HOUSE RELEASES FIRST DRAFT OF FY2015-16 SCHOOL AID BILL

The House Appropriations Subcommittee on K-12 funding released its version of the budget for the FY2015-16 school year earlier today. The HB 4089 (H-1) budget proposal holds true to the statements we’ve heard over the last few weeks that the House would “roll-up” multiple sections of categorical funding into the foundation allowance. The end result is a significant increase in the foundation allowance ranging from $137 to $274 per pupil and up to an additional $25 for equity! Sounds pretty good eh? Not so fast! You’ll need to dig into the district-by-district details of the proposal to see how your district fares in the exchange for categoricals!

FOUNDATION INCREASES!
The current minimum foundation allowance for FY2014-15 is technically $7,126. If you add in the current $125 equity payment maximum, you’ll get to base funding to begin the FY2015-16 discussion. The Committee Chair’s proposal would increase the minimum foundation by $274 to a total of $7,525 AND allocate up to another $25 in an equity payment under Section 22c to get any district with a foundation allowance under $7,550 to that level. That means the effective per pupil increase for a minimum foundation district is $299! The basic foundation would be increased by $137 totaling $8,236.

If the impact of eliminating categorical funding results in a less than a $25 per pupil increase in overall funding to the district, the proposal allocates funds that bring all districts to at least a $25 per pupil increase.

CATEGORICAL FUNDING CHANGES!

So…what are the categorical funds that have been reduced or eliminated from FY2014-15 levels in the proposal? Here’s a short list, but look to the House Fiscal Agency analysis for all the details!

This is not an exhaustive list of reductions but does hit many of the categoricals that you need to take into consideration when deciding how this version of the budget might impact your district. Please see the House Fiscal Agency analysis posted with even more detail.

Other notable categorical changes show an increase in Section 61a Career and Technical Ed of $15 million for a total of $42.6 million, and Section 81 ISD General Operations at the current level of $67.1 million while eliminating best practice requirements for ISD’s.

MPSERS AND OTHER OBLIGATIONS
Other areas showing change between FY2014-15 funding and the Committee Chair’s proposal for FY2015-16 are the MPSERS Unfunded Liability Payment, School Bond Loan Fund, and the Durant – Non Plaintiff Debt Service. The amount needed to “cap” the districts share of the MPSERS unfunded liability will grow $216.6 million in FY2015-16, totaling $893.5 million. Based on the estimate of 1.495 million students for next year, that’s a buy-down at an average cost of nearly $598 per pupil! The amount required to pay for debt service payments for the districts in the School Bond Loan Program increases by $17 million, totaling $143 million and the Durant debt service payments expired in FY2014-15 which is a “savings” to the School Aid Fund of $39.5 million annually.

IMPORTANT “BOILERPLATE” LANGUAGE CHANGES
There are several language changes in the bill, and we are still wading through the 210 pages, but several sections that were included in the Governor’s proposal that deal with “early warning of district financial distress” were not included in the Chair’s Recommendation. Sections 103a, b and c which described the process by which districts would be required to provide additional reporting, potentially subject to an enhanced deficit elimination plan and be subject to the Department of Treasury oversight, were all eliminated. This topic is currently being debated through a series of bills in the House, HB 4325, 4326, 4327, 4328 and 4329. We have been following these discussions closely over the last few weeks.

FINAL THOUGHTS
There’s no doubt that budget season is in full swing, and with spring break just a few days away we’re anticipating on seeing the Senate version on the FY2015-16 School Aid Bill yet this week. We’ve heard that their plan will be “revolutionary” so stay tuned for the details. We’ll try to get out a quick run-down as soon as we get the information. We have been posting all of the detailed information we receive concerning the budget on our web page dedicated to the FY2015-16 School Aid Budget. We ask you continue to monitor it daily for the next few days as we will post information generally prior to eblasting.

IMPORTANT TO REMEMBER: The release of the House and Senate budget proposals and the analysis of each one are important steps in the process. They are not law however and should be used with caution when discussing next year’s funding. They give a great landscape of the priority and total funds allocated, but that’s subject to change as more information becomes available. An important difference between the Governor’s proposal and the Chair’s Recommendation detailed above is the Governor’s plan allocated nearly $50 million more than the House version. Since the Governor’s release, more current revenue information is known and perhaps the House has backed off of the total figures used by the Governor. For more details on the differences overall, see the House Fiscal Agency “side-by-side” document posted on our website!

We’ll keep watching the exchanges, but with Proposal 15-1 “Roads Funding” vote and the May Consensus Revenue Estimating Conference quickly approaching, things do and will change. Stay Tuned!