September 6, 2006, Introduced by Reps. Gaffney, Vagnozzi and David Law 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 2005 PA 155.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 20. (1) For 2003-2004 and for 2004-2005, the basic
foundation allowance is $6,700.00 per membership pupil. For 2005-
2006, the basic foundation allowance is $6,875.00.
(2) The amount of each district's foundation allowance shall
be calculated as provided in this section, using a basic foundation
allowance in the amount specified in subsection (1).
(3) Except as otherwise provided in this section, the amount
of a district's foundation allowance shall be calculated as
follows, using in all calculations the total amount of the
district's foundation allowance as calculated before any proration:
(a) Except as otherwise provided in this subsection, for a
district that in the immediately preceding state fiscal year had a
foundation allowance in an amount at least equal to the amount of
the basic foundation allowance for the immediately preceding state
fiscal year, the district shall receive a foundation allowance in
an amount equal to the sum of the district's foundation allowance
for the immediately preceding state fiscal year plus the dollar
amount of the adjustment from the immediately preceding state
fiscal year to the current state fiscal year in the basic
foundation allowance. However, for 2002-2003, the foundation
allowance for a district under this subdivision is an amount equal
to the sum of the district's foundation allowance for the
immediately preceding state fiscal year plus $200.00.
(b) For a district that in the 1994-95 state fiscal year had a
foundation allowance greater than $6,500.00, the district's
foundation allowance is an amount equal to the sum of the
district's foundation allowance for the immediately preceding state
fiscal year plus the lesser of the increase in the basic foundation
allowance for the current state fiscal year, as compared to the
immediately preceding state fiscal year, or the product of the
district's foundation allowance for the immediately preceding state
fiscal year times the percentage increase in the United States
consumer price index in the calendar year ending in the immediately
preceding fiscal year as reported by the May revenue estimating
conference conducted under section 367b of the management and
budget
act, 1984 PA 431, MCL 18.1367b. For 2002-2003, However,
beginning in 2006-2007, for a district that in the 1994-95 state
fiscal year had a foundation allowance greater than $6,500.00, the
district's
foundation allowance is shall
be an amount equal to
the greater of the sum of the district's foundation allowance for
the
immediately preceding state fiscal year plus the lesser of
$200.00
dollar increase in the basic
foundation allowance or the
product
of the district's foundation allowance for the immediately
preceding
state fiscal year times the percentage increase in the
United
States consumer price index in adjusted
by an amount
determined by the state treasurer at the end of the calendar year
ending
in the immediately preceding fiscal year as reported by the
May
revenue estimating conference conducted under section 367b of
the
management and budget act, 1984 PA 431, MCL 18.1367b to
reflect the cumulative annual percentage change in the general
price level, as defined in section 1211 of the revised school code,
MCL 380.1211.
(c) For a district that has a foundation allowance that is not
a whole dollar amount, the district's foundation allowance shall be
rounded up to the nearest whole dollar.
(d) For a district that received a payment under former
section 22c for 2001-2002, the district's 2001-2002 foundation
allowance shall be considered to have been an amount equal to the
sum of the district's actual 2001-2002 foundation allowance as
otherwise calculated under this section plus the per pupil amount
of the district's equity payment for 2001-2002 under former section
22c.
(4) Except as otherwise provided in this subsection, the state
portion of a district's foundation allowance is an amount equal to
the district's foundation allowance or $6,500.00, whichever is
less, minus the difference between the product of the taxable value
per membership pupil of all property in the district that is not a
principal residence or qualified agricultural property times the
lesser of 18 mills or the number of mills of school operating taxes
levied by the district in 1993-94 and the quotient of the ad
valorem property tax revenue of the district captured under 1975 PA
197, MCL 125.1651 to 125.1681, the tax increment finance authority
act, 1980 PA 450, MCL 125.1801 to 125.1830, the local development
financing act, 1986 PA 281, MCL 125.2151 to 125.2174, or the
brownfield redevelopment financing act, 1996 PA 381, MCL 125.2651
to 125.2672, divided by the district's membership excluding special
education pupils. For a district described in subsection (3)(b),
the state portion of the district's foundation allowance is an
amount equal to $6,962.00 plus the difference between the
district's foundation allowance for the current state fiscal year
and the district's foundation allowance for 1998-99, minus the
difference between the product of the taxable value per membership
pupil of all property in the district that is not a principal
residence or qualified agricultural property times the lesser of 18
mills or the number of mills of school operating taxes levied by
the district in 1993-94 and the quotient of the ad valorem property
tax revenue of the district captured under 1975 PA 197, MCL
125.1651 to 125.1681, the tax increment finance authority act, 1980
PA 450, MCL 125.1801 to 125.1830, the local development financing
act, 1986 PA 281, MCL 125.2151 to 125.2174, or the brownfield
redevelopment financing act, 1996 PA 381, MCL 125.2651 to 125.2672,
divided by the district's membership excluding special education
pupils. For a district that has a millage reduction required under
section 31 of article IX of the state constitution of 1963, the
state portion of the district's foundation allowance shall be
calculated as if that reduction did not occur. The $6,500.00 amount
prescribed in this subsection shall be adjusted each year by an
amount equal to the dollar amount of the difference between the
basic foundation allowance for the current state fiscal year and
$5,000.00, minus $200.00.
(5) The allocation calculated under this section for a pupil
shall be based on the foundation allowance of the pupil's district
of residence. However, for a pupil enrolled in a district other
than the pupil's district of residence, if the foundation allowance
of the pupil's district of residence has been adjusted pursuant to
subsection (19), the allocation calculated under this section shall
not include the adjustment described in subsection (19). For a
pupil enrolled pursuant to section 105 or 105c in a district other
than the pupil's district of residence, the allocation calculated
under this section shall be based on the lesser of the foundation
allowance of the pupil's district of residence or the foundation
allowance of the educating district. For a pupil in membership in a
K-5, K-6, or K-8 district who is enrolled in another district in a
grade not offered by the pupil's district of residence, the
allocation calculated under this section shall be based on the
foundation allowance of the educating district if the educating
district's foundation allowance is greater than the foundation
allowance of the pupil's district of residence. The calculation
under this subsection shall take into account a district's per
pupil allocation under section 20j(2).
(6) Subject to subsection (7) and section 22b(3) and except as
otherwise provided in this subsection, for pupils in membership,
other than special education pupils, in a public school academy or
a university school, the allocation calculated under this section
is an amount per membership pupil other than special education
pupils in the public school academy or university school equal to
the sum of the local school operating revenue per membership pupil
other than special education pupils for the district in which the
public school academy or university school is located and the state
portion of that district's foundation allowance, or the sum of the
basic foundation allowance under subsection (1) plus $300.00,
whichever is less. Notwithstanding section 101(2), for a public
school academy that begins operations after the pupil membership
count day, the amount per membership pupil calculated under this
subsection shall be adjusted by multiplying that amount per
membership pupil by the number of hours of pupil instruction
provided by the public school academy after it begins operations,
as determined by the department, divided by the minimum number of
hours of pupil instruction required under section 101(3). The
result of this calculation shall not exceed the amount per
membership pupil otherwise calculated under this subsection.
(7) If more than 25% of the pupils residing within a district
are in membership in 1 or more public school academies located in
the district, then the amount per membership pupil calculated under
this section for a public school academy located in the district
shall be reduced by an amount equal to the difference between the
product of the taxable value per membership pupil of all property
in the district that is not a principal residence or qualified
agricultural property times the lesser of 18 mills or the number of
mills of school operating taxes levied by the district in 1993-94
and the quotient of the ad valorem property tax revenue of the
district captured under 1975 PA 197, MCL 125.1651 to 125.1681, the
tax increment finance authority act, 1980 PA 450, MCL 125.1801 to
125.1830, the local development financing act, 1986 PA 281, MCL
125.2151 to 125.2174, or the brownfield redevelopment financing
act, 1996 PA 381, MCL 125.2651 to 125.2672, divided by the
district's membership excluding special education pupils, in the
school fiscal year ending in the current state fiscal year,
calculated as if the resident pupils in membership in 1 or more
public school academies located in the district were in membership
in the district. In order to receive state school aid under this
act, a district described in this subsection shall pay to the
authorizing body that is the fiscal agent for a public school
academy located in the district for forwarding to the public school
academy an amount equal to that local school operating revenue per
membership pupil for each resident pupil in membership other than
special education pupils in the public school academy, as
determined by the department.
(8) If a district does not receive an amount calculated under
subsection (9); if the number of mills the district may levy on a
principal residence and qualified agricultural property under
section 1211(1) of the revised school code, MCL 380.1211, is 0.5
mills or less; and if the district elects not to levy those mills,
the district instead shall receive a separate supplemental amount
calculated under this subsection in an amount equal to the amount
the district would have received had it levied those mills, as
determined by the department of treasury. A district shall not
receive a separate supplemental amount calculated under this
subsection for a fiscal year unless in the calendar year ending in
the fiscal year the district levies 18 mills or the number of mills
of school operating taxes levied by the district in 1993, whichever
is less, on property that is not a principal residence or qualified
agricultural property.
(9) For a district that had combined state and local revenue
per membership pupil in the 1993-94 state fiscal year of more than
$6,500.00 and that had fewer than 350 pupils in membership, if the
district elects not to reduce the number of mills from which a
principal residence and qualified agricultural property are exempt
and not to levy school operating taxes on a principal residence and
qualified agricultural property as provided in section 1211(1) of
the revised school code, MCL 380.1211, and not to levy school
operating taxes on all property as provided in section 1211(2) of
the revised school code, MCL 380.1211, there is calculated under
this subsection for 1994-95 and each succeeding fiscal year a
separate supplemental amount in an amount equal to the amount the
district would have received per membership pupil had it levied
school operating taxes on a principal residence and qualified
agricultural property at the rate authorized for the district under
section 1211(1) of the revised school code, MCL 380.1211, and
levied school operating taxes on all property at the rate
authorized for the district under section 1211(2) of the revised
school code, MCL 380.1211, as determined by the department of
treasury. If in the calendar year ending in the fiscal year a
district does not levy 18 mills or the number of mills of school
operating taxes levied by the district in 1993, whichever is less,
on property that is not a principal residence or qualified
agricultural property, the amount calculated under this subsection
will be reduced by the same percentage as the millage actually
levied compares to the 18 mills or the number of mills levied in
1993, whichever is less.
(10) Subject to subsection (4), for a district that is formed
or reconfigured after June 1, 2002 by consolidation of 2 or more
districts or by annexation, the resulting district's foundation
allowance under this section beginning after the effective date of
the consolidation or annexation shall be the average of the
foundation allowances of each of the original or affected
districts, calculated as provided in this section, weighted as to
the percentage of pupils in total membership in the resulting
district who reside in the geographic area of each of the original
or affected districts. The calculation under this subsection shall
take into account a district's per pupil allocation under section
20j(2).
(11) Each fraction used in making calculations under this
section shall be rounded to the fourth decimal place and the dollar
amount of an increase in the basic foundation allowance shall be
rounded to the nearest whole dollar.
(12) State payments related to payment of the foundation
allowance for a special education pupil are not calculated under
this section but are instead calculated under section 51a.
(13) To assist the legislature in determining the basic
foundation allowance for the subsequent state fiscal year, each
revenue estimating conference conducted under section 367b of the
management and budget act, 1984 PA 431, MCL 18.1367b, shall
calculate a pupil membership factor, a revenue adjustment factor,
and an index as follows:
(a) The pupil membership factor shall be computed by dividing
the estimated membership in the school year ending in the current
state fiscal year, excluding intermediate district membership, by
the estimated membership for the school year ending in the
subsequent state fiscal year, excluding intermediate district
membership. If a consensus membership factor is not determined at
the revenue estimating conference, the principals of the revenue
estimating conference shall report their estimates to the house and
senate subcommittees responsible for school aid appropriations not
later than 7 days after the conclusion of the revenue conference.
(b) The revenue adjustment factor shall be computed by
dividing the sum of the estimated total state school aid fund
revenue for the subsequent state fiscal year plus the estimated
total state school aid fund revenue for the current state fiscal
year, adjusted for any change in the rate or base of a tax the
proceeds of which are deposited in that fund and excluding money
transferred into that fund from the countercyclical budget and
economic stabilization fund under section 353e of the management
and budget act, 1984 PA 431, MCL 18.1353e, by the sum of the
estimated total school aid fund revenue for the current state
fiscal year plus the estimated total state school aid fund revenue
for the immediately preceding state fiscal year, adjusted for any
change in the rate or base of a tax the proceeds of which are
deposited in that fund. If a consensus revenue factor is not
determined at the revenue estimating conference, the principals of
the revenue estimating conference shall report their estimates to
the house and senate subcommittees responsible for school aid
appropriations not later than 7 days after the conclusion of the
revenue conference.
(c) The index shall be calculated by multiplying the pupil
membership factor by the revenue adjustment factor. However, for
2005-2006, the index shall be 1.00. If a consensus index is not
determined at the revenue estimating conference, the principals of
the revenue estimating conference shall report their estimates to
the house and senate subcommittees responsible for school aid
appropriations not later than 7 days after the conclusion of the
revenue conference.
(14) If the principals at the revenue estimating conference
reach a consensus on the index described in subsection (13)(c), the
basic foundation allowance for the subsequent state fiscal year
shall be at least the amount of that consensus index multiplied by
the basic foundation allowance specified in subsection (1).
(15) If at the January revenue estimating conference it is
estimated that pupil membership, excluding intermediate district
membership, for the subsequent state fiscal year will be greater
than 101% of the pupil membership, excluding intermediate district
membership, for the current state fiscal year, then it is the
intent of the legislature that the executive budget proposal for
the school aid budget for the subsequent state fiscal year include
a general fund/general purpose allocation sufficient to support the
membership in excess of 101% of the current year pupil membership.
(16) For a district that had combined state and local revenue
per membership pupil in the 1993-94 state fiscal year of more than
$6,500.00, that had fewer than 7 pupils in membership in the 1993-
94 state fiscal year, that has at least 1 child educated in the
district in the current state fiscal year, and that levies the
number of mills of school operating taxes authorized for the
district under section 1211 of the revised school code, MCL
380.1211, a minimum amount of combined state and local revenue
shall be calculated for the district as provided under this
subsection. The minimum amount of combined state and local revenue
for 1999-2000 shall be $67,000.00 plus the district's additional
expenses to educate pupils in grades 9 to 12 educated in other
districts as determined and allowed by the department. The minimum
amount of combined state and local revenue under this subsection,
before adding the additional expenses, shall increase each fiscal
year by the same percentage increase as the percentage increase in
the basic foundation allowance from the immediately preceding
fiscal year to the current fiscal year. The state portion of the
minimum amount of combined state and local revenue under this
subsection shall be calculated by subtracting from the minimum
amount of combined state and local revenue under this subsection
the sum of the district's local school operating revenue and an
amount equal to the product of the sum of the state portion of the
district's foundation allowance plus the amount calculated under
section 20j times the district's membership. As used in this
subsection, "additional expenses" means the district's expenses for
tuition or fees, not to exceed $6,500.00 as adjusted each year by
an amount equal to the dollar amount of the difference between the
basic foundation allowance for the current state fiscal year and
$5,000.00, minus $200.00, plus a room and board stipend not to
exceed $10.00 per school day for each pupil in grades 9 to 12
educated in another district, as approved by the department.
(17) For a district in which 7.75 mills levied in 1992 for
school operating purposes in the 1992-93 school year were not
renewed in 1993 for school operating purposes in the 1993-94 school
year, the district's combined state and local revenue per
membership pupil shall be recalculated as if that millage reduction
did not occur and the district's foundation allowance shall be
calculated as if its 1994-95 foundation allowance had been
calculated using that recalculated 1993-94 combined state and local
revenue per membership pupil as a base. A district is not entitled
to any retroactive payments for fiscal years before 2000-2001 due
to this subsection.
(18) For a district in which an industrial facilities
exemption certificate that abated taxes on property with a state
equalized valuation greater than the total state equalized
valuation of the district at the time the certificate was issued or
$700,000,000.00, whichever is greater, was issued under 1974 PA
198, MCL 207.551 to 207.572, before the calculation of the
district's 1994-95 foundation allowance, the district's foundation
allowance for 2002-2003 is an amount equal to the sum of the
district's foundation allowance for 2002-2003, as otherwise
calculated under this section, plus $250.00.
(19) For a district that received a grant under former section
32e for 2001-2002, the district's foundation allowance for 2002-
2003 and each succeeding fiscal year shall be adjusted to be an
amount equal to the sum of the district's foundation allowance, as
otherwise calculated under this section, plus the quotient of 100%
of the amount of the grant award to the district for 2001-2002
under former section 32e divided by the number of pupils in the
district's membership for 2001-2002 who were residents of and
enrolled in the district. Except as otherwise provided in this
subsection, a district qualifying for a foundation allowance
adjustment under this subsection shall use the funds resulting from
this adjustment for at least 1 of grades K to 3 for purposes
allowable under former section 32e as in effect for 2001-2002. For
an individual school or schools operated by a district qualifying
for a foundation allowance under this subsection that have been
determined by the department to meet the adequate yearly progress
standards of the federal no child left behind act of 2001, Public
Law 107-110, in both mathematics and English language arts at all
applicable grade levels for all applicable subgroups, the district
may submit to the department an application for flexibility in
using the funds resulting from this adjustment that are
attributable to the pupils in the school or schools. The
application shall identify the affected school or schools and the
affected funds and shall contain a plan for using the funds for
specific purposes identified by the district that are designed to
reduce class size, but that may be different from the purposes
otherwise allowable under this subsection. The department shall
approve the application if the department determines that the
purposes identified in the plan are reasonably designed to reduce
class size. If the department does not act to approve or disapprove
an application within 30 days after it is submitted to the
department, the application is considered to be approved. If an
application for flexibility in using the funds is approved, the
district may use the funds identified in the application for any
purpose identified in the plan.
(20) For a district that is a qualifying school district with
a school reform board in place under part 5a of the revised school
code, MCL 380.371 to 380.376, the district's foundation allowance
for 2002-2003 shall be adjusted to be an amount equal to the sum of
the district's foundation allowance, as otherwise calculated under
this section, plus the quotient of $15,000,000.00 divided by the
district's membership for 2002-2003. If a district ceases to meet
the requirements of this subsection, the department shall adjust
the district's foundation allowance in effect at that time based on
a 2002-2003 foundation allowance for the district that does not
include the 2002-2003 adjustment under this subsection. This
subsection only applies for 2002-2003, 2003-2004, and 2004-2005.
Beginning in 2005-2006, the foundation allowance of a district that
received an adjustment under this subsection for those fiscal years
shall be calculated as if those adjustments did not occur.
(21) Payments to districts, university schools, or public
school academies shall not be made under this section. Rather, the
calculations under this section shall be used to determine the
amount of state payments under section 22b.
(22) If an amendment to section 2 of article VIII of the state
constitution of 1963 allowing state aid to some or all nonpublic
schools is approved by the voters of this state, each foundation
allowance or per pupil payment calculation under this section may
be reduced.
(23) As used in this section:
(a) "Combined state and local revenue" means the aggregate of
the district's state school aid received by or paid on behalf of
the district under this section and the district's local school
operating revenue.
(b) "Combined state and local revenue per membership pupil"
means the district's combined state and local revenue divided by
the district's membership excluding special education pupils.
(c) "Current state fiscal year" means the state fiscal year
for which a particular calculation is made.
(d) "Immediately preceding state fiscal year" means the state
fiscal year immediately preceding the current state fiscal year.
(e) "Local school operating revenue" means school operating
taxes levied under section 1211 of the revised school code, MCL
380.1211.
(f) "Local school operating revenue per membership pupil"
means a district's local school operating revenue divided by the
district's membership excluding special education pupils.
(g) "Membership" means the definition of that term under
section 6 as in effect for the particular fiscal year for which a
particular calculation is made.
(h) "Principal residence" and "qualified agricultural
property" mean those terms as defined in section 7dd of the general
property tax act, 1893 PA 206, MCL 211.7dd.
(i) "School operating purposes" means the purposes included in
the operation costs of the district as prescribed in sections 7 and
18.
(j) "School operating taxes" means local ad valorem property
taxes levied under section 1211 of the revised school code, MCL
380.1211, and retained for school operating purposes.
(k) "Taxable value per membership pupil" means taxable value,
as certified by the department of treasury, for the calendar year
ending in the current state fiscal year divided by the district's
membership excluding special education pupils for the school year
ending in the current state fiscal year.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 6419(request no.
04956'05) of the 93rd Legislature is enacted into law.