HOUSE BILL No. 6276 September 17, 2002, Introduced by Reps. Toy, Cassis, Newell, Ruth Johnson, Birkholz, Palmer, Woronchak, Voorhees, Vander Veen, Richardville, Ehardt, Cameron Brown, Meyer, Van Woerkom, Rocca, Caul, Pappageorge, DeRossett and Kooiman and referred to the Committee on Tax Policy. 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 allowance 2 is $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 07067'02 g FDD 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. 07067'02 g 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 ahomesteadPRINCIPAL RESIDENCE or qualified 17 agricultural property times the lesser of 18 mills or the number 18 of mills of school operating taxes levied by the district in 19 1993-94 and the quotient of the ad valorem property tax revenue 20 of the district captured under 1975 PA 197, MCL 125.1651 to 21 125.1681, the tax increment finance authority act, 1980 PA 450, 22 MCL 125.1801 to 125.1830, the local development financing act, 23 1986 PA 281, MCL 125.2151 to 125.2174, or the brownfield redevel- 24 opment financing act, 1996 PA 381, MCL 125.2651 to 125.2672, 25 divided by the district's membership excluding special education 26 pupils. For a district described in subsection (3)(b), the state 27 portion of the district's foundation allowance is an amount equal 07067'02 g 4 1 to $6,962.00 plus the difference between the district's 2 foundation allowance for the current state fiscal year and the 3 district's foundation allowance for 1998-99, minus the difference 4 between the product of the taxable value per membership pupil of 5 all property in the district that is not ahomesteadPRINCIPAL 6 RESIDENCE or qualified agricultural property times the lesser of 7 18 mills or the number of mills of school operating taxes levied 8 by the district in 1993-94 and the quotient of the ad valorem 9 property tax revenue of the district captured under 1975 PA 197, 10 MCL 125.1651 to 125.1681, the tax increment finance authority 11 act, 1980 PA 450, MCL 125.1801 to 125.1830, the local development 12 financing act, 1986 PA 281, MCL 125.2151 to 125.2174, or the 13 brownfield redevelopment financing act, 1996 PA 381, MCL 125.2651 14 to 125.2672, divided by the district's membership excluding spe- 15 cial education pupils. For a district that has a millage reduc- 16 tion required under section 31 of article IX of the state consti- 17 tution of 1963, the state portion of the district's foundation 18 allowance shall be calculated as if that reduction did not 19 occur. The $6,500.00 amount prescribed in this subsection shall 20 be adjusted each year by an amount equal to the dollar amount of 21 the difference between the basic foundation allowance for the 22 current state fiscal year and $5,000.00. 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. 07067'02 g 5 1 (5) The allocation calculated under this section for a pupil 2 shall be based on the foundation allowance of the pupil's 3 district of residence. However, for a pupil enrolled pursuant to 4 section 105 or 105c in a district other than the pupil's district 5 of residence, the allocation calculated under this section shall 6 be based on the lesser of the foundation allowance of the pupil's 7 district of residence or the foundation allowance of the educat- 8 ing district. For a pupil in membership in a K-5, K-6, or K-8 9 district who is enrolled in another district in a grade not 10 offered by the pupil's district of residence, the allocation cal- 11 culated under this section shall be based on the foundation 12 allowance of the educating district if the educating district's 13 foundation allowance is greater than the foundation allowance of 14 the pupil's district of residence. The calculation under this 15 subsection shall take into account a district's per pupil alloca- 16 tion under section 20j(2). 17 (6) Subject to subsection (7) and section 22b(4) and except 18 as otherwise provided in this subsection, for pupils in member- 19 ship, other than special education pupils, in a public school 20 academy or a university school, the allocation calculated under 21 this section is an amount per membership pupil other than special 22 education pupils in the public school academy or university 23 school equal to the sum of the local school operating revenue per 24 membership pupil other than special education pupils for the dis- 25 trict in which the public school academy or university school is 26 located and the state portion of that district's foundation 27 allowance, or the sum of the basic foundation allowance under 07067'02 g 6 1 subsection (1) plus $500.00, whichever is less. However, 2 beginning in 2002-2003, this $500.00 amount shall instead be 3 $300.00. Notwithstanding section 101(2), for a public school 4 academy that begins operations in 2000-2001, 2001-2002, or 5 2002-2003, as applicable, after the pupil membership count day, 6 the amount per membership pupil calculated under this subsection 7 shall be adjusted by multiplying that amount per membership pupil 8 by the number of hours of pupil instruction provided by the 9 public school academy after it begins operations, as determined 10 by the department, divided by the minimum number of hours of 11 pupil instruction required under section 1284 of the revised 12 school code, MCL 380.1284. The result of this calculation shall 13 not exceed the amount per membership pupil otherwise calculated 14 under this subsection. 15 (7) If more than 25% of the pupils residing within a dis- 16 trict are in membership in 1 or more public school academies 17 located in the district, then the amount per membership pupil 18 calculated under this section for a public school academy located 19 in the district shall be reduced by an amount equal to the dif- 20 ference between the product of the taxable value per membership 21 pupil of all property in the district that is not a homestead or 22 qualified agricultural property times the lesser of 18 mills or 23 the number of mills of school operating taxes levied by the dis- 24 trict in 1993-94 and the quotient of the ad valorem property tax 25 revenue of the district captured under 1975 PA 197, MCL 125.1651 26 to 125.1681, the tax increment finance authority act, 1980 27 PA 450, MCL 125.1801 to 125.1830, the local development financing 07067'02 g 7 1 act, 1986 PA 281, MCL 125.2151 to 125.2174, or the brownfield 2 redevelopment financing act, 1996 PA 381, MCL 125.2651 to 3 125.2672, divided by the district's membership excluding special 4 education pupils, in the school fiscal year ending in the current 5 state fiscal year, calculated as if the resident pupils in mem- 6 bership in 1 or more public school academies located in the dis- 7 trict were in membership in the district. In order to receive 8 state school aid under this act, a district described in this 9 subsection shall pay to the authorizing body that is the fiscal 10 agent for a public school academy located in the district for 11 forwarding to the public school academy an amount equal to that 12 local school operating revenue per membership pupil for each res- 13 ident pupil in membership other than special education pupils in 14 the public school academy, as determined by the department. 15 (8) If a district does not receive an amount calculated 16 under subsection (9); if the number of mills the district may 17 levy on ahomesteadPRINCIPAL RESIDENCE and qualified agricul- 18 tural property under section 1211(1) of the revised school code, 19 MCL 380.1211, is 0.5 mills or less; and if the district elects 20 not to levy those mills, the district instead shall receive a 21 separate supplemental amount calculated under this subsection in 22 an amount equal to the amount the district would have received 23 had it levied those mills, as determined by the department of 24 treasury. A district shall not receive a separate supplemental 25 amount calculated under this subsection for a fiscal year unless 26 in the calendar year ending in the fiscal year the district 27 levies 18 mills or the number of mills of school operating taxes 07067'02 g 8 1 levied by the district in 1993, whichever is less, on property 2 that is not a homestead or qualified agricultural property. 3 (9) For a district that had combined state and local revenue 4 per membership pupil in the 1993-94 state fiscal year of more 5 than $6,500.00 and that had fewer than 350 pupils in membership, 6 if the district elects not to reduce the number of mills from 7 which a homestead and qualified agricultural property are exempt 8 and not to levy school operating taxes on a homestead and quali- 9 fied agricultural property as provided in section 1211(1) of the 10 revised school code, MCL 380.1211, and not to levy school operat- 11 ing taxes on all property as provided in section 1211(2) of the 12 revised school code, MCL 380.1211, there is calculated under this 13 subsection for 1994-95 and each succeeding fiscal year a separate 14 supplemental amount in an amount equal to the amount the district 15 would have received per membership pupil had it levied school 16 operating taxes on a homestead and qualified agricultural prop- 17 erty at the rate authorized for the district under 18 section 1211(1) of the revised school code, MCL 380.1211, and 19 levied school operating taxes on all property at the rate autho- 20 rized for the district under section 1211(2) of the revised 21 school code, MCL 380.1211, as determined by the department of 22 treasury. If in the calendar year ending in the fiscal year a 23 district does not levy 18 mills or the number of mills of school 24 operating taxes levied by the district in 1993, whichever is 25 less, on property that is not ahomesteadPRINCIPAL RESIDENCE 26 or qualified agricultural property, the amount calculated under 27 this subsection will be reduced by the same percentage as the 07067'02 g 9 1 millage actually levied compares to the 18 mills or the number of 2 mills levied in 1993, whichever is less. 3 (10) For a district that is formed or reconfigured after 4 June 1, 1994 by consolidation of 2 or more districts or by annex- 5 ation, the resulting district's foundation allowance under this 6 section beginning after the effective date of the consolidation 7 or annexation shall be the average of the foundation allowances 8 of each of the original or affected districts, calculated as pro- 9 vided in this section, weighted as to the percentage of pupils in 10 total membership in the resulting district who reside in the geo- 11 graphic area of each of the original districts. If an affected 12 district's foundation allowance is less than the basic foundation 13 allowance, the amount of that district's foundation allowance 14 shall be considered for the purpose of calculations under this 15 subsection to be equal to the amount of the basic foundation 16 allowance. 17 (11) Each fraction used in making calculations under this 18 section shall be rounded to the fourth decimal place and the 19 dollar amount of an increase in the basic foundation allowance 20 shall be rounded to the nearest whole dollar. 21 (12) State payments related to payment of the foundation 22 allowance for a special education pupil are not calculated under 23 this section but are instead calculated under section 51a. 24 (13) To assist the legislature in determining the basic 25 foundation allowance for the subsequent state fiscal year, each 26 revenue estimating conference conducted under section 367b of the 27 management and budget act, 1984 PA 431, MCL 18.1367b, shall 07067'02 g 10 1 calculate a pupil membership factor, a revenue adjustment factor, 2 and an index as follows: 3 (a) The pupil membership factor shall be computed by divid- 4 ing the estimated membership in the school year ending in the 5 current state fiscal year, excluding intermediate district mem- 6 bership, by the estimated membership for the school year ending 7 in the subsequent state fiscal year, excluding intermediate dis- 8 trict membership. If a consensus membership factor is not deter- 9 mined at the revenue estimating conference, the principals of the 10 revenue estimating conference shall report their estimates to the 11 house and senate subcommittees responsible for school aid appro- 12 priations not later than 7 days after the conclusion of the reve- 13 nue conference. 14 (b) The revenue adjustment factor shall be computed by 15 dividing the sum of the estimated total state school aid fund 16 revenue for the subsequent state fiscal year plus the estimated 17 total state school aid fund revenue for the current state fiscal 18 year, adjusted for any change in the rate or base of a tax the 19 proceeds of which are deposited in that fund and excluding money 20 transferred into that fund from the countercyclical budget and 21 economic stabilization fund under section 353e of the management 22 and budget act, 1984 PA 431, MCL 18.1353e, by the sum of the 23 estimated total school aid fund revenue for the current state 24 fiscal year plus the estimated total state school aid fund reve- 25 nue for the immediately preceding state fiscal year, adjusted for 26 any change in the rate or base of a tax the proceeds of which are 27 deposited in that fund. If a consensus revenue factor is not 07067'02 g 11 1 determined at the revenue estimating conference, the principals 2 of the revenue estimating conference shall report their estimates 3 to the house and senate subcommittees responsible for school aid 4 appropriations not later than 7 days after the conclusion of the 5 revenue conference. 6 (c) The index shall be calculated by multiplying the pupil 7 membership factor by the revenue adjustment factor. If a consen- 8 sus index is not determined at the revenue estimating conference, 9 the principals of the revenue estimating conference shall report 10 their estimates to the house and senate subcommittees responsible 11 for school aid appropriations not later than 7 days after the 12 conclusion of the revenue conference. 13 (14) If the principals at the revenue estimating conference 14 reach a consensus on the index described in subsection (13)(c), 15 the basic foundation allowance for the subsequent state fiscal 16 year shall be at least the amount of that consensus index multi- 17 plied by the basic foundation allowance specified in subsection 18 (1). 19 (15) If at the January revenue estimating conference it is 20 estimated that pupil membership, excluding intermediate district 21 membership, for the subsequent state fiscal year will be greater 22 than 101% of the pupil membership, excluding intermediate dis- 23 trict membership, for the current state fiscal year, then it is 24 the intent of the legislature that the executive budget proposal 25 for the school aid budget for the subsequent state fiscal year 26 include a general fund/general purpose allocation sufficient to 07067'02 g 12 1 support the membership in excess of 101% of the current year 2 pupil membership. 3 (16) For a district that had combined state and local reve- 4 nue per membership pupil in the 1993-94 state fiscal year of more 5 than $6,500.00, that had fewer than 7 pupils in membership in the 6 1993-94 state fiscal year, that has at least 1 child educated in 7 the district in the current state fiscal year, and that levies 8 the number of mills of school operating taxes authorized for the 9 district under section 1211 of the revised school code, 10 MCL 380.1211, a minimum amount of combined state and local reve- 11 nue shall be calculated for the district as provided under this 12 subsection. The minimum amount of combined state and local reve- 13 nue for 1999-2000 shall be $67,000.00 plus the district's addi- 14 tional expenses to educate pupils in grades 9 to 12 educated in 15 other districts as determined and allowed by the department. The 16 minimum amount of combined state and local revenue under this 17 subsection, before adding the additional expenses, shall increase 18 each fiscal year by the same percentage increase as the percen- 19 tage increase in the basic foundation allowance from the immedi- 20 ately preceding fiscal year to the current fiscal year. The 21 state portion of the minimum amount of combined state and local 22 revenue under this subsection shall be calculated by subtracting 23 from the minimum amount of combined state and local revenue under 24 this subsection the sum of the district's local school operating 25 revenue and an amount equal to the product of the sum of the 26 state portion of the district's foundation allowance plus the 27 amount calculated under section 20j times the district's 07067'02 g 13 1 membership. As used in this subsection, "additional expenses" 2 means the district's expenses for tuition or fees, not to exceed 3 $6,500.00 as adjusted each year by an amount equal to the dollar 4 amount of the difference between the basic foundation allowance 5 for the current state fiscal year and $5,000.00, plus a room and 6 board stipend not to exceed $10.00 per school day for each pupil 7 in grades 9 to 12 educated in another district, as approved by 8 the department. However, beginning in 2002-2003, the $6,500.00 9 amount prescribed in this subsection shall be adjusted each year 10 by an amount equal to the dollar amount of the difference between 11 the basic foundation allowance for the current state fiscal year 12 and $5,000.00, minus $200.00. 13 (17) For a district in which 7.75 mills levied in 1992 for 14 school operating purposes in the 1992-93 school year were not 15 renewed in 1993 for school operating purposes in the 1993-94 16 school year, the district's combined state and local revenue per 17 membership pupil shall be recalculated as if that millage reduc- 18 tion did not occur and the district's foundation allowance shall 19 be calculated as if its 1994-95 foundation allowance had been 20 calculated using that recalculated 1993-94 combined state and 21 local revenue per membership pupil as a base. A district is not 22 entitled to any retroactive payments for fiscal years before 23 2000-2001 due to this subsection. 24 (18) Payments to districts, university schools, or public 25 school academies shall not be made under this section. Rather, 26 the calculations under this section shall be used to determine 27 the amount of state payments under section 22b. 07067'02 g 14 1 (19) If an amendment to section 2 of article VIII of the 2 state constitution of 1963 allowing state aid to some or all non- 3 public schools is approved by the voters of this state, each 4 foundation allowance or per pupil payment calculation under this 5 section may be reduced. 6 (20) As used in this section: 7 (a) "Combined state and local revenue" means the aggregate 8 of the district's state school aid received by or paid on behalf 9 of the district under this section and the district's local 10 school operating revenue. 11 (b) "Combined state and local revenue per membership pupil" 12 means the district's combined state and local revenue divided by 13 the district's membership excluding special education pupils. 14 (c) "Current state fiscal year" means the state fiscal year 15 for which a particular calculation is made. 16(d) "Homestead" means that term as defined in section 121117of the revised school code, MCL 380.1211.18 (D)(e)"Immediately preceding state fiscal year" means 19 the state fiscal year immediately preceding the current state 20 fiscal year. 21 (E)(f)"Local school operating revenue" means school 22 operating taxes levied under section 1211 of the revised school 23 code, MCL 380.1211. 24 (F)(g)"Local school operating revenue per membership 25 pupil" means a district's local school operating revenue divided 26 by the district's membership excluding special education pupils. 07067'02 g 15 1 (G)(h)"Membership" means the definition of that term 2 under section 6 as in effect for the particular fiscal year for 3 which a particular calculation is made. 4 (H) "PRINCIPAL RESIDENCE" MEANS THAT TERM AS DEFINED IN 5 SECTION 70D OF THE GENERAL PROPERTY TAX ACT, 1893 PA 206, MCL 6 211.70D. 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. 6283 23 (request no. 07067'02) of the 91st Legislature is enacted into 24 law. 07067'02 g Final page. FDD