SB-1194, As Passed House, June 15, 2004                                     

SUBSTITUTE FOR

SENATE BILL NO. 1194

                                                                             A bill to amend 1979 PA 94, entitled                                              

"The state school aid act of 1979,"                                         

by amending section 11 (MCL 388.1611), as amended by 2003 PA                

236.                                                                        

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 11.  (1) For the fiscal year ending September 30, 2004,                

2   there is appropriated for the public schools of this state and              

3   certain other state purposes relating to education the sum of               

4   $10,962,387,100.00 from the state school aid fund established by            

5   section 11 of article IX of the state constitution of 1963 and              

6   the sum of  $327,700,000.00 $377,800,000.00 from the general               

7   fund.   For the fiscal year ending September 30, 2003, from loan            

8   repayments deposited to the general fund pursuant to section 4 of           

9   1961 PA 112, MCL 388.984, on the settlement date, as determined             

10  under section 9c of 1961 PA 108, MCL 388.959c, there is                     

1   appropriated from the general fund to the state school aid fund             

2   the amount determined by the state treasurer to equal the                   

3   difference between the outstanding amount of general obligation             

4   debt incurred pursuant to 1961 PA 112, MCL 388.981 to 388.985,              

5   and the outstanding amount of loans under 1961 PA 108, MCL                  

6   388.951 to 388.963, as reduced in accordance with section 9c(1)             

7   of 1961 PA 108, MCL 388.959c.  In addition, for the fiscal year             

8   ending September 30, 2003, there is appropriated from the general           

9   fund to the state school aid fund an amount equal to the amount             

10  of all school bond loan fund repayments received by the state               

11  treasurer from June 1, 2003 through December 21, 2003, determined           

12  by the state treasurer not to have been paid from proceeds of               

13  bonds of the school district and representing the difference                

14  between the outstanding amount of general obligation debt                   

15  incurred by this state under 1961 PA 112, MCL 388.981 to 388.985,           

16  and the outstanding amount of loans under 1961 PA 108, MCL                  

17  388.951 to 388.963, at the time of repayment.  Funds appropriated           

18  to the state school aid fund from the general fund from loan                

19  repayments received as described in this subsection shall be                

20  expended within 90 days of deposit within the state school aid              

21  fund.  In addition, available federal funds are appropriated for            

22  each of those fiscal years.                                                 

23      (2) The appropriations under this section shall be allocated                

24  as provided in this act.  Money appropriated under this section             

25  from the general fund shall be expended to fund the purposes of             

26  this act before the expenditure of money appropriated under this            

27  section from the state school aid fund.  If the maximum amount              

1   appropriated under this section from the state school aid fund              

2   for a fiscal year exceeds the amount necessary to fully fund                

3   allocations under this act from the state school aid fund, that             

4   excess amount shall not be expended in that state fiscal year and           

5   shall not lapse to the general fund, but instead shall be                   

6   deposited into the school aid stabilization fund created in                 

7   section 11a.                                                                

8       (3) If the maximum amount appropriated under this section                   

9   from the state school aid fund and the school aid stabilization             

10  fund for a fiscal year exceeds the amount available for                     

11  expenditure from the state school aid fund for that fiscal year,            

12  payments under sections 11f, 11g, 22a, 31d, 51a(2), and 51c shall           

13  be made in full.  In addition, for districts beginning operations           

14  after 1994-95 that qualify for payments under section 22b,                  

15  payments under section 22b shall be made so that the qualifying             

16  districts receive the lesser of an amount equal to the 1994-95              

17  foundation allowance of the district in which the district                  

18  beginning operations after 1994-95 is located or $5,500.00.  The            

19  amount of the payment to be made under section 22b for these                

20  qualifying districts shall be as calculated under section 22a,              

21  with the balance of the payment under section 22b being subject             

22  to the proration otherwise provided under this subsection and               

23  subsection (4).  For any proration necessary after 2002-2003,               

24  state payments under each of the other sections of this act from            

25  all state funding sources shall be prorated in the manner                   

26  prescribed in subsection (4) as necessary to reflect the amount             

27  available for expenditure from the state school aid fund for the            

1   affected fiscal year.  However, if the department of treasury               

2   determines that proration will be required under this subsection,           

3   the department of treasury shall notify the state budget                    

4   director, and the state budget director shall notify the                    

5   legislature at least 30 calendar days or 6 legislative session              

6   days, whichever is more, before the department reduces any                  

7   payments under this act because of the proration.  During the 30            

8   calendar day or 6 legislative session day period after that                 

9   notification by the state budget director, the department shall             

10  not reduce any payments under this act because of proration under           

11  this subsection.  The legislature may prevent proration from                

12  occurring by, within the 30 calendar day or 6 legislative session           

13  day period after that notification by the state budget director,            

14  enacting legislation appropriating additional funds from the                

15  general fund, countercyclical budget and economic stabilization             

16  fund, state school aid fund balance, or another source to fund              

17  the amount of the projected shortfall.                                      

18      (4) For any proration necessary after 2002-2003, the                        

19  department shall calculate the proration in district and                    

20  intermediate district payments that is required under subsection            

21  (3) as follows:                                                             

22      (a) The department shall calculate the percentage of total                  

23  state school aid allocated under this act for the affected fiscal           

24  year for each of the following:                                             

25                                                                               (i) Districts.                                                                      

26      (ii) Intermediate districts.                                                 

27      (iii) Entities other than districts or intermediate                          

1   districts.                                                                  

2       (b) The department shall recover a percentage of the                        

3   proration amount required under subsection (3) that is equal to             

4   the percentage calculated under subdivision (a)(i) for districts            

5   by reducing payments to districts.  This reduction shall be made            

6   by calculating an equal dollar amount per pupil as necessary to             

7   recover this percentage of the proration amount and reducing each           

8   district's total state school aid from state sources, other than            

9   payments under sections 11f, 11g, 22a, 31d, 51a(2), 51a(12), 51c,           

10  53a, and 56, by that amount.                                                

11      (c) The department shall recover a percentage of the                        

12  proration amount required under subsection (3) that is equal to             

13  the percentage calculated under subdivision (a)(ii) for                      

14  intermediate districts by reducing payments to intermediate                 

15  districts.  This reduction shall be made by reducing the payments           

16  to each intermediate district, other than payments under sections           

17  11f, 11g, 22a, 31d, 51a(2), 51a(12), 51c, 53a, and 56, on an                

18  equal percentage basis.                                                     

19      (d) The department shall recover a percentage of the                        

20  proration amount required under subsection (3) that is equal to             

21  the percentage calculated under subdivision (a)(iii) for entities            

22  other than districts and intermediate districts by reducing                 

23  payments to these entities.  This reduction shall be made by                

24  reducing the payments to each of these entities on an equal                 

25  percentage basis.                                                           

26      (5) Except for the allocation under section 26a, any general                

27  fund allocations under this act that are not expended by the end            

1   of the state fiscal year are transferred to the state school aid            

2   fund.