SB-0367,As Passed Senate,May 14, 2003                                       

SUBSTITUTE FOR

SENATE BILL NO. 367

                                                                             A bill to amend 1979 PA 94, entitled                                              

"The state school aid act of 1979,"                                         

by amending sections 20 and 31a (MCL 388.1620 and 388.1631a), as            

amended by 2002 PA 521.                                                     

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 20.  (1)  For 2001-2002, the basic foundation allowance                

2   is $6,300.00 per membership pupil.  For 2002-2003 and for                   

3   2003-2004, the basic foundation allowance is $6,700.00 per                  

4   membership pupil.                                                           

5       (2) The amount of each district's foundation allowance shall                

6   be calculated as provided in this section, using a basic                    

7   foundation allowance in the amount specified in subsection (1).             

8       (3) Except as otherwise provided in this section, the amount                

9   of a district's foundation allowance shall be calculated as                 

10  follows, using in all calculations the total amount of the                  

1   district's foundation allowance as calculated before any                    

2   proration:                                                                  

3       (a) Except as otherwise provided in this subsection, for a                  

4   district that in the immediately preceding state fiscal year had            

5   a foundation allowance in an amount at least equal to the amount            

6   of the basic foundation allowance for the immediately preceding             

7   state fiscal year, the district shall receive a foundation                  

8   allowance in an amount equal to the sum of the district's                   

9   foundation allowance for the immediately preceding state fiscal             

10  year plus the dollar amount of the adjustment from the                      

11  immediately preceding state fiscal year to the current state                

12  fiscal year in the basic foundation allowance.  However, for                

13  2002-2003, the foundation allowance for a district under this               

14  subdivision is an amount equal to the sum of the district's                 

15  foundation allowance for the immediately preceding state fiscal             

16  year plus $200.00.                                                          

17      (b) For a district that in the 1994-95 state fiscal year had                

18  a foundation allowance greater than $6,500.00, the district's               

19  foundation allowance is an amount equal to the sum of the                   

20  district's foundation allowance for the immediately preceding               

21  state fiscal year plus the lesser of the increase in the basic              

22  foundation allowance for the current state fiscal year, as                  

23  compared to the immediately preceding state fiscal year, or the             

24  product of the district's foundation allowance for the                      

25  immediately preceding state fiscal year times the percentage                

26  increase in the United States consumer price index in the                   

27  calendar year ending in the immediately preceding fiscal year as            

1   reported by the May revenue estimating conference conducted under           

2   section 367b of the management and budget act, 1984 PA 431,                 

3   MCL 18.1367b.  For 2002-2003, for a district that in the 1994-95            

4   state fiscal year had a foundation allowance greater than                   

5   $6,500.00, the district's foundation allowance is an amount equal           

6   to the sum of the district's foundation allowance for the                   

7   immediately preceding state fiscal year plus the lesser of                  

8   $200.00 or the product of the district's foundation allowance for           

9   the immediately preceding state fiscal year times the percentage            

10  increase in the United States consumer price index in the                   

11  calendar year ending in the immediately preceding fiscal year as            

12  reported by the May revenue estimating conference conducted under           

13  section 367b of the management and budget act, 1984 PA 431,                 

14  MCL 18.1367b.                                                               

15      (c) For a district that has a foundation allowance that is                  

16  not a whole dollar amount, the district's foundation allowance              

17  shall be rounded up to the nearest whole dollar.                            

18      (d)  Beginning in 2002-2003, for For a district that                       

19  receives received a payment under former section 22c for                  

20  2001-2002, the district's 2001-2002 foundation allowance shall be           

21  considered to have been an amount equal to the sum of the                   

22  district's actual 2001-2002 foundation allowance as otherwise               

23  calculated under this section plus the per pupil amount of the              

24  district's equity payment for 2001-2002 under former section                

25  22c.                                                                        

26      (4) Except as otherwise provided in this subsection, the                    

27  state portion of a district's foundation allowance is an amount             

1   equal to the district's foundation allowance or $6,500.00,                  

2   whichever is less, minus the difference between the product of              

3   the taxable value per membership pupil of all property in the               

4   district that is not a homestead or qualified agricultural                  

5   property times the lesser of 18 mills or the number of mills of             

6   school operating taxes levied by the district in 1993-94 and the            

7   quotient of the ad valorem property tax revenue of the district             

8   captured under 1975 PA 197, MCL 125.1651 to 125.1681, the tax               

9   increment finance authority act, 1980 PA 450, MCL 125.1801 to               

10  125.1830, the local development financing act, 1986 PA 281,                 

11  MCL 125.2151 to 125.2174, or the brownfield redevelopment                   

12  financing act, 1996 PA 381, MCL 125.2651 to 125.2672, divided by            

13  the district's membership excluding special education pupils.               

14  For a district described in subsection (3)(b), the state portion            

15  of the district's foundation allowance is an amount equal to                

16  $6,962.00 plus the difference between the district's foundation             

17  allowance for the current state fiscal year and the district's              

18  foundation allowance for 1998-99, 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 the brownfield                    

1   redevelopment financing act, 1996 PA 381, MCL 125.2651 to                   

2   125.2672, divided by the district's membership excluding special            

3   education pupils.  For a district that has a millage reduction              

4   required under section 31 of article IX of the state constitution           

5   of 1963, the state portion of the district's foundation allowance           

6   shall be calculated as if that reduction did not occur.  The                

7   $6,500.00 amount prescribed in this subsection shall be adjusted            

8   each year by an amount equal to the dollar amount of the                    

9   difference between the basic foundation allowance for the current           

10  state fiscal year and $5,000.00,  .  However, beginning in                  

11  2002-2003, the $6,500.00 amount prescribed in this subsection               

12  shall be adjusted each year by an amount equal to the dollar                

13  amount of the difference between the basic foundation allowance             

14  for the current state fiscal year and $5,000.00,  minus $200.00.            

15      (5) The allocation calculated under this section for a pupil                

16  shall be based on the foundation allowance of the pupil's                   

17  district of residence.  However, for a pupil enrolled pursuant to           

18  section 105 or 105c in a district other than the pupil's district           

19  of residence, the allocation calculated under this section shall            

20  be based on the lesser of the foundation allowance of the pupil's           

21  district of residence or the foundation allowance of the                    

22  educating district.  For a pupil in membership in a K-5, K-6, or            

23  K-8 district who is enrolled in another district in a grade not             

24  offered by the pupil's district of residence, the allocation                

25  calculated under this section shall be based on the foundation              

26  allowance of the educating district if the educating district's             

27  foundation allowance is greater than the foundation allowance of            

1   the pupil's district of residence.  The calculation under this              

2   subsection shall take into account a district's per pupil                   

3   allocation under section 20j(2).                                            

4       (6) Subject to subsection (7) and section 22b(3) and except                 

5   as otherwise provided in this subsection, for pupils in                     

6   membership, other than special education pupils, in a public                

7   school academy or a university school, the allocation calculated            

8   under this section is an amount per membership pupil other than             

9   special education pupils in the public school academy or                    

10  university school equal to the sum of the local school operating            

11  revenue per membership pupil other than special education pupils            

12  for the district in which the public school academy or university           

13  school is located and the state portion of that district's                  

14  foundation allowance, or the sum of the basic foundation                    

15  allowance under subsection (1) plus  $500.00 $300.00, whichever            

16  is less.   However, beginning in 2002-2003, this $500.00 amount             

17  shall instead be $300.00.  Notwithstanding section 101(2), for a            

18  public school academy that begins operations in  2001-2002,

19  2002-2003  ,  or 2003-2004, as applicable, after the pupil                  

20  membership count day, the amount per membership pupil calculated            

21  under this subsection shall be adjusted by multiplying that                 

22  amount per membership pupil by the number of hours of pupil                 

23  instruction provided by the public school academy after it begins           

24  operations, as determined by the department, divided by the                 

25  minimum number of hours of pupil instruction required under                 

26  section 101(3).  The result of this calculation shall not exceed            

27  the amount per membership pupil otherwise calculated under this             

1   subsection.                                                                 

2       (7) If more than 25% of the pupils residing within a district               

3   are in membership in 1 or more public school academies located in           

4   the district, then the amount per membership pupil calculated               

5   under this section for a public school academy located in the               

6   district shall be reduced by an amount equal to the difference              

7   between the product of the taxable value per membership pupil of            

8   all property in the district that is not a homestead or qualified           

9   agricultural property times the lesser of 18 mills or the number            

10  of mills of school operating taxes levied by the district in                

11  1993-94 and the quotient of the ad valorem property tax revenue             

12  of the district captured under 1975 PA 197, MCL 125.1651 to                 

13  125.1681, the tax increment finance authority act, 1980 PA 450,             

14  MCL 125.1801 to 125.1830, the local development financing act,              

15  1986 PA 281, MCL 125.2151 to 125.2174, or the brownfield                    

16  redevelopment financing act, 1996 PA 381, MCL 125.2651 to                   

17  125.2672, divided by the district's membership excluding special            

18  education pupils, in the school fiscal year ending in the current           

19  state fiscal year, calculated as if the resident pupils in                  

20  membership in 1 or more public school academies located in the              

21  district were in membership in the district.  In order to receive           

22  state school aid under this act, a district described in this               

23  subsection shall pay to the authorizing body that is the fiscal             

24  agent for a public school academy located in the district for               

25  forwarding to the public school academy an amount equal to that             

26  local school operating revenue per membership pupil for each                

27  resident pupil in membership other than special education pupils            

1   in the public school academy, as determined by the department.              

2       (8) If a district does not receive an amount calculated under               

3   subsection (9); if the number of mills the district may levy on a           

4   homestead and qualified agricultural property under                         

5   section 1211(1) of the revised school code, MCL 380.1211, is 0.5            

6   mills or less; and if the district elects not to levy those                 

7   mills, the district instead shall receive a separate supplemental           

8   amount calculated under this subsection in an amount equal to the           

9   amount the district would have received had it levied those                 

10  mills, as determined by the department of treasury.  A district             

11  shall not receive a separate supplemental amount calculated under           

12  this subsection for a fiscal year unless in the calendar year               

13  ending in the fiscal year the district levies 18 mills or the               

14  number of mills of school operating taxes levied by the district            

15  in 1993, whichever is less, on property that is not a homestead             

16  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                   

23  qualified agricultural property as provided in section 1211(1) of           

24  the revised school code, MCL 380.1211, and not to levy school               

25  operating taxes on all property as provided in section 1211(2) of           

26  the revised school code, MCL 380.1211, there is calculated under            

27  this subsection for 1994-95 and each succeeding fiscal year a               

1   separate supplemental amount 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                   

7   authorized for the district under section 1211(2) of the revised            

8   school code, MCL 380.1211, as determined by the department of               

9   treasury.  If in the calendar year ending in the fiscal year a              

10  district does not levy 18 mills or the number of mills of school            

11  operating taxes levied by the district in 1993, whichever is                

12  less, on property that is not a homestead or qualified                      

13  agricultural property, the amount calculated under this                     

14  subsection will be reduced by the same percentage as the millage            

15  actually levied compares to the 18 mills or the number of mills             

16  levied in 1993, whichever is less.                                          

17      (10) For a district that is formed or reconfigured after                    

18  June 1, 2002 by consolidation of 2 or more districts or by                  

19  annexation, the resulting district's foundation allowance under             

20  this section beginning after the effective date of the                      

21  consolidation or annexation shall be the lesser of an amount                

22  equal to the sum of the highest foundation allowance, as                    

23  calculated under this section, among the original or affected               

24  districts plus $50.00 or an amount equal to $6,500.00 adjusted by           

25  the dollar amount of the difference between the basic foundation            

26  allowance under this section for the current state fiscal year              

27  and $5,000.00,  .  However, beginning in 2002-2003, the $6,500.00           

1   amount prescribed in this subsection shall be adjusted each year            

2   by an amount equal to the dollar amount of the difference between           

3   the basic foundation allowance for the current state fiscal year            

4   and $5,000.00,  minus $200.00.                                              

5       (11) Each fraction used in making calculations under this                   

6   section shall be rounded to the fourth decimal place and the                

7   dollar amount of an increase in the basic foundation allowance              

8   shall be rounded to the nearest whole dollar.                               

9       (12) State payments related to payment of the foundation                    

10  allowance for a special education pupil are not calculated under            

11  this section but are instead calculated under section 51a.                  

12      (13) To assist the legislature in determining the basic                     

13  foundation allowance for the subsequent state fiscal year, each             

14  revenue estimating conference conducted under section 367b of the           

15  management and budget act, 1984 PA 431, MCL 18.1367b, shall                 

16  calculate a pupil membership factor, a revenue adjustment factor,           

17  and an index as follows:                                                    

18      (a) The pupil membership factor shall be computed by dividing               

19  the estimated membership in the school year ending in the current           

20  state fiscal year, excluding intermediate district membership, by           

21  the estimated membership for the school year ending in the                  

22  subsequent state fiscal year, excluding intermediate district               

23  membership.  If a consensus membership factor is not determined             

24  at the revenue estimating conference, the principals of the                 

25  revenue estimating conference shall report their estimates to the           

26  house and senate subcommittees responsible for school aid                   

27  appropriations not later than 7 days after the conclusion of the            

1   revenue conference.                                                         

2       (b) The revenue adjustment factor shall be computed by                      

3   dividing the sum of the estimated total state school aid fund               

4   revenue for the subsequent state fiscal year plus the estimated             

5   total state school aid fund revenue for the current state fiscal            

6   year, adjusted for any change in the rate or base of a tax the              

7   proceeds of which are deposited in that fund and excluding money            

8   transferred into that fund from the countercyclical budget and              

9   economic stabilization fund under section 353e of the management            

10  and budget act, 1984 PA 431, MCL 18.1353e, by the sum of the                

11  estimated total school aid fund revenue for the current state               

12  fiscal year plus the estimated total state school aid fund                  

13  revenue for the immediately preceding state fiscal year, adjusted           

14  for any change in the rate or base of a tax the proceeds of which           

15  are deposited in that fund.  If a consensus revenue factor is not           

16  determined at the revenue estimating conference, the principals             

17  of the revenue estimating conference shall report their estimates           

18  to the house and senate subcommittees responsible for school aid            

19  appropriations not later than 7 days after the conclusion of the            

20  revenue conference.                                                         

21      (c) The index shall be calculated by multiplying the pupil                  

22  membership factor by the revenue adjustment factor.  If a                   

23  consensus index is not determined at the revenue estimating                 

24  conference, the principals of the revenue estimating conference             

25  shall report their estimates to the house and senate                        

26  subcommittees responsible for school aid appropriations not later           

27  than 7 days after the conclusion of the revenue conference.                 

1       (14) If the principals at the revenue estimating conference                 

2   reach a consensus on the index described in subsection (13)(c),             

3   the basic foundation allowance for the subsequent state fiscal              

4   year shall be at least the amount of that consensus index                   

5   multiplied by the basic foundation allowance specified in                   

6   subsection (1).                                                             

7       (15) If at the January revenue estimating conference it is                  

8   estimated that pupil membership, excluding intermediate district            

9   membership, for the subsequent state fiscal year will be greater            

10  than 101% of the pupil membership, excluding intermediate                   

11  district membership, for the current state fiscal year, then it             

12  is the intent of the legislature that the executive budget                  

13  proposal for the school aid budget for the subsequent state                 

14  fiscal year include a general fund/general purpose allocation               

15  sufficient to support the membership in excess of 101% of the               

16  current year pupil membership.                                              

17      (16) 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, that had fewer than 7 pupils in membership in the           

20  1993-94 state fiscal year, that has at least 1 child educated in            

21  the district in the current state fiscal year, and that levies              

22  the number of mills of school operating taxes authorized for the            

23  district under section 1211 of the revised school code,                     

24  MCL 380.1211, a minimum amount of combined state and local                  

25  revenue shall be calculated for the district as provided under              

26  this subsection.  The minimum amount of combined state and local            

27  revenue for 1999-2000 shall be $67,000.00 plus the district's               

1   additional expenses to educate pupils in grades 9 to 12 educated            

2   in other districts as determined and allowed by the department.             

3   The minimum amount of combined state and local revenue under this           

4   subsection, before adding the additional expenses, shall increase           

5   each fiscal year by the same percentage increase as the                     

6   percentage increase in the basic foundation allowance from the              

7   immediately preceding fiscal year to the current fiscal year.               

8   The state portion of the minimum amount of combined state and               

9   local revenue under this subsection shall be calculated by                  

10  subtracting from the minimum amount of combined state and local             

11  revenue under this subsection the sum of the district's local               

12  school operating revenue and an amount equal to the product of              

13  the sum of the state portion of the district's foundation                   

14  allowance plus the amount calculated under section 20j times the            

15  district's membership.  As used in this subsection, "additional             

16  expenses" means the district's expenses for tuition or fees, not            

17  to exceed $6,500.00 as adjusted each year by an amount equal to             

18  the dollar amount of the difference between the basic foundation            

19  allowance for the current state fiscal year and $5,000.00, minus            

20  $500.00, plus a room and board stipend not to exceed $10.00 per             

21  school day for each pupil in grades 9 to 12 educated in another             

22  district, as approved by the department.   However, beginning in            

23  2002-2003, the $6,500.00 amount prescribed in this subsection               

24  shall be adjusted each year by an amount equal to the dollar                

25  amount of the difference between the basic foundation allowance             

26  for the current state fiscal year and $5,000.00, minus $200.00.

27      (17) For a district in which 7.75 mills levied in 1992 for                  

1   school operating purposes in the 1992-93 school year were not               

2   renewed in 1993 for school operating purposes in the 1993-94                

3   school year, the district's combined state and local revenue per            

4   membership pupil shall be recalculated as if that millage                   

5   reduction did not occur and the district's foundation allowance             

6   shall be calculated as if its 1994-95 foundation allowance had              

7   been calculated using that recalculated 1993-94 combined state              

8   and local revenue per membership pupil as a base.  A district is            

9   not entitled to any retroactive payments for fiscal years before            

10  2000-2001 due to this subsection.                                           

11      (18) For a district in which an industrial facilities                       

12  exemption certificate that abated taxes on property with a state            

13  equalized valuation greater than the total state equalized                  

14  valuation of the district at the time the certificate was issued            

15  or $700,000,000.00, whichever is greater, was issued under 1974             

16  PA 198, MCL 207.551 to 207.572, before the calculation of the               

17  district's 1994-95 foundation allowance, the district's                     

18  foundation allowance for 2002-2003 is an amount equal to the sum            

19  of the district's foundation allowance for 2002-2003, as                    

20  otherwise calculated under this section, plus $250.00.                      

21      (19) For a district that received a grant under former                      

22  section 32e for 2001-2002, the district's foundation allowance              

23  for 2002-2003 shall be adjusted to be an amount equal to the sum            

24  of the district's foundation allowance, as otherwise calculated             

25  under this section, plus the quotient of the amount of the grant            

26  award to the district for 2001-2002 under former section 32e                

27  divided by the district's membership for 2001-2002.   A Except             

Senate Bill No. 367 as amended May 13, 2003                                 

1   as otherwise provided in this subsection, a district qualifying             

2   for a foundation allowance adjustment under this  section

3   subsection shall use the funds resulting from this adjustment for           

4   purposes allowable under former section 32e as in effect for                

5   2001-2002.  For an individual school or schools operated by a               

6   district qualifying for a foundation allowance under this                   

7   subsection that have been determined by the department to meet              

8   the adequate yearly progress standards of the federal no child              

9   left behind act of 2001, Public Law 107-110, 115 Stat. 1425, in             

10  both mathematics and English language arts at all applicable                

11  grade levels for all applicable subgroups, the district may                 

12  submit to the department an application for flexibility in using            

13  the funds resulting from this adjustment that are attributable to           

14  the pupils in the school or schools.  The application shall                 

15  identify the affected school or schools and the affected funds              

16  and shall contain a plan for using the funds for specific                   

17  purposes identified by the district that are designed to <<reduce

18  class size            >>, but that may be different from the                

19  purposes otherwise allowable under this subsection.  The                    

20  department shall approve the application if the department                  

21  determines that the purposes identified in the plan are                     

22  reasonably designed to <<reduce class size          >>.  If the             

23  department does not act to approve or disapprove an application             

24  within 30 days after it is submitted to the department, the                 

25  application is considered to be approved.  If an application for            

26  flexibility in using the funds is approved, the district may use            

27  the funds identified in the application for any purpose                     

1   identified in the plan.

2       (20) For a district that is a qualifying school district with               

3   a school reform board in place under part 5a of the revised                 

4   school code, MCL 380.371 to 380.376, the district's foundation              

5   allowance for 2002-2003 shall be adjusted to be an amount equal             

6   to the sum of the district's foundation allowance, as otherwise             

7   calculated under this section, plus the quotient of                         

8   $15,000,000.00 divided by the district's membership for                     

9   2002-2003.  If a district ceases to meet the requirements of this           

10  subsection, the department shall adjust the district's foundation           

11  allowance in effect at that time based on a 2002-2003 foundation            

12  allowance for the district that does not include the 2002-2003              

13  adjustment under this subsection.                                           

14      (21) Payments to districts, university schools, or public                   

15  school academies shall not be made under this section.  Rather,             

16  the calculations under this section shall be used to determine              

17  the amount of state payments under section 22b.                             

18      (22) If an amendment to section 2 of article VIII of the                    

19  state constitution of 1963 allowing state aid to some or all                

20  nonpublic schools is approved by the voters of this state, each             

21  foundation allowance or per pupil payment calculation under this            

22  section may be reduced.                                                     

23      (23) As used in this section:                                               

24      (a) "Combined state and local revenue" means the aggregate of               

25  the district's state school aid received by or paid on behalf of            

26  the district under this section and the district's local school             

27  operating revenue.                                                          

1       (b) "Combined state and local revenue per membership pupil"                 

2   means the district's combined state and local revenue divided by            

3   the district's membership excluding special education pupils.               

4       (c) "Current state fiscal year" means the state fiscal year                 

5   for which a particular calculation is made.                                 

6       (d) "Homestead" means that term as defined in section 1211 of               

7   the revised school code, MCL 380.1211.                                      

8       (e) "Immediately preceding state fiscal year" means the state               

9   fiscal year immediately preceding the current state fiscal year.            

10      (f) "Local school operating revenue" means school operating                 

11  taxes levied under section 1211 of the revised school code,                 

12  MCL 380.1211.                                                               

13      (g) "Local school operating revenue per membership pupil"                   

14  means a district's local school operating revenue divided by the            

15  district's membership excluding special education pupils.                   

16      (h) "Membership" means the definition of that term under                    

17  section 6 as in effect for the particular fiscal year for which a           

18  particular calculation is made.                                             

19      (i) "Qualified agricultural property" means that term as                    

20  defined in section 1211 of the revised school code,                         

21  MCL 380.1211.                                                               

22      (j) "School operating purposes" means the purposes included                 

23  in the operation costs of the district as prescribed in                     

24  sections 7 and 18.                                                          

25      (k) "School operating taxes" means local ad valorem property                

26  taxes levied under section 1211 of the revised school code,                 

27  MCL 380.1211, and retained for school operating purposes.                   

1                                                                                (l) "Taxable value per membership pupil" means taxable value,                       

2   as certified by the department of treasury, for the calendar year           

3   ending in the current state fiscal year divided by the district's           

4   membership excluding special education pupils for the school year           

5   ending in the current state fiscal year.                                    

6       Sec. 31a.  (1) From the state school aid fund money                         

7   appropriated in section 11,  there is allocated for 2001-2002 an            

8   amount not to exceed $314,200,000.00 and  there is allocated each           

9   fiscal year for 2002-2003 and for 2003-2004 an amount not to                

10  exceed $314,200,000.00 for payments to eligible districts and               

11  eligible public school academies under this section.  Subject to            

12  subsection  (11) (12), the amount of the additional allowance              

13  under this section shall be based on the number of actual pupils            

14  in membership in the district or public school academy who met              

15  the income eligibility criteria for free breakfast, lunch, or               

16  milk in the immediately preceding state fiscal year, as                     

17  determined under the Richard B. Russell national school lunch               

18  act, chapter 281, 60 Stat. 230, 42 U.S.C. 1751 to 1753, 1755 to             

19  1761, 1762a, 1765 to 1766a, 1769, 1769b to 1769c, and 1769f to              

20  1769h, and reported to the department by October 31 of the                  

21  immediately preceding fiscal year and adjusted not later than               

22  December 31 of the immediately preceding fiscal year.  However,             

23  for a public school academy that began operations as a public               

24  school academy after the pupil membership count day of the                  

25  immediately preceding school year, the basis for the additional             

26  allowance under this section shall be the number of actual pupils           

27  in membership in the public school academy who met the income               

1   eligibility criteria for free breakfast, lunch, or milk in the              

2   current state fiscal year, as determined under the Richard                  

3   B. Russell national school lunch act.                                       

4       (2) To be eligible to receive funding under this section,                   

5   other than funding under subsection (6), a district or public               

6   school academy that has not been previously determined to be                

7   eligible shall apply to the department, in a form and manner                

8   prescribed by the department, and a district or public school               

9   academy must meet all of the following:                                     

10      (a) The sum of the district's or public school academy's                    

11  combined state and local revenue per membership pupil in the                

12  current state fiscal year, as calculated under section 20, plus             

13  the amount of the district's per pupil allocation under section             

14  20j(2), is less than or equal to $6,500.00 adjusted by the dollar           

15  amount of the difference between the basic foundation allowance             

16  under section 20 for the current state fiscal year and $5,000.00,

17  .  However, beginning in 2002-2003, the $6,500.00 amount                   

18  prescribed in this subdivision shall be adjusted each year by an            

19  amount equal to the dollar amount of the difference between the             

20  basic foundation allowance for the current state fiscal year and            

21  $5,000.00,  minus $200.00.                                                  

22      (b) The district or public school academy agrees to use the                 

23  funding only for purposes allowed under this section and to                 

24  comply with the program and accountability requirements under               

25  this section.                                                               

26      (3) Except as otherwise provided in this subsection, an                     

27  eligible district or eligible public school academy shall receive           

1   under this section for each membership pupil in the district or             

2   public school academy who met the income eligibility criteria for           

3   free breakfast, lunch, or milk, as determined under the Richard             

4   B. Russell national school lunch act and as reported to the                 

5   department by October 31 of the immediately preceding fiscal year           

6   and adjusted not later than December 31 of the immediately                  

7   preceding fiscal year, an amount per pupil equal to 11.5% of the            

8   sum of the district's foundation allowance or public school                 

9   academy's per pupil amount calculated under section 20, plus the            

10  amount of the district's per pupil allocation under section                 

11  20j(2), not to exceed $6,500.00 adjusted by the dollar amount of            

12  the difference between the basic foundation allowance under                 

13  section 20 for the current state fiscal year and $5,000.00, minus           

14  $200.00, or of the public school academy's per membership pupil             

15  amount calculated under section 20 for the current state fiscal             

16  year.   However, beginning in 2002-2003, the $6,500.00 amount               

17  prescribed in this subsection shall be adjusted each year by an             

18  amount equal to the dollar amount of the difference between the             

19  basic foundation allowance for the current state fiscal year and            

20  $5,000.00, minus $200.00.  A public school academy that began               

21  operations as a public school academy after the pupil membership            

22  count day of the immediately preceding school year shall receive            

23  under this section for each membership pupil in the public school           

24  academy who met the income eligibility criteria for free                    

25  breakfast, lunch, or milk, as determined under the Richard                  

26  B. Russell national school lunch act and as reported to the                 

27  department by October 31 of the current fiscal year and adjusted            

1   not later than December 31 of the current fiscal year, an amount            

2   per pupil equal to 11.5% of the public school academy's per                 

3   membership pupil amount calculated under section 20 for the                 

4   current state fiscal year.                                                  

5       (4) Except as otherwise provided in this section, a district                

6   or public school academy receiving funding under this section               

7   shall use that money only to provide instructional programs and             

8   direct noninstructional services, including, but not limited to,            

9   medical or counseling services, for at-risk pupils; for school              

10  health clinics; and for the purposes of subsection (5) or (6).  ,           

11  and A district or public school academy shall not use any of               

12  that money for administrative costs or to supplant another                  

13  program or other funds, except for funds allocated to the                   

14  district or public school academy under this section in the                 

15  immediately preceding year and already being used by the district           

16  or public school academy for at-risk pupils.  The instruction or            

17  direct noninstructional services provided under this section may            

18  be conducted before or after regular school hours or by adding              

19  extra school days to the school year and may be conducted using a           

20  tutorial method, with paraprofessionals working under the                   

21  supervision of a certificated teacher.  The ratio of pupils to              

22  paraprofessionals shall be between 10:1 and 15:1.  Only 1                   

23  certificated teacher is required to supervise instruction using a           

24  tutorial method.  As used in this subsection, "to supplant                  

25  another program" means to take the place of a previously existing           

26  instructional program or direct noninstructional services funded            

27  from a funding source other than funding under this section.                

1       (5)  A Except as otherwise provided in subsection (11), a

2   district or public school academy that receives funds under this            

3   section and that operates a school breakfast program under                  

4   section 1272a of the revised school code, MCL 380.1272a, shall              

5   use from the funds received under this section an amount, not to            

6   exceed $10.00 per pupil for whom the district or public school              

7   academy receives funds under this section, necessary to operate             

8   the school breakfast program.                                               

9       (6)  From the funds allocated under subsection (1), there is                

10  allocated for 2001-2002 an amount not to exceed $2,400,000.00 to            

11  support teen health centers.  These 2001-2002 funds shall be                

12  distributed to existing teen health centers in a manner                     

13  determined by the department in collaboration with the department           

14  of community health.  From the funds allocated under                        

15  subsection (1), there is allocated each fiscal year for 2002-2003           

16  and for 2003-2004 an amount not to exceed $3,743,000.00 for                 

17  competitive grants to support teen health centers.  These grants            

18  for 2002-2003 and 2003-2004 shall be awarded in a form and manner           

19  approved jointly by the department and the department of                    

20  community health.  If any funds allocated under this subsection             

21  are not used for the purposes of this subsection for the fiscal             

22  year in which they are allocated, those unused funds shall be               

23  used that fiscal year to avoid or minimize any proration that               

24  would otherwise be required under subsection  (11) (12) for that           

25  fiscal year.                                                                

26      (7) Each district or public school academy receiving funds                  

27  under this section shall submit to the department by July 15 of             

1   each fiscal year a report, not to exceed 10 pages, on the usage             

2   by the district or public school academy of funds under this                

3   section, which report shall include at least a brief description            

4   of each program conducted by the district or public school                  

5   academy using funds under this section, the amount of funds under           

6   this section allocated to each of those programs, the number of             

7   at-risk pupils eligible for free or reduced price school lunch              

8   who were served by each of those programs, and the total number             

9   of at-risk pupils served by each of those programs.  If a                   

10  district or public school academy does not comply with this                 

11  subsection, the department shall withhold an amount equal to the            

12  August payment due under this section until the district or                 

13  public school academy complies with this subsection.  If the                

14  district or public school academy does not comply with this                 

15  subsection by the end of the state fiscal year, the withheld                

16  funds shall be forfeited to the school aid fund.                            

17      (8) In order to receive funds under this section, a district                

18  or public school academy shall allow access for the department or           

19  the department's designee to audit all records related to the               

20  program for which it receives those funds.  The district or                 

21  public school academy shall reimburse the state for all                     

22  disallowances found in the audit.                                           

23      (9) Subject to subsections (5),  and  (6), and (11), any                    

24  district may use up to 100% of the funds it receives under this             

25  section to reduce the ratio of pupils to teachers in grades K-6,            

26  or any combination of those grades, in school buildings in which            

27  the percentage of pupils described in subsection (1) exceeds the            

1   district's aggregate percentage of those pupils.  Subject to                

2   subsections (5),  and  (6), and (11), if a district obtains a               

3   waiver from the department, the district may use up to 100% of              

4   the funds it receives under this section to reduce the ratio of             

5   pupils to teachers in grades K-6, or any combination of those               

6   grades, in school buildings in which the percentage of pupils               

7   described in subsection (1) is at least 60% of the district's               

8   aggregate percentage of those pupils and at least 30% of the                

9   total number of pupils enrolled in the school building.  To                 

10  obtain a waiver, a district must apply to the department and                

11  demonstrate to the satisfaction of the department that the class            

12  size reductions would be in the best interests of the district's            

13  at-risk pupils.                                                             

14      (10) A district or public school academy may use funds                      

15  received under this section for adult high school completion,               

16  general education development (G.E.D.)  test preparation, or                

17  adult basic education programs described in section 107.                    

18  (11) For an individual school or schools operated by a                      

19  district or public school academy receiving funds under this                

20  section that have been determined by the department to meet the             

21  adequate yearly progress standards of the federal no child left             

22  behind act of 2001, Public Law 107-110, 115 Stat. 1425, in both             

23  mathematics and English language arts at all applicable grade               

24  levels for all applicable subgroups, the district or public                 

25  school academy may submit to the department an application for              

26  flexibility in using the funds received under this section that             

27  are attributable to the pupils in the school or schools.  The               

1   application shall identify the affected school or schools and the           

2   affected funds and shall contain a plan for using the funds for             

3   specific purposes identified by the district that are designed to           

4   benefit at-risk pupils in the school, but that may be different             

5   from the purposes otherwise allowable under this section.  The              

6   department shall approve the application if the department                  

7   determines that the purposes identified in the plan are                     

8   reasonably designed to benefit at-risk pupils in the school.  If            

9   the department does not act to approve or disapprove an                     

10  application within 30 days after it is submitted to the                     

11  department, the application is considered to be approved.  If an            

12  application for flexibility in using the funds is approved, the             

13  district may use the funds identified in the application for any            

14  purpose identified in the plan.

15  (12)  (11)  If necessary, and before any proration required                 

16  under section 11, the department shall prorate payments under               

17  this section by reducing the amount of the per pupil payment                

18  under this section by a dollar amount calculated by determining             

19  the amount by which the amount necessary to fully fund the                  

20  requirements of this section exceeds the maximum amount allocated           

21  under this section and then dividing that amount by the total               

22  statewide number of pupils who met the income eligibility                   

23  criteria for free breakfast, lunch, or milk in the immediately              

24  preceding fiscal year, as described in subsection (1).                      

25  (13)  (12)  Funds allocated under this section that are                     

26  unexpended and unencumbered at the end of the fiscal year for               

27  which they were allocated shall be carried forward and used in              

1   subsequent fiscal years to avoid or minimize any proration that             

2   would otherwise be required under subsection  (11) (12).                   

3   (14)  (13)  If a district is formed by consolidation after                  

4   June 1, 1995, and if 1 or more of the original districts was not            

5   eligible before the consolidation for an additional allowance               

6   under this section, the amount of the additional allowance under            

7   this section for the consolidated district shall be based on the            

8   number of pupils described in subsection (1) enrolled in the                

9   consolidated district who reside in the territory of an original            

10  district that was eligible before the consolidation for an                  

11  additional allowance under this section.                                    

12  (15)  (14)  A district or public school academy that does not               

13  meet the eligibility requirement under subsection (2)(a) is                 

14  eligible for funding under this section if at least 1/4 of the              

15  pupils in membership in the district or public school academy met           

16  the income eligibility criteria for free breakfast, lunch, or               

17  milk in the immediately preceding state fiscal year, as                     

18  determined and reported as described in subsection (1), and at              

19  least 4,500 of the pupils in membership in the district or public           

20  school academy met the income eligibility criteria for free                 

21  breakfast, lunch, or milk in the immediately preceding state                

22  fiscal year, as determined and reported as described in                     

23  subsection (1).  A district or public school academy that is                

24  eligible for funding under this section because the district                

25  meets the requirements of this subsection shall receive under               

26  this section for each membership pupil in the district or public            

27  school academy who met the income eligibility criteria for free             

1   breakfast, lunch, or milk in the immediately preceding fiscal               

2   year, as determined and reported as described in subsection (1),            

3   an amount per pupil equal to 5.75% for 2001-2002 and 11.5% for              

4   2002-2003 and subsequent fiscal years of the sum of the                     

5   district's foundation allowance or public school academy's per              

6   pupil allocation under section 20, plus the amount of the                   

7   district's per pupil allocation under section 20j(2), not to                

8   exceed $6,500.00 adjusted by the dollar amount of the difference            

9   between the basic foundation allowance under section 20 for the             

10  current state fiscal year and $5,000.00,  .  However, beginning             

11  in 2002-2003, the $6,500.00 amount prescribed in this subsection            

12  shall be adjusted each year by an amount equal to the dollar                

13  amount of the difference between the basic foundation allowance             

14  for the current state fiscal year and $5,000.00,  minus $200.00.            

15  (16)  (15)  As used in this section, "at-risk pupil" means a                

16  pupil for whom the district has documentation that the pupil                

17  meets at least 2 of the following criteria:  is a victim of child           

18  abuse or neglect; is below grade level in English language and              

19  communication skills or mathematics; is a pregnant teenager or              

20  teenage parent; is eligible for a federal free or reduced-price             

21  lunch subsidy; has atypical behavior or attendance patterns; or             

22  has a family history of school failure, incarceration, or                   

23  substance abuse.  For pupils for whom the results of at least the           

24  applicable Michigan education assessment program (MEAP) test have           

25  been received, at-risk pupil also includes a pupil who does not             

26  meet the other criteria under this subsection but who did not               

27  achieve at least a score of moderate on the most recent MEAP                

1   reading test for which results for the pupil have been received,            

2   did not achieve at least a score of moderate on the most recent             

3   MEAP mathematics test for which results for the pupil have been             

4   received, or did not achieve at least a score of novice on the              

5   most recent MEAP science test for which results for the pupil               

6   have been received.  For pupils in grades K-3, at-risk pupil also           

7   includes a pupil who is at risk of not meeting the district's               

8   core academic curricular objectives in English language,                    

9   communication skills, or mathematics.                                       

10      Enacting section 1.  This amendatory act takes effect                       

11  October 1, 2003.