HOUSE BILL No. 6144 May 29, 2002, Introduced by Rep. Allen and referred to the Committee on Appropriations. A bill to amend 1979 PA 94, entitled "The state school aid act of 1979," by amending section 20 (MCL 388.1620), as amended by 2001 PA 121. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 20. (1)For 2000-2001, the basic foundation allowance2is $6,000.00 per membership pupil.For 2001-2002, the basic 3 foundation allowance is $6,300.00 per membership pupil. For 4 2002-2003, the basic foundation allowance is $6,700.00 per mem- 5 bership pupil. 6 (2) The amount of each district's foundation allowance shall 7 be calculated as provided in this section, using a basic founda- 8 tion allowance in the amount specified in subsection (1). 9 (3) Except as otherwise provided in this section, the amount 10 of a district's foundation allowance shall be calculated as 06536'02 TAV 2 1 follows, using in all calculations the total amount of the 2 district's foundation allowance as calculated before any 3 proration: 4 (a) Except as otherwise provided in this subsection, for a 5 district that in the immediately preceding state fiscal year had 6 a foundation allowance in an amount at least equal to the amount 7 of the basic foundation allowance for the immediately preceding 8 state fiscal year, the district shall receive a foundation allow- 9 ance in an amount equal to the sum of the district's foundation 10 allowance for the immediately preceding state fiscal year plus 11 the dollar amount of the adjustment from the immediately preced- 12 ing state fiscal year to the current state fiscal year in the 13 basic foundation allowance. 14 (b) For a district that in the 1994-95 state fiscal year had 15 a foundation allowance greater than $6,500.00, the district's 16 foundation allowance is an amount equal to the sum of the 17 district's foundation allowance for the immediately preceding 18 state fiscal year plus the lesser of the increase in the basic 19 foundation allowance for the current state fiscal year, as com- 20 pared to the immediately preceding state fiscal year, or the pro- 21 duct of the district's foundation allowance for the immediately 22 preceding state fiscal year times the percentage increase in the 23 United States consumer price index in the calendar year ending in 24 the immediately preceding fiscal year as reported by the May rev- 25 enue estimating conference conducted under section 367b of the 26 management and budget act, 1984 PA 431, MCL 18.1367b. 06536'02 3 1 (c) For a district that has a foundation allowance that is 2 not a whole dollar amount, the district's foundation allowance 3 shall be rounded up to the nearest whole dollar. 4 (d) Beginning in 2002-2003, for a district that receives a 5 payment under section 22c for 2001-2002, the district's 2001-2002 6 foundation allowance shall be considered to have been an amount 7 equal to the sum of the district's actual 2001-2002 foundation 8 allowance as otherwise calculated under this section plus the per 9 pupil amount of the district's equity payment for 2001-2002 under 10 section 22c. 11 (4) Except as otherwise provided in this subsection, the 12 state portion of a district's foundation allowance is an amount 13 equal to the district's foundation allowance or $6,500.00, which- 14 ever is less, minus the difference between the product of the 15 taxable value per membership pupil of all property in the dis- 16 trict that is not a homestead or qualified agricultural property 17 times the lesser of 18 mills or the number of mills of school 18 operating taxes levied by the district in 1993-94 and the quo- 19 tient of the ad valorem property tax revenue of the district cap- 20 tured under 1975 PA 197, MCL 125.1651 to 125.1681, the tax incre- 21 ment finance authority act, 1980 PA 450, MCL 125.1801 to 22 125.1830, the local development financing act, 1986 PA 281, 23 MCL 125.2151 to 125.2174, or the brownfield redevelopment financ- 24 ing act, 1996 PA 381, MCL 125.2651 to 125.2672, divided by the 25 district's membership excluding special education pupils. For a 26 district described in subsection (3)(b), the state portion of the 27 district's foundation allowance is an amount equal to $6,962.00 06536'02 4 1 plus the difference between the district's foundation allowance 2 for the current state fiscal year and the district's foundation 3 allowance for 1998-99, minus the difference between the product 4 of the taxable value per membership pupil of all property in the 5 district that is not a homestead or qualified agricultural prop- 6 erty times the lesser of 18 mills or the number of mills of 7 school operating taxes levied by the district in 1993-94 and the 8 quotient of the ad valorem property tax revenue of the district 9 captured under 1975 PA 197, MCL 125.1651 to 125.1681, the tax 10 increment finance authority act, 1980 PA 450, MCL 125.1801 to 11 125.1830, the local development financing act, 1986 PA 281, 12 MCL 125.2151 to 125.2174, or the brownfield redevelopment financ- 13 ing act, 1996 PA 381, MCL 125.2651 to 125.2672, divided by the 14 district's membership excluding special education pupils. For a 15 district that has a millage reduction required under section 31 16 of article IX of the state constitution of 1963, the state por- 17 tion of the district's foundation allowance shall be calculated 18 as if that reduction did not occur. The $6,500.00 amount pre- 19 scribed in this subsection shall be adjusted each year by an 20 amount equal to the dollar amount of the difference between the 21 basic foundation allowance for the current state fiscal year and 22 $5,000.00. However, beginning in 2002-2003, the $6,500.00 amount 23 prescribed in this subsection shall be adjusted each year by an 24 amount equal to the dollar amount of the difference between the 25 basic foundation allowance for the current state fiscal year and 26 $5,000.00, minus $200.00. 06536'02 5 1 (5)TheEXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION, 2 THE allocation calculated under this section for a pupil shall be 3 based on the foundation allowance of the pupil's district of 4 residence.However, forFOR a pupil enrolled pursuant to sec- 5 tion 105 or 105c in a district other than the pupil's district of 6 residence, the allocation calculated under this section shall be 7 based on the lesser of the foundation allowance of the pupil's 8 district of residence or the foundation allowance of the educat- 9 ing district. FOR A PUPIL WHO RESIDES ON AN INDIAN RESERVATION, 10 AS DESCRIBED IN SECTION 6(6)(l), THE ALLOCATION CALCULATED UNDER 11 THIS SECTION SHALL BE BASED ON THE FOUNDATION ALLOWANCE OF THE 12 EDUCATING DISTRICT. For a pupil in membership in a K-5, K-6, or 13 K-8 district who is enrolled in another district in a grade not 14 offered by the pupil's district of residence, the allocation cal- 15 culated under this section shall be based on the foundation 16 allowance of the educating district if the educating district's 17 foundation allowance is greater than the foundation allowance of 18 the pupil's district of residence. The calculation under this 19 subsection shall take into account a district's per pupil alloca- 20 tion under section 20j(2). 21 (6) Subject to subsection (7) and section22b(4)22B(3) 22 and except as otherwise provided in this subsection, for pupils 23 in membership, other than special education pupils, in a public 24 school academy or a university school, the allocation calculated 25 under this section is an amount per membership pupil other than 26 special education pupils in the public school academy or 27 university school equal to the sum of the local school operating 06536'02 6 1 revenue per membership pupil other than special education pupils 2 for the district in which the public school academy or university 3 school is located and the state portion of that district's foun- 4 dation allowance, or the sum of the basic foundation allowance 5 under subsection (1) plus $500.00, whichever is less. However, 6 beginning in 2002-2003, this $500.00 amount shall instead be 7 $300.00. Notwithstanding section 101(2), for a public school 8 academy that begins operations in2000-2001,2001-2002,or 9 2002-2003, as applicable, after the pupil membership count day, 10 the amount per membership pupil calculated under this subsection 11 shall be adjusted by multiplying that amount per membership pupil 12 by the number of hours of pupil instruction provided by the 13 public school academy after it begins operations, as determined 14 by the department, divided by the minimum number of hours of 15 pupil instruction required under section 1284 of the revised 16 school code, MCL 380.1284. The result of this calculation shall 17 not exceed the amount per membership pupil otherwise calculated 18 under this subsection. 19 (7) If more than 25% of the pupils residing within a dis- 20 trict are in membership in 1 or more public school academies 21 located in the district, then the amount per membership pupil 22 calculated under this section for a public school academy located 23 in the district shall be reduced by an amount equal to the dif- 24 ference between the product of the taxable value per membership 25 pupil of all property in the district that is not a homestead or 26 qualified agricultural property times the lesser of 18 mills or 27 the number of mills of school operating taxes levied by the 06536'02 7 1 district in 1993-94 and the quotient of the ad valorem property 2 tax revenue of the district captured under 1975 PA 197, 3 MCL 125.1651 to 125.1681, the tax increment finance authority 4 act, 1980 PA 450, MCL 125.1801 to 125.1830, the local development 5 financing act, 1986 PA 281, MCL 125.2151 to 125.2174, or the 6 brownfield redevelopment financing act, 1996 PA 381, MCL 125.2651 7 to 125.2672, divided by the district's membership excluding spe- 8 cial education pupils, in the school fiscal year ending in the 9 current state fiscal year, calculated as if the resident pupils 10 in membership in 1 or more public school academies located in the 11 district were in membership in the district. In order to receive 12 state school aid under this act, a district described in this 13 subsection shall pay to the authorizing body that is the fiscal 14 agent for a public school academy located in the district for 15 forwarding to the public school academy an amount equal to that 16 local school operating revenue per membership pupil for each res- 17 ident pupil in membership other than special education pupils in 18 the public school academy, as determined by the department. 19 (8) If a district does not receive an amount calculated 20 under subsection (9); if the number of mills the district may 21 levy on a homestead and qualified agricultural property under 22 section 1211(1) of the revised school code, MCL 380.1211, is 0.5 23 mills or less; and if the district elects not to levy those 24 mills, the district instead shall receive a separate supplemental 25 amount calculated under this subsection in an amount equal to the 26 amount the district would have received had it levied those 27 mills, as determined by the department of treasury. A district 06536'02 8 1 shall not receive a separate supplemental amount calculated under 2 this subsection for a fiscal year unless in the calendar year 3 ending in the fiscal year the district levies 18 mills or the 4 number of mills of school operating taxes levied by the district 5 in 1993, whichever is less, on property that is not a homestead 6 or qualified agricultural property. 7 (9) For a district that had combined state and local revenue 8 per membership pupil in the 1993-94 state fiscal year of more 9 than $6,500.00 and that had fewer than 350 pupils in membership, 10 if the district elects not to reduce the number of mills from 11 which a homestead and qualified agricultural property are exempt 12 and not to levy school operating taxes on a homestead and quali- 13 fied agricultural property as provided in section 1211(1) of the 14 revised school code, MCL 380.1211, and not to levy school operat- 15 ing taxes on all property as provided in section 1211(2) of the 16 revised school code, MCL 380.1211, there is calculated under this 17 subsection for 1994-95 and each succeeding fiscal year a separate 18 supplemental amount in an amount equal to the amount the district 19 would have received per membership pupil had it levied school 20 operating taxes on a homestead and qualified agricultural prop- 21 erty at the rate authorized for the district under 22 section 1211(1) of the revised school code, MCL 380.1211, and 23 levied school operating taxes on all property at the rate autho- 24 rized for the district under section 1211(2) of the revised 25 school code, MCL 380.1211, as determined by the department of 26 treasury. If in the calendar year ending in the fiscal year a 27 district does not levy 18 mills or the number of mills of school 06536'02 9 1 operating taxes levied by the district in 1993, whichever is 2 less, on property that is not a homestead or qualified agricul- 3 tural property, the amount calculated under this subsection will 4 be reduced by the same percentage as the millage actually levied 5 compares to the 18 mills or the number of mills levied in 1993, 6 whichever is less. 7 (10) For a district that is formed or reconfigured after 8 June 1, 1994 by consolidation of 2 or more districts or by annex- 9 ation, the resulting district's foundation allowance under this 10 section beginning after the effective date of the consolidation 11 or annexation shall be the average of the foundation allowances 12 of each of the original or affected districts, calculated as pro- 13 vided in this section, weighted as to the percentage of pupils in 14 total membership in the resulting district who reside in the geo- 15 graphic area of each of the original districts. If an affected 16 district's foundation allowance is less than the basic foundation 17 allowance, the amount of that district's foundation allowance 18 shall be considered for the purpose of calculations under this 19 subsection to be equal to the amount of the basic foundation 20 allowance. 21 (11) Each fraction used in making calculations under this 22 section shall be rounded to the fourth decimal place and the 23 dollar amount of an increase in the basic foundation allowance 24 shall be rounded to the nearest whole dollar. 25 (12) State payments related to payment of the foundation 26 allowance for a special education pupil are not calculated under 27 this section but are instead calculated under section 51a. 06536'02 10 1 (13) To assist the legislature in determining the basic 2 foundation allowance for the subsequent state fiscal year, each 3 revenue estimating conference conducted under section 367b of the 4 management and budget act, 1984 PA 431, MCL 18.1367b, shall cal- 5 culate a pupil membership factor, a revenue adjustment factor, 6 and an index as follows: 7 (a) The pupil membership factor shall be computed by divid- 8 ing the estimated membership in the school year ending in the 9 current state fiscal year, excluding intermediate district mem- 10 bership, by the estimated membership for the school year ending 11 in the subsequent state fiscal year, excluding intermediate dis- 12 trict membership. If a consensus membership factor is not deter- 13 mined at the revenue estimating conference, the principals of the 14 revenue estimating conference shall report their estimates to the 15 house and senate subcommittees responsible for school aid appro- 16 priations not later than 7 days after the conclusion of the reve- 17 nue conference. 18 (b) The revenue adjustment factor shall be computed by 19 dividing the sum of the estimated total state school aid fund 20 revenue for the subsequent state fiscal year plus the estimated 21 total state school aid fund revenue for the current state fiscal 22 year, adjusted for any change in the rate or base of a tax the 23 proceeds of which are deposited in that fund and excluding money 24 transferred into that fund from the countercyclical budget and 25 economic stabilization fund under section 353e of the management 26 and budget act, 1984 PA 431, MCL 18.1353e, by the sum of the 27 estimated total school aid fund revenue for the current state 06536'02 11 1 fiscal year plus the estimated total state school aid fund 2 revenue for the immediately preceding state fiscal year, adjusted 3 for any change in the rate or base of a tax the proceeds of which 4 are deposited in that fund. If a consensus revenue factor is not 5 determined at the revenue estimating conference, the principals 6 of the revenue estimating conference shall report their estimates 7 to the house and senate subcommittees responsible for school aid 8 appropriations not later than 7 days after the conclusion of the 9 revenue conference. 10 (c) The index shall be calculated by multiplying the pupil 11 membership factor by the revenue adjustment factor. If a consen- 12 sus index is not determined at the revenue estimating conference, 13 the principals of the revenue estimating conference shall report 14 their estimates to the house and senate subcommittees responsible 15 for school aid appropriations not later than 7 days after the 16 conclusion of the revenue conference. 17 (14) If the principals at the revenue estimating conference 18 reach a consensus on the index described in subsection (13)(c), 19 the basic foundation allowance for the subsequent state fiscal 20 year shall be at least the amount of that consensus index multi- 21 plied by the basic foundation allowance specified in subsection 22 (1). 23 (15) If at the January revenue estimating conference it is 24 estimated that pupil membership, excluding intermediate district 25 membership, for the subsequent state fiscal year will be greater 26 than 101% of the pupil membership, excluding intermediate 27 district membership, for the current state fiscal year, then it 06536'02 12 1 is the intent of the legislature that the executive budget 2 proposal for the school aid budget for the subsequent state 3 fiscal year include a general fund/general purpose allocation 4 sufficient to support the membership in excess of 101% of the 5 current year pupil membership. 6 (16) For a district that had combined state and local reve- 7 nue per membership pupil in the 1993-94 state fiscal year of more 8 than $6,500.00, that had fewer than 7 pupils in membership in the 9 1993-94 state fiscal year, that has at least 1 child educated in 10 the district in the current state fiscal year, and that levies 11 the number of mills of school operating taxes authorized for the 12 district under section 1211 of the revised school code, 13 MCL 380.1211, a minimum amount of combined state and local reve- 14 nue shall be calculated for the district as provided under this 15 subsection. The minimum amount of combined state and local reve- 16 nue for 1999-2000 shall be $67,000.00 plus the district's addi- 17 tional expenses to educate pupils in grades 9 to 12 educated in 18 other districts as determined and allowed by the department. The 19 minimum amount of combined state and local revenue under this 20 subsection, before adding the additional expenses, shall increase 21 each fiscal year by the same percentage increase as the percen- 22 tage increase in the basic foundation allowance from the immedi- 23 ately preceding fiscal year to the current fiscal year. The 24 state portion of the minimum amount of combined state and local 25 revenue under this subsection shall be calculated by subtracting 26 from the minimum amount of combined state and local revenue under 27 this subsection the sum of the district's local school operating 06536'02 13 1 revenue and an amount equal to the product of the sum of the 2 state portion of the district's foundation allowance plus the 3 amount calculated under section 20j times the district's 4 membership. As used in this subsection, "additional expenses" 5 means the district's expenses for tuition or fees, not to exceed 6 $6,500.00 as adjusted each year by an amount equal to the dollar 7 amount of the difference between the basic foundation allowance 8 for the current state fiscal year and $5,000.00, plus a room and 9 board stipend not to exceed $10.00 per school day for each pupil 10 in grades 9 to 12 educated in another district, as approved by 11 the department. However, beginning in 2002-2003, the $6,500.00 12 amount prescribed in this subsection shall be adjusted each year 13 by an amount equal to the dollar amount of the difference between 14 the basic foundation allowance for the current state fiscal year 15 and $5,000.00, minus $200.00. 16 (17) For a district in which 7.75 mills levied in 1992 for 17 school operating purposes in the 1992-93 school year were not 18 renewed in 1993 for school operating purposes in the 1993-94 19 school year, the district's combined state and local revenue per 20 membership pupil shall be recalculated as if that millage reduc- 21 tion did not occur and the district's foundation allowance shall 22 be calculated as if its 1994-95 foundation allowance had been 23 calculated using that recalculated 1993-94 combined state and 24 local revenue per membership pupil as a base. A district is not 25 entitled to any retroactive payments for fiscal years before 26 2000-2001 due to this subsection. 06536'02 14 1 (18) Payments to districts, university schools, or public 2 school academies shall not be made under this section. Rather, 3 the calculations under this section shall be used to determine 4 the amount of state payments under section 22b. 5 (19) If an amendment to section 2 of article VIII of the 6 state constitution of 1963 allowing state aid to some or all non- 7 public schools is approved by the voters of this state, each 8 foundation allowance or per pupil payment calculation under this 9 section may be reduced. 10 (20) As used in this section: 11 (a) "Combined state and local revenue" means the aggregate 12 of the district's state school aid received by or paid on behalf 13 of the district under this section and the district's local 14 school operating revenue. 15 (b) "Combined state and local revenue per membership pupil" 16 means the district's combined state and local revenue divided by 17 the district's membership excluding special education pupils. 18 (c) "Current state fiscal year" means the state fiscal year 19 for which a particular calculation is made. 20 (d) "Homestead" means that term as defined in section 1211 21 of the revised school code, MCL 380.1211. 22 (e) "Immediately preceding state fiscal year" means the 23 state fiscal year immediately preceding the current state fiscal 24 year. 25 (f) "Local school operating revenue" means school operating 26 taxes levied under section 1211 of the revised school code, 27 MCL 380.1211. 06536'02 15 1 (g) "Local school operating revenue per membership pupil" 2 means a district's local school operating revenue divided by the 3 district's membership excluding special education pupils. 4 (h) "Membership" means the definition of that term under 5 section 6 as in effect for the particular fiscal year for which a 6 particular calculation is made. 7 (i) "Qualified agricultural property" means that term as 8 defined in section 1211 of the revised school code, 9 MCL 380.1211. 10 (j) "School operating purposes" means the purposes included 11 in the operation costs of the district as prescribed in 12 sections 7 and 18. 13 (k) "School operating taxes" means local ad valorem property 14 taxes levied under section 1211 of the revised school code, 15 MCL 380.1211, and retained for school operating purposes. 16 (l) "Taxable value per membership pupil" means taxable 17 value, as certified by the department of treasury, for the calen- 18 dar year ending in the current state fiscal year divided by the 19 district's membership excluding special education pupils for the 20 school year ending in the current state fiscal year. 21 Enacting section 1. This amendatory act does not take 22 effect unless Senate Bill No. ______ or House Bill No. 6143 23 (request no. 05759'01 *) of the 91st Legislature is enacted into 24 law. 06536'02 Final page. TAV