Reform/Redesign Office. The House does not include this section or allocation.
• Educator and Administrator Evaluations – The Governor proposed $10 million to assist the evaluation implementation and training. The House Subcommittee did not include this funding in its initial proposal for 2016-17.
• Consolidation Innovation Grants – The House version expands reimbursement to include the consolidation of operations or services between two or more districts or ISDs.
• FIRST Robotics – The Governor proposed a $500,000 increase in the allocation, the House Committee Chair’s plan does not include this increase.
• MiSTEM – The Governor proposed a $1.75 million increase in Section 99s STEM funding. The House Subcommittee did not include this increase in their initial proposal.
• Online Algebra Tool – The House Subcommittee recommends a $2 million allocation in a new categorical to implement an online Algebra tool to assist student instruction.
• Financial Data Analysis Tools – The categorical from 2015-16 was continued under the Governor’s plan and increased by $100,000 under the House Subcommittee’s plan to include ISD’s as eligible for reimbursement of financial data analysis tools. The total allocation is $1.6 million for 2016-17.
• Education Assessments – State – The Governor proposed a decrease of $10 million for education assessment costs, the House Subcommittee recommends a nearly $22 million reduction.
• Nonpublic School Reimbursement – The House Sub Committee Chair recommends a new categorical for the reimbursement of non-public school reporting requirement costs in the amount of $1 million for 2016-17.
• DPS Trust Funds – Both proposals include the $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.
• General Fund/General Purpose (GF/GP) Transfer to the School Aid Fund (SAF)– Both proposals include a significant increase in the GF/GP transfer to the SAF. The Governor’s proposal includes a $184 million increase from the 2015-16 enacted SAF transfer; the House Subcommittee’s proposal includes a $175 million increase to fund 2016-17. The use of significant “one-time” GF/GP transfers is a cause for concern when looking at the overall affordability of the proposals and will be something we watch closely through the budget debate.

Although there are differences in the proposals as noted in the items above, the overall funding for the proposals is essentially the same, with the House Subcommittee’s version costing just over $1 million more than the Governor’s plan. This is more the beginning of the process for the House version as opposed to the end, so we’ll follow the House K-12 Subcommittee version closely as it makes its way through the process.

It is also expected that we will see the Senate Sub Committee Chair’s budget proposal later this week. We’ll provide a brief update when the information is released and we have had time to review it.

With the budget process in full swing, it will be important for you to monitor our webpage that is dedicated to the School Aid Fund 2016-17. We have posted the bill language for HB 5266, the “side-by-side” Section Highlights of the Governor’s proposal and the House version, the House Fiscal Agency’s summary of the proposal, the proposed foundation allowances by district and newly eligible district At-Risk projected allocation reports! 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.