SENATE RELEASES FY2015-16 SCHOOL AID BILL

The Senate Appropriations Subcommittee on K-12 funding released its version of the budget for the FY2015-16 school year and voted it out to the full Appropriations Committee yesterday. The SB 130 budget proposal looks very similar to the Governor’s proposal in many respects, including the addition of new categoricals focusing on early literacy and the expansion of At-Risk funding. The Senate version however, increases the foundation allowance ranging from $50 to $100 per pupil using the 2x formula and adds additional funds to ensure all districts are at least held harmless to this year’s funding level after specific categorical cuts.

As we said in our eblast on the House version of the budget, HB 4089, you’ll need to dig into the district-by-district details of the Senate proposal to see how your district fares in the exchange for categoricals! (Please note the Section 22d(4) column of the district-by-district detail represents the “new” qualifiers. Those districts that currently qualify would continue to qualify next year under the proposal.)

FOUNDATION INCREASES!
With the inclusion of the current year equity payment, the minimum foundation allowance for FY2014-15 is $7,251. The Senate Subcommittee Chair’s proposal would increase the minimum foundation by $100 to a total of $7,351. The basic foundation would be increased by $50 totaling $8,149. The 2x formula would be applied for the distribution of the foundation allowance increases.

If the impact of eliminating specific categorical funding results in less funding than the proposed foundation allowance increases, the proposal allocates funds that bring all districts to at least this year’s level.

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 fiscal agency analysis for all the details!

This is not an exhaustive list of changes 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 Senate Fiscal Agency analysis for even more detail.

Other notable categorical changes show an increase in Section 22d Isolated Districts Funding of nearly $2.5 million for a total of $5 million, Section 61a Career and Technical Ed of $12 million for a total of $40.0 million, and Section 81 ISD General Operations of $3 million for a total of $68.1 million. This proposal eliminates requirements of Section 81(7) ISD Best Practices and moves the funds to ISD operations. However, local districts will still be required to meet best practices as proposed by the Governor at a reduced rate of $20 per pupil.

MPSERS AND OTHER OBLIGATIONS
Other areas showing change between FY2014-15 funding and the Senate Subcommittee 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 $598 per pupil! The amount required to pay for debt service payments related to 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 262 pages, but several sections that we’ve seen before that deal with “early warning of district financial distress” were included in the Chair’s Recommendation. Changes to Section 102, and the addition of Sections 102a, b, c, and d, describe the process by which districts would be required to provide additional reporting, potentially subject districts to an enhanced deficit elimination plan and Department of Treasury oversight. This topic is currently being debated through a series of bills in the House; HB’s 4325, 4326, 4327, 4328 and 4329. We have been following these discussions over the last few weeks and are working closely with MASA and MASB on this legislation.

FINAL THOUGHTS
There’s no doubt, with the Governor’s proposal, the House Subcommittee Chair’s proposal, and now the Senate Subcommittee Chair’s proposal, budget season is definitely in full swing. 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 that you continue to monitor our web page in the coming weeks as the process moves forward.

IMPORTANT TO REMEMBER: The release of the House and Senate budget proposals and the analysis of each are important steps in the process. Both budgets have been passed out of subcommittee and are on to their respective Full Appropriations Committee. They are not law and should only be used with caution when discussing next year’s funding. They paint a great landscape of the priority and total funds allocated, but are subject to change as more information becomes available.

An important difference between the Governor’s proposal, the House version and the Senate version as detailed above is the Governor’s plan allocated nearly $50 million more than the House version and the Senate allocated nearly $10 million more than the Governor. As the legislature makes progress on setting budgetary target amounts, the total allocation will become clearer. For more details on the differences between the three versions, see the Senate 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 scheduled for May 15 quickly approaching, things do and will change. Stay Tuned!