HOUSE BILL No. 5814 May 23, 2000, Introduced by Reps. Patterson, Toy and Mortimer and referred to the Committee on Appropriations. A bill to amend 1979 PA 94, entitled "The state school aid act of 1979," by amending section 20 (MCL 388.1620), as amended by 1999 PA 119. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 20. (1)For 1998-99, the basic foundation allowance2is $5,462.00 per membership pupil.For 1999-2000, the basic 3 foundation allowance is $5,696.00 per membership pupil. For 4 2000-2001, the basic foundation allowance is $5,866.00 per mem- 5 bership pupil. 6 (2) From the appropriation in section 11, there is allocated 7 for1998-99 an amount not to exceed $8,034,100,000.00, for8 1999-2000 an amount not to exceed $8,516,932,000.00,and for 9 2000-2001 an amount not to exceed $8,906,496,200.00 to guarantee 10 each district a foundation allowance per membership pupil other 06351'00 TAV 2 1 than special education pupils and to make payments under this 2 section to public school academies and university schools for 3 membership pupils other than special education pupils. The 4 amount of each district's foundation allowance shall be calcu- 5 lated as provided in this section, using a basic foundation 6 allowance in the amount specified in subsection (1). If the max- 7 imum amount allocated under this section is not sufficient to 8 fully fund payments under this section, and before any proration 9 required under section 11, the amount of the payment to each dis- 10 trict, university school, and public school academy shall be pro- 11 rated by reducing by an equal percentage the total payment under 12 this section to each district, university school, and public 13 school academy. However, if the department determines that pro- 14 ration will be required under this section, the superintendent of 15 public instruction shall notify the state budget director, and 16 the state budget director shall notify the legislature at least 17 30 calendar days or 6 legislative session days, whichever is 18 more, before the department reduces any payments under this sec- 19 tion because of the proration. During the 30 calendar day or 6 20 legislative session day period after that notification by the 21 state budget director, the department shall not reduce any pay- 22 ments under this section because of proration. The legislature 23 may prevent proration under this section from occurring by, 24 within the 30 calendar day or 6 legislative session day period 25 after that notification by the director, enacting legislation 26 appropriating additional funds from the general fund, 27 countercyclical budget and economic stabilization fund, state 06351'00 3 1 school aid fund balance, or another source to ensure full 2 foundation allowance funding for each district, university 3 school, and public school academy. 4 (3) Except as otherwise provided in this section, the amount 5 of a district's foundation allowance shall be calculated as fol- 6 lows, using in all calculations the total amount of the 7 district's foundation allowance as calculated before any 8 proration: 9 (a) For a district that in the immediately preceding state 10 fiscal year had a foundation allowance at least equal to the sum 11 of $4,200.00 plus the total dollar amount of all adjustments made 12 from 1994-95 to the immediately preceding state fiscal year in 13 the lowest foundation allowance among all districts, but less 14 than the basic foundation allowance in the immediately preceding 15 state fiscal year, the district shall receive a foundation allow- 16 ance in an amount equal to the sum of the district's foundation 17 allowance for the immediately preceding state fiscal year plus 18 the difference between twice the dollar amount of the adjustment 19 from the immediately preceding state fiscal year to the current 20 state fiscal year made in the basic foundation allowance and 21 [(the dollar amount of the adjustment from the immediately pre- 22 ceding state fiscal year to the current state fiscal year made in 23 the basic foundation allowance minus $50.00) times (the differ- 24 ence between the district's foundation allowance for the immedi- 25 ately preceding state fiscal year and the sum of $4,200.00 plus 26 the total dollar amount of all adjustments made from 1994-95 to 27 the immediately preceding state fiscal year in the lowest 06351'00 4 1 foundation allowance among all districts) divided by the 2 difference between the basic foundation allowance for the current 3 state fiscal year and the sum of $4,200.00 plus the total dollar 4 amount of all adjustments made from 1994-95 to the immediately 5 preceding state fiscal year in the lowest foundation allowance 6 among all districts]. However, the foundation allowance for a 7 district that had less than the basic foundation allowance in the 8 immediately preceding state fiscal year shall not exceed the 9 basic foundation allowance for the current state fiscal year. 10 (b) Except as otherwise provided insubdivision (c) or (d)11 THIS SUBSECTION, for a district that in the immediately preceding 12 state fiscal year had a foundation allowance in an amount at 13 least equal to the amount of the basic foundation allowance for 14 the immediately preceding state fiscal year, the district shall 15 receive a foundation allowance in an amount equal to the sum of 16 the district's foundation allowance for the immediately preceding 17 state fiscal year plus the dollar amount of the adjustment from 18 the immediately preceding state fiscal year to the current state 19 fiscal year in the basic foundation allowance. 20 (c) For 1999-2000 only, for a district that in the immedi- 21 ately preceding state fiscal year had a foundation allowance 22 greater than $6,962.00 and less than $12,000.00, the district 23 shall receive a foundation allowance in an amount equal to the 24 sum of the district's foundation allowance for the immediately 25 preceding state fiscal year plus 1.6% of the district's founda- 26 tion allowance for the immediately preceding state fiscal year. 06351'00 5 1 (d) For 2000-2001 only, for a district that in the 2 immediately preceding state fiscal year had a foundation 3 allowance greater than $7,196.00 and less than $12,234.00, the 4 district shall receive a foundation allowance in an amount equal 5 to the sum of the district's foundation allowance for the immedi- 6 ately preceding state fiscal year plus 1.6% of the district's 7 foundation allowance for the immediately preceding state fiscal 8 year. 9 (e) For1998-99, each district's foundation allowance shall10be at least $5,170.00.2001-2002, A DISTRICT'S FOUNDATION ALLOW- 11 ANCE SHALL BE $9,000.00 IF THE DEPARTMENT DETERMINES THAT THE 12 DISTRICT MEETS ALL OF THE FOLLOWING: 13 (i) IS LOCATED IN WHOLE OR IN PART IN A COUNTY WITH A POPU- 14 LATION GREATER THAN 2,000,000. 15 (ii) HAS TERRITORY OF MORE THAN 1 CITY, VILLAGE, OR TOWNSHIP 16 LOCATED WITHIN ITS BOUNDARIES. 17 (iii) HAS A 2000-2001 MEMBERSHIP GREATER THAN 15,000. 18 (iv) OPERATES AT LEAST 2 HIGH SCHOOLS, AT LEAST 5 MIDDLE 19 SCHOOLS, AND AT LEAST 12 ELEMENTARY SCHOOLS. 20 (v) HAS AN AVERAGE CLASSROOM PUPIL TO TEACHER RATIO OF NOT 21 LESS THAN 23 TO 1. 22 (vi) LESS THAN 8% OF ITS PUPILS MET THE INCOME ELIGIBILITY 23 CRITERIA FOR THE FEDERAL FREE AND REDUCED PRICE LUNCH PROGRAM FOR 24 THE IMMEDIATELY PRECEDING SCHOOL YEAR. 25 (vii) HAS AN AVERAGE TEACHER SALARY OF AT LEAST $55,000.00 26 FOR THE SCHOOL YEAR. 06351'00 6 1 (viii) HAS A DROPOUT RATE OF LESS THAN 3.2%, AS CALCULATED 2 BY THE DEPARTMENT FOR THE IMMEDIATELY PRECEDING SCHOOL YEAR. 3 (ix) HAS A GRADUATION RATE OF AT LEAST 90%, AS CALCULATED BY 4 THE DEPARTMENT FOR THE IMMEDIATELY PRECEDING SCHOOL YEAR. 5 (x) HAD A FOUNDATION ALLOWANCE FOR 1999-2000 OF MORE THAN 6 $6,200.00. 7 (4) To ensure that a district receives the district's foun- 8 dation allowance, there is allocated to each district a state 9 portion of the district's foundation allowance in an amount cal- 10 culated under this subsection. Except as otherwise provided in 11 this subsection, the state portion of a district's foundation 12 allowance is an amount equal to the district's foundation allow- 13 ance or $6,500.00, whichever is less, minus the difference 14 between the product of the taxable value per membership pupil of 15 all property in the district that is not a homestead or qualified 16 agricultural property times the lesser of 18 mills or the number 17 of mills of school operating taxes levied by the district in 18 1993-94 and the quotient of the ad valorem property tax revenue 19 of the district captured under 1975 PA 197, MCL 125.1651 to 20 125.1681, the tax increment finance authority act, 1980 PA 450, 21 MCL 125.1801 to 125.1830, the local development financing act, 22 1986 PA 281, MCL 125.2151 to 125.2174, or theBrownfield23 BROWNFIELD redevelopment financing act, 1996 PA 381, MCL 125.2651 24 to 125.2672, divided by the district's membership excluding spe- 25 cial education pupils. For 1999-2000 only, for a district 26 described in subsection (3)(c), the state portion of the 27 district's foundation allowance is an amount equal to $6,962.00 06351'00 7 1 plus 1.6% of the district's foundation allowance for the 2 immediately preceding state fiscal year minus the difference 3 between the product of the taxable value per membership pupil of 4 all property in the district that is not a homestead or qualified 5 agricultural property times the lesser of 18 mills or the number 6 of mills of school operating taxes levied by the district in 7 1993-94 and the quotient of the ad valorem property tax revenue 8 of the district captured under 1975 PA 197, MCL 125.1651 to 9 125.1681, the tax increment finance authority act, 1980 PA 450, 10 MCL 125.1801 to 125.1830, the local development financing act, 11 1986 PA 281, MCL 125.2151 to 125.2174, or theBrownfield12 BROWNFIELD redevelopment financing act, 1996 PA 381, MCL 125.2651 13 to 125.2672, divided by the district's membership excluding spe- 14 cial education pupils. For 2000-2001 only, for a district 15 described in subsection (3)(d), the state portion of the 16 district's foundation allowance is an amount equal to $7,196.00 17 plus 1.6% of the district's foundation allowance for the immedi- 18 ately preceding state fiscal year minus the difference between 19 the product of the taxable value per membership pupil of all 20 property in the district that is not a homestead or qualified 21 agricultural property times the lesser of 18 mills or the number 22 of mills of school operating taxes levied by the district in 23 1993-94 and the quotient of the ad valorem property tax revenue 24 of the district captured under 1975 PA 197, MCL 125.1651 to 25 125.1681, the tax increment finance authority act, 1980 PA 450, 26 MCL 125.1801 to 125.1830, the local development financing act, 27 1986 PA 281, MCL 125.2151 to 125.2174, or theBrownfield06351'00 8 1 BROWNFIELD redevelopment financing act, 1996 PA 381, MCL 125.2651 2 to 125.2672, divided by the district's membership excluding spe- 3 cial education pupils. For a district that has a millage reduc- 4 tion required under section 31 of article IX of the state consti- 5 tution of 1963, the state portion of the district's foundation 6 allowance shall be calculated as if that reduction did not 7 occur. For each fiscal year after 1994-95, the $6,500.00 amount 8 prescribed in this subsection shall be adjusted each year by an 9 amount equal to the dollar amount of the difference between the 10 basic foundation allowance for the current state fiscal year and 11 $5,000.00. 12 (5) The allocation under this section for a pupil shall be 13 based on the foundation allowance of the pupil's district of 14 residence. However, for a pupil enrolled pursuant to section 105 15 OR 105C in a district other than the pupil's district of resi- 16 dence, the allocation under this section shall be based on the 17 lesser of the foundation allowance of the pupil's district of 18 residence or the foundation allowance of the educating district. 19 For a pupil in membership in a K-5, K-6, or K-8 district who is 20 enrolled in another district in a grade not offered by the 21 pupil's district of residence, the allocation under this section 22 shall be based on the foundation allowance of the educating dis- 23 trict if the educating district's foundation allowance is greater 24 than the foundation allowance of the pupil's district of 25 residence. 26 (6) Subject to subsection (7) and except as otherwise 27 provided in this subsection, for pupils in membership, other than 06351'00 9 1 special education pupils, in a public school academy or a 2 university school, there is allocated under this section each 3 fiscal yearfor 1998-99,for 1999-2000,and for 2000- 2001 to 4 the authorizing body that is the fiscal agent for the public 5 school academy for forwarding to the public school academy, or to 6 the board of the public university operating the university 7 school, an amount per membership pupil other than special educa- 8 tion pupils in the public school academy or university school 9 equal to the sum of the local school operating revenue per mem- 10 bership pupil other than special education pupils for the dis- 11 trict in which the public school academy or university school is 12 located and the state portion of that district's foundation 13 allowance, or the sum of the basic foundation allowance under 14 subsection (1) plus $500.00, whichever is less. Notwithstanding 15 section 101(2), for a public school academy that begins opera- 16 tions in1998-99,1999-2000,or 2000-2001, as applicable, 17 after the pupil membership count day, the amount per membership 18 pupil calculated under this subsection shall be adjusted by 19 multiplying that amount per membership pupil by the number of 20 hours of pupil instruction provided by the public school academy 21 after it begins operations, as determined by the department, 22 divided by the minimum number of hours of pupil instruction 23 required under section 1284 of the revised school code, 24 MCL 380.1284. The result of this calculation shall not exceed 25 the amount per membership pupil otherwise calculated under this 26 subsection. 06351'00 10 1 (7) If more than 25% of the pupils residing within a 2 district are in membership in 1 or more public school academies 3 located in the district, then the amount per membership pupil 4 allocated under this section to the authorizing body that is the 5 fiscal agent for a public school academy located in the district 6 for forwarding to the public school academy shall be reduced by 7 an amount equal to the difference between the product of the tax- 8 able value per membership pupil of all property in the district 9 that is not a homestead or qualified agricultural property times 10 the lesser of 18 mills or the number of mills of school operating 11 taxes levied by the district in 1993-94 and the quotient of the 12 ad valorem property tax revenue of the district captured under 13 1975 PA 197, MCL 125.1651 to 125.1681, the tax increment finance 14 authority act, 1980 PA 450, MCL 125.1801 to 125.1830, the local 15 development financing act, 1986 PA 281, MCL 125.2151 to 125.2174, 16 or theBrownfieldBROWNFIELD redevelopment financing act, 1996 17 PA 381, MCL 125.2651 to 125.2672, divided by the district's mem- 18 bership excluding special education pupils, in the school fiscal 19 year ending in the current state fiscal year, calculated as if 20 the resident pupils in membership in 1 or more public school 21 academies located in the district were in membership in the 22 district. In order to receive state school aid under this act, a 23 district described in this subsection shall pay to the authoriz- 24 ing body that is the fiscal agent for a public school academy 25 located in the district for forwarding to the public school acad- 26 emy an amount equal to that local school operating revenue per 27 membership pupil for each resident pupil in membership other than 06351'00 11 1 special education pupils in the public school academy, as 2 determined by the department. 3 (8) If a district does not receive a payment under subsec- 4 tion (9); if the number of mills the district may levy on a home- 5 stead and qualified agricultural property under section 1211(1) 6 of the revised school code, MCL 380.1211, is 0.5 mills or less; 7 and if the district elects not to levy those mills, the district 8 instead shall receive a separate supplemental payment under this 9 subsection in an amount equal to the amount the district would 10 have received had it levied those mills, as determined by the 11 department of treasury. A district shall not receive a separate 12 supplemental payment under this subsection for a fiscal year 13 unless in the calendar year ending in the fiscal year the dis- 14 trict levies 18 mills or the number of mills of school operating 15 taxes levied by the district in 1993, whichever is less, on prop- 16 erty that is not a homestead or qualified agricultural property. 17 (9) For a district that had combined state and local revenue 18 per membership pupil in the 1993-94 state fiscal year of more 19 than $6,500.00 and that had fewer than 350 pupils in membership, 20 if the district elects not to reduce the number of mills from 21 which a homestead and qualified agricultural property are exempt 22 and not to levy school operating taxes on a homestead and quali- 23 fied agricultural property as provided in section 1211(1) of the 24 revised school code, MCL 380.1211, and not to levy school operat- 25 ing taxes on all property as provided in section 1211(2) of the 26 revised school code, MCL 380.1211, there is allocated under this 27 subsection for 1994-95 and each succeeding fiscal year a separate 06351'00 12 1 supplemental payment in an amount equal to the amount the 2 district would have received per membership pupil had it levied 3 school operating taxes on a homestead and qualified agricultural 4 property at the rate authorized for the district under 5 section 1211(1) of the revised school code, MCL 380.1211, and 6 levied school operating taxes on all property at the rate autho- 7 rized for the district under section 1211(2) of the revised 8 school code, MCL 380.1211, as determined by the department of 9 treasury. A district shall not receive a separate supplemental 10 payment under this subsection for a fiscal year unless in the 11 calendar year ending in the fiscal year the district levies 18 12 mills or the number of mills of school operating taxes levied by 13 the district in 1993, whichever is less, on property that is not 14 a homestead or qualified agricultural property. If in the calen- 15 dar year ending in the fiscal year a district does not levy 18 16 mills or the number of mills of school operating taxes levied by 17 the district in 1993, whichever is less, on property that is not 18 a homestead or qualified agricultural property, the payment under 19 this subsection will be reduced by the same percentage as the 20 millage actually levied compares to the 18 mills or the number of 21 mills levied in 1993, whichever is less. 22 (10) A district or public school academy may use any funds 23 allocated under this section in conjunction with any federal 24 funds for which the district or public school academy otherwise 25 would be eligible. 26 (11) For a district that is formed or reconfigured after 27 June 1, 1994 by consolidation of 2 or more districts or by 06351'00 13 1 annexation, the resulting district's foundation allowance under 2 this section beginning after the effective date of the consolida- 3 tion or annexation shall be the average of the foundation allow- 4 ances of each of the original or affected districts, calculated 5 as provided in this section, weighted as to the percentage of 6 pupils in total membership in the resulting district who reside 7 in the geographic area of each of the original districts. If an 8 affected district's foundation allowance is less than the basic 9 foundation allowance, the amount of that district's foundation 10 allowance shall be considered for the purpose of calculations 11 under this subsection to be equal to the amount of the basic 12 foundation allowance. 13 (12) Each fraction used in making calculations under this 14 section shall be rounded to the fourth decimal place and the 15 dollar amount of an increase in the basic foundation allowance 16 shall be rounded to the nearest whole dollar. 17 (13) State payments related to payment of the foundation 18 allowance for a special education pupil are not funded under this 19 section but are instead funded under section 51a. 20 (14) To assist the legislature in determining the basic 21 foundation allowance for the subsequent state fiscal year, each 22 revenue estimating conference conducted under section 367b of the 23 management and budget act, 1984 PA 431, MCL 18.1367b, shall cal- 24 culate a pupil membership factor, a revenue adjustment factor, 25 and an index as follows: 26 (a) The pupil membership factor shall be computed by 27 dividing the estimated membership in the school year ending in 06351'00 14 1 the current state fiscal year, excluding intermediate district 2 membership, by the estimated membership for the school year 3 ending in the subsequent state fiscal year, excluding intermedi- 4 ate district membership. If a consensus membership factor is not 5 determined at the revenue estimating conference, the principals 6 of the revenue estimating conference shall report their estimates 7 to the house and senate subcommittees responsible for school aid 8 appropriations not later than 7 days after the conclusion of the 9 revenue conference. 10 (b) The revenue adjustment factor shall be computed by 11 dividing the sum of the estimated total state school aid fund 12 revenue for the subsequent state fiscal year plus the estimated 13 total state school aid fund revenue for the current state fiscal 14 year, adjusted for any change in the rate or base of a tax the 15 proceeds of which are deposited in that fund and excluding money 16 transferred into that fund from the countercyclical budget and 17 economic stabilization fund under section 353e of the management 18 and budget act, 1984 PA 431, MCL 18.1353e, by the sum of the 19 estimated total school aid fund revenue for the current state 20 fiscal year plus the estimated total state school aid fund reve- 21 nue for the immediately preceding state fiscal year, adjusted for 22 any change in the rate or base of a tax the proceeds of which are 23 deposited in that fund. If a consensus revenue factor is not 24 determined at the revenue estimating conference, the principals 25 of the revenue estimating conference shall report their estimates 26 to the house and senate subcommittees responsible for school aid 06351'00 15 1 appropriations not later than 7 days after the conclusion of the 2 revenue conference. 3 (c) The index shall be calculated by multiplying the pupil 4 membership factor by the revenue adjustment factor. However, for 5 1998-99 only, the index shall be 1.00. If a consensus index is 6 not determined at the revenue estimating conference, the princi- 7 pals of the revenue estimating conference shall report their 8 estimates to the house and senate subcommittees responsible for 9 school aid appropriations not later than 7 days after the conclu- 10 sion of the revenue conference. 11 (15) If the principals at the revenue estimating conference 12 reach a consensus on the index described in subsection (14)(c), 13 the basic foundation allowance for the subsequent state fiscal 14 year shall be at least the amount of that consensus index multi- 15 plied by the basic foundation allowance specified in subsection 16 (1). 17 (16) If at the January revenue estimating conference it is 18 estimated that pupil membership, excluding intermediate district 19 membership, for the subsequent state fiscal year will be greater 20 than 101% of the pupil membership, excluding intermediate dis- 21 trict membership, for the current state fiscal year, then it is 22 the intent of the legislature that the executive budget proposal 23 for the school aid budget for the subsequent state fiscal year 24 include a general fund/general purpose allocation sufficient to 25 support the membership in excess of 101% of the current year 26 pupil membership. 06351'00 16 1 (17) Beginning in 1999-2000, for a district that had 2 combined state and local revenue per membership pupil in the 3 1993-94 state fiscal year of more than $6,500.00, that had fewer 4 than 7 pupils in membership in the 1993-94 state fiscal year, 5 that has at least 1 pupil in membership educated in the district 6 in the current state fiscal year, and that levies the number of 7 mills of school operating taxes authorized for the district under 8 section 1211 of the revised school code, MCL 380.1211, the dis- 9 trict shall be allocated a minimum amount of combined state and 10 local revenue as provided under this subsection. This minimum 11 amount of combined state and local revenue for 1999-2000 shall be 12 $67,000.00 plus the district's additional expenses to educate 13 pupils in grades 9 to 12 educated in other districts as deter- 14 mined and allowed by the department. Beginning in 2000-2001, the 15 amount of the minimum amount of combined state and local revenue 16 under this subsection, before adding the additional expenses, 17 shall increase each fiscal year by the same percentage increase 18 as the percentage increase in the basic foundation allowance from 19 the immediately preceding fiscal year to the current fiscal 20 year. The state portion of the minimum amount of combined state 21 and local revenue under this subsection shall be calculated by 22 subtracting from the minimum amount of combined state and local 23 revenue under this subsection the sum of the district's local 24 school operating revenue and the product of the state portion of 25 the district's foundation allowance times the district's 26 membership. As used in this subsection, "additional expenses" 27 means the district's expenses for tuition or fees, not to exceed 06351'00 17 1 $6,500.00 as adjusted each year by an amount equal to the dollar 2 amount of the difference between the basic foundation allowance 3 for the current state fiscal year and $5,000.00, plus a room and 4 board stipend not to exceed $10.00 per school day for each pupil 5 in grades 9 to 12 educated in another district, as approved by 6 the department. 7 (18) As used in this section: 8 (a) "Combined state and local revenue" means the aggregate 9 of the district's state school aid received by or paid on behalf 10 of the district under this section and the district's local 11 school operating revenue. 12 (b) "Combined state and local revenue per membership pupil" 13 means the district's combined state and local revenue divided by 14 the district's membership excluding special education pupils. 15 (c) "Current state fiscal year" means the state fiscal year 16 for which a particular calculation is made. 17 (d) "Homestead" means that term as defined in section 1211 18 of the revised school code, MCL 380.1211. 19 (e) "Immediately preceding state fiscal year" means the 20 state fiscal year immediately preceding the current state fiscal 21 year. 22 (f) "Local school operating revenue" means school operating 23 taxes levied under section 1211 of the revised school code, 24 MCL 380.1211. 25 (g) "Local school operating revenue per membership pupil" 26 means a district's local school operating revenue divided by the 27 district's membership excluding special education pupils. 06351'00 18 1 (h) "Membership" means the definition of that term under 2 section 6 as in effect for the particular fiscal year for which a 3 particular calculation is made. 4 (i) "Qualified agricultural property" means that term as 5 defined in section 1211 of the revised school code, 6 MCL 380.1211. 7 (j) "School operating purposes" means the purposes included 8 in the operation costs of the district as prescribed in 9 sections 7 and 18. 10 (k) "School operating taxes" means local ad valorem property 11 taxes levied under section 1211 of the revised school code, 12 MCL 380.1211, and retained for school operating purposes. 13 (l) "Taxable value per membership pupil" means taxable 14 value, as certified by the department of treasury, for the calen- 15 dar year ending in the current state fiscal year divided by the 16 district's membership excluding special education pupils for the 17 school year ending in the current state fiscal year. 06351'00 Final page. 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