SB-0763, As Passed House, December 7, 2016

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 763

A bill to amend 1979 PA 94, entitled

"The state school aid act of 1979,"

by amending sections 51a and 58 (MCL 388.1651a and 388.1658),

section 51a as amended by 2016 PA 249 and section 58 as amended by

1997 PA 93.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 51a. (1) From the appropriation in section 11, there is

allocated an amount not to exceed $945,246,100.00 for 2015-2016 and

an amount not to exceed $973,046,100.00 for 2016-2017 from state

sources and all available federal funding under sections 611 to 619

of part B of the individuals with disabilities education act, 20

USC 1411 to 1419, estimated at $370,000,000.00 each fiscal year for

2015-2016 and for 2016-2017, plus any carryover federal funds from

previous year appropriations. The allocations under this subsection

are for the purpose of reimbursing districts and intermediate

districts for special education programs, services, and special

education personnel as prescribed in article 3 of the revised

school code, MCL 380.1701 to 380.1766; net tuition payments made by

intermediate districts to the Michigan schools for the deaf and

blind; and special education programs and services for pupils who

are eligible for special education programs and services according

to statute or rule. For meeting the costs of special education

programs and services not reimbursed under this article, a district

or intermediate district may use money in general funds or special

education funds, not otherwise restricted, or contributions from

districts to intermediate districts, tuition payments, gifts and

contributions from individuals or other entities, or federal funds

that may be available for this purpose, as determined by the

intermediate district plan prepared pursuant to article 3 of the

revised school code, MCL 380.1701 to 380.1766. Notwithstanding

section 17b, payments of federal funds to districts, intermediate

districts, and other eligible entities under this section shall be

paid on a schedule determined by the department.

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

allocated the amount necessary, estimated at $263,500,000.00 for

2015-2016 and estimated at $271,600,000.00 for 2016-2017, for

payments toward reimbursing districts and intermediate districts

for 28.6138% of total approved costs of special education,

excluding costs reimbursed under section 53a, and 70.4165% of total

approved costs of special education transportation. Allocations

under this subsection shall be made as follows:

(a) The initial amount allocated to a district under this

subsection toward fulfilling the specified percentages shall be

calculated by multiplying the district's special education pupil

membership, excluding pupils described in subsection (11), times

the foundation allowance under section 20 of the pupil's district

of residence plus the amount of the district's per-pupil allocation

under section 20m, not to exceed the basic foundation allowance

under section 20 for the current fiscal year, or, for a special

education pupil in membership in a district that is a public school

academy, times an amount equal to the amount per membership pupil

calculated under section 20(6) or, for a pupil described in this

subsection who is counted in membership in the education

achievement system, times an amount equal to the amount per

membership pupil under section 20(7). For an intermediate district,

the amount allocated under this subdivision toward fulfilling the

specified percentages shall be an amount per special education

membership pupil, excluding pupils described in subsection (11),

and shall be calculated in the same manner as for a district, using

the foundation allowance under section 20 of the pupil's district

of residence, not to exceed the basic foundation allowance under

section 20 for the current fiscal year, and that district's per-

pupil allocation under section 20m.

(b) After the allocations under subdivision (a), districts and

intermediate districts for which the payments calculated under

subdivision (a) do not fulfill the specified percentages shall be

paid the amount necessary to achieve the specified percentages for

the district or intermediate district.

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

allocated for 2015-2016 an amount not to exceed $1,000,000.00 and

there is allocated for 2016-2017 an amount not to exceed

$1,100,000.00 to make payments to districts and intermediate

districts under this subsection. If the amount allocated to a

district or intermediate district for a fiscal year under

subsection (2)(b) is less than the sum of the amounts allocated to

the district or intermediate district for 1996-97 under sections 52

and 58, there is allocated to the district or intermediate district

for the fiscal year an amount equal to that difference, adjusted by

applying the same proration factor that was used in the

distribution of funds under section 52 in 1996-97 as adjusted to

the district's or intermediate district's necessary costs of

special education used in calculations for the fiscal year. This

adjustment is to reflect reductions in special education program

operations or services between 1996-97 and subsequent fiscal years.

Adjustments for reductions in special education program operations

or services shall be made in a manner determined by the department

and shall include adjustments for program or service shifts.

(4) If the department determines that the sum of the amounts

allocated for a fiscal year to a district or intermediate district

under subsection (2)(a) and (b) is not sufficient to fulfill the

specified percentages in subsection (2), then the shortfall shall

be paid to the district or intermediate district during the fiscal

year beginning on the October 1 following the determination and

payments under subsection (3) shall be adjusted as necessary. If

the department determines that the sum of the amounts allocated for

a fiscal year to a district or intermediate district under

subsection (2)(a) and (b) exceeds the sum of the amount necessary

to fulfill the specified percentages in subsection (2), then the

department shall deduct the amount of the excess from the

district's or intermediate district's payments under this article

for the fiscal year beginning on the October 1 following the

determination and payments under subsection (3) shall be adjusted

as necessary. However, if the amount allocated under subsection

(2)(a) in itself exceeds the amount necessary to fulfill the

specified percentages in subsection (2), there shall be no

deduction under this subsection.

(5) State funds shall be allocated on a total approved cost

basis. Federal funds shall be allocated under applicable federal

requirements, except that an amount not to exceed $3,500,000.00 may

be allocated by the department each fiscal year for 2015-2016 and

for 2016-2017 to districts, intermediate districts, or other

eligible entities on a competitive grant basis for programs,

equipment, and services that the department determines to be

designed to benefit or improve special education on a statewide

scale.

(6) From the amount allocated in subsection (1), there is

allocated an amount not to exceed $2,200,000.00 each fiscal year

for 2015-2016 and for 2016-2017 to reimburse 100% of the net

increase in necessary costs incurred by a district or intermediate

district in implementing the revisions in the administrative rules

for special education that became effective on July 1, 1987. As

used in this subsection, "net increase in necessary costs" means

the necessary additional costs incurred solely because of new or

revised requirements in the administrative rules minus cost savings

permitted in implementing the revised rules. Net increase in

necessary costs shall be determined in a manner specified by the

department.

(7) For purposes of sections 51a to 58, all of the following

apply:

(a) "Total approved costs of special education" shall be

determined in a manner specified by the department and may include

indirect costs, but shall not exceed 115% of approved direct costs

for section 52 and section 53a programs. The total approved costs

include salary and other compensation for all approved special

education personnel for the program, including payments for social

security and Medicare and public school employee retirement system

contributions. The total approved costs do not include salaries or

other compensation paid to administrative personnel who are not

special education personnel as defined in section 6 of the revised

school code, MCL 380.6. Costs reimbursed by federal funds, other

than those federal funds included in the allocation made under this

article, are not included. Special education approved personnel not

utilized full time in the evaluation of students or in the delivery

of special education programs, ancillary, and other related

services shall be reimbursed under this section only for that

portion of time actually spent providing these programs and

services, with the exception of special education programs and

services provided to youth placed in child caring institutions or

juvenile detention programs approved by the department to provide

an on-grounds education program.

(b) Beginning with the 2004-2005 fiscal year, a district or

intermediate district that employed special education support

services staff to provide special education support services in

2003-2004 or in a subsequent fiscal year and that in a fiscal year

after 2003-2004 receives the same type of support services from

another district or intermediate district shall report the cost of

those support services for special education reimbursement purposes

under this article. This subdivision does not prohibit the transfer

of special education classroom teachers and special education

classroom aides if the pupils counted in membership associated with

those special education classroom teachers and special education

classroom aides are transferred and counted in membership in the

other district or intermediate district in conjunction with the

transfer of those teachers and aides.

fiscal year that the amounts allocated for that fiscal year under

subsections (2), (3), (6), and (11) and sections 53a, 54, and 56

will exceed expenditures for that fiscal year under subsections

(2), (3), (6), and (11) and sections 53a, 54, and 56, then for a

district or intermediate district whose reimbursement for that

fiscal year would otherwise be affected by subdivision (b),

subdivision (b) does not apply to the calculation of the

reimbursement for that district or intermediate district and

reimbursement for that district or intermediate district shall be

calculated in the same manner as it was for 2003-2004. If the

amount of the excess allocations under subsections (2), (3), (6),

and (11) and sections 53a, 54, and 56 is not sufficient to fully

fund the calculation of reimbursement to those districts and

intermediate districts under this subdivision, then the

calculations and resulting reimbursement under this subdivision

shall be prorated on an equal percentage basis. Beginning in 2015-

2016, the amount of reimbursement under this subdivision for a

fiscal year shall not exceed $2,000,000.00 for any district or

intermediate district.

(d) Reimbursement for ancillary and other related services, as

defined by R 340.1701c of the Michigan ~~administrative code,~~

Administrative Code, shall not be provided when those services are

covered by and available through private group health insurance

carriers or federal reimbursed program sources unless the

department and district or intermediate district agree otherwise

and that agreement is approved by the state budget director.

Expenses, other than the incidental expense of filing, shall not be

borne by the parent. In addition, the filing of claims shall not

delay the education of a pupil. A district or intermediate district

shall be responsible for payment of a deductible amount and for an

advance payment required until the time a claim is paid.

(e) Beginning with calculations for 2004-2005, if an

intermediate district purchases a special education pupil

transportation service from a constituent district that was

previously purchased from a private entity; if the purchase from

the constituent district is at a lower cost, adjusted for changes

in fuel costs; and if the cost shift from the intermediate district

to the constituent does not result in any net change in the revenue

the constituent district receives from payments under sections 22b

and 51c, then upon application by the intermediate district, the

department shall direct the intermediate district to continue to

report the cost associated with the specific identified special

education pupil transportation service and shall adjust the costs

reported by the constituent district to remove the cost associated

with that specific service.

(8) A pupil who is enrolled in a full-time special education

program conducted or administered by an intermediate district or a

pupil who is enrolled in the Michigan schools for the deaf and

blind shall not be included in the membership count of a district,

but shall be counted in membership in the intermediate district of

residence.

(9) Special education personnel transferred from 1 district to

another to implement the revised school code shall be entitled to

the rights, benefits, and tenure to which the person would

otherwise be entitled had that person been employed by the

receiving district originally.

(10) If a district or intermediate district uses money

received under this section for a purpose other than the purpose or

purposes for which the money is allocated, the department may

require the district or intermediate district to refund the amount

of money received. Money that is refunded shall be deposited in the

state treasury to the credit of the state school aid fund.

(11) From the funds allocated in subsection (1), there is

allocated the amount necessary, estimated at $3,800,000.00 for

2015-2016 and estimated at $3,700,000.00 for 2016-2017, to pay the

foundation allowances for pupils described in this subsection. The

allocation to a district under this subsection shall be calculated

by multiplying the number of pupils described in this subsection

who are counted in membership in the district times the sum of the

foundation allowance under section 20 of the pupil's district of

residence plus the amount of the district's per-pupil allocation

under section 20m, not to exceed the basic foundation allowance

under section 20 for the current fiscal year, or, for a pupil

described in this subsection who is counted in membership in a

district that is a public school academy, times an amount equal to

the amount per membership pupil under section 20(6) or, for a pupil

described in this subsection who is counted in membership in the

education achievement system, times an amount equal to the amount

per membership pupil under section 20(7). The allocation to an

intermediate district under this subsection shall be calculated in

the same manner as for a district, using the foundation allowance

under section 20 of the pupil's district of residence, not to

exceed the basic foundation allowance under section 20 for the

current fiscal year, and that district's per-pupil allocation under

section 20m. This subsection applies to all of the following

pupils:

(a) Pupils described in section 53a.

(b) Pupils counted in membership in an intermediate district

who are not special education pupils and are served by the

intermediate district in a juvenile detention or child caring

facility.

by an intermediate district and provided educational services by

the department of health and human services.

(12) If it is determined that funds allocated under subsection

(2) or (11) or under section 51c will not be expended, funds up to

the amount necessary and available may be used to supplement the

allocations under subsection (2) or (11) or under section 51c in

order to fully fund those allocations. After payments under

subsections (2) and (11) and section 51c, the remaining

expenditures from the allocation in subsection (1) shall be made in

the following order:

(a) 100% of the reimbursement required under section 53a.

(b) 100% of the reimbursement required under subsection (6).

(d) 100% of the payment required under subsection (3).

(e) 100% of the payments under section 56.

(13) The allocations under subsections (2), (3), and (11)

shall be allocations to intermediate districts only and shall not

be allocations to districts, but instead shall be calculations used

only to determine the state payments under section 22b.

(14) If a public school academy enrolls pursuant to this

section a pupil who resides outside of the intermediate district in

which the public school academy is located and who is eligible for

special education programs and services according to statute or

rule, or who is a child with disabilities, as defined under the

individuals with disabilities education act, Public Law 108-446,

the provision of special education programs and services and the

payment of the added costs of special education programs and

services for the pupil are the responsibility of the district and

intermediate district in which the pupil resides unless the

enrolling district or intermediate district has a written agreement

with the district or intermediate district in which the pupil

resides or the public school academy for the purpose of providing

the pupil with a free appropriate public education and the written

agreement includes at least an agreement on the responsibility for

the payment of the added costs of special education programs and

services for the pupil.

(15) Beginning in 2016-2017, a district, public school

academy, or intermediate district that fails to comply with

subsection (14) or with the requirements of federal regulations

regarding the treatment of public school academies and public

school academy pupils for the purposes of special education, 34 CFR

300.209, forfeits from its total state aid an amount equal to 10%

of its total state aid.

(16) For the purposes of this section, the department or the

center shall only require a district or intermediate district to

report information that is not already available from the financial

information database maintained by the center.

Sec. 58. Allocations to districts and intermediate districts

under section 51a for providing special education transportation

services shall be based on data reported by the districts and

intermediate districts for the current school year. For the

purposes of this section, the department or the center shall only

require a district or intermediate district to report information

that is not already available from the financial information