SB-1193, As Passed Senate, December 1, 2004                                 

SUBSTITUTE FOR

SENATE BILL NO. 1193

                                                                             A bill to amend 1979 PA 94, entitled                                              

"The state school aid act of 1979,"                                         

by amending sections 11 and 17b (MCL 388.1611 and 388.1617b),               

section 11 as amended by 2004 PA 351 and section 17b as amended             

by 2000 PA 297.                                                             

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 11.  (1) For the fiscal year ending September 30, 2005,                

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

3   certain other state purposes relating to education the sum of               

4   $11,008,700,000.00 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 $165,200,000.00 from the general fund.  In addition,             

7   available federal funds are appropriated for each of those fiscal           

8   years.                                                                      

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

1   as  provided specified in this act.  Money appropriated under              

2   this section from the general fund shall be expended to fund the            

3   purposes of this act before the expenditure of money appropriated           

4   under this section from the state school aid fund.  If the                  

5   maximum amount appropriated under this section from the state               

6   school aid fund for a fiscal year exceeds the amount necessary to           

7   fully fund allocations under this act from the state school aid             

8   fund, that excess amount shall not be expended in that state                

9   fiscal year and shall not lapse to the general fund, but instead            

10  shall be deposited into the school aid stabilization fund created           

11  in section 11a.                                                             

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

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

14  fund for a fiscal year exceeds the amount available for                     

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

16  payments under sections 11f, 11g, 11j, 22a, 26a, 31d, 51a(2),               

17  51a(12), 51c, 53a, and 56 shall be made in full.  In addition,              

18  for districts beginning operations after 1994-95 that qualify for           

19  payments under section 22b, payments under section 22b shall be             

20  made so that the qualifying districts receive the lesser of an              

21  amount equal to the 1994-95 foundation allowance of the district            

22  in which the district beginning operations after 1994-95 is                 

23  located or $5,500.00.  The amount of the payment to be made under           

24  section 22b for these qualifying districts shall be as calculated           

25  under section 22a, with the balance of the payment under section            

26  22b being subject to the proration otherwise provided under this            

27  subsection and subsection (4).  Subject to subsection (5), if               

1   proration is necessary after 2002-2003, state payments under each           

2   of the other sections of this act from all state funding sources            

3   shall be prorated in the manner prescribed in subsection (4) as             

4   necessary to reflect the amount available for expenditure from              

5   the state school aid fund for the affected fiscal year.  However,           

6   if the department of treasury determines that proration will be             

7   required under this subsection, or if the department of treasury            

8   determines that further proration is required under this                    

9   subsection after an initial proration has already been made for a           

10  fiscal year, the department of treasury shall notify the state              

11  budget director, and the state budget director shall notify the             

12  legislature at least 30 calendar days or 6 legislative session              

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

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

15  calendar day or 6 legislative session day period after that                 

16  notification by the state budget director, the department shall             

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

18  this subsection.  The legislature may prevent proration from                

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

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

21  enacting legislation appropriating additional funds from the                

22  general fund, countercyclical budget and economic stabilization             

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

24  the amount of the projected shortfall.                                      

25      (4) Subject to subsection (5), if proration is necessary, the               

26  department shall calculate the proration in district and                    

27  intermediate district payments that is required under subsection            

1   (3) as follows:                                                             

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

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

4   year for each of the following:                                             

5                                                                                (i) Districts.                                                                      

6       (ii) Intermediate districts.                                                 

7       (iii) Entities other than districts or intermediate                          

8   districts.                                                                  

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

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

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

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

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

14  recover this percentage of the proration amount and reducing each           

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

16  payments under sections 11f, 11g, 11j, 22a, 26a, 31d, 51a(2),               

17  51a(12), 51c, and 53a, by that amount.                                      

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

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

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

21  intermediate districts by reducing payments to intermediate                 

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

23  to each intermediate district, other than payments under sections           

24  11f, 11g, 26a, 51a(2), 51a(12), 53a, and 56, on an equal                    

25  percentage basis.                                                           

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

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

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

2   other than districts and intermediate districts by reducing                 

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

4   reducing the payments to each of these entities, other than                 

5   payments under sections 11j and 26a, on an equal percentage                 

6   basis.                                                                      

7       (5) Beginning in 2004-2005, if a district has an emergency                  

8   financial manager in place under the local government fiscal                

9   responsibility act, 1990 PA 72, MCL 141.1201 to 141.1291,                   

10  payments to that district are not subject to proration under this           

11  section.                                                                    

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

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

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

15  fund.  If it is determined at the May 2005 revenue estimating               

16  conference conducted under section 367b of the management and               

17  budget act, 1984 PA 431, MCL 18.1367b, that there is additional             

18  school aid fund revenue beyond that determined at the May 2004              

19  revenue estimating conference, then it is the intent of the                 

20  legislature to enact legislation to fund, to the extent that                

21  revenues are available, the same programs in the same amount that           

22  were funded under section 81 in 2003 PA 236 and the same pupil              

23  membership formula as in effect under 2003 PA 236.                          

24      Sec. 17b.  (1) Not later than October 20, November 20,                      

25  December 20, January 20, February 20, March 20, April 20, May 20,           

26  June 20, July 20, and August 20, the department shall prepare a             

27  statement of the amount to be distributed under this act in the             

1   installment to the districts and intermediate districts and                 

2   deliver the statement to the state treasurer, and the state                 

3   treasurer shall pay the installments on each of those dates or,             

4   if the date is not a business day, on the immediately preceding             

5   business day before that date.  Except as otherwise provided in             

6   this act, the portion of the district's or intermediate                     

7   district's state fiscal year entitlement to be included in each             

8   installment shall be 1/11.  A district or intermediate district             

9   shall accrue the payments received in July and August to the                

10  school fiscal year ending the immediately preceding June 30.                

11      (2) The state treasurer shall make payment under this section               

12  by drawing a warrant in favor of the treasurer of each district             

13  or intermediate district for the amount payable to the district             

14  or intermediate district according to the statement and                     

15  delivering the warrant to the treasurer of each district or                 

16  intermediate district, or if the state treasurer receives a                 

17  written request by the treasurer of the district or intermediate            

18  district specifying an account, by electronic funds transfer to             

19  that account of the amount payable to the district or                       

20  intermediate district according to the statement.  The department           

21  may make adjustments in payments made under this section through            

22  additional payments when changes in law or errors in computation            

23  cause the regularly scheduled payment to be less than the amount            

24  to which the district or intermediate district is entitled                  

25  pursuant to this act.                                                       

26      (3) Except as otherwise  specified provided in this act,                   

27  grant payments under this act shall be paid according to                    

1   subsection (1).                                                             

2       (4) Upon the written request of a district or intermediate                  

3   district and the submission of proof satisfactory to the                    

4   department of a need of a temporary and nonrecurring nature, the            

5   superintendent, with the written concurrence of the state                   

6   treasurer and the state budget director, may authorize an advance           

7   release of funds due a district or intermediate district under              

8   this act.   Such an An advance authorized under this subsection

9   shall not cause funds to be paid to a district or intermediate              

10  district more than 30 days earlier than the established payment             

11  date for those funds.