Summary: Executive Budget Recommendation

Summary: House Budget Recommendation

As Passed Appropriations Committee

SCHOOL AID – HB 4887 (H-1)

FY 2005-06

Analyst: Mary Ann Cleary

	Recommended FY 2004-05 YTD				FY 2005-06	*Difference: House* *from FY 2004-05 YTD*
	Recommended FY 2004-05 YTD	Executive	House	Senate	Enacted	*Amount*	%
IDG/IDT	$0	$0	$0	$0	$0	$0	0.0
Federal	1,353,540,100	1,389,587,300	1,392,587,300	0	0	39,047,400	2.9
Local	0	0	0	0	0 0	0	0.0
Private	0	0	0	0	0	0	0.0
Restricted	10,948,322,200	11,398,994,600	11,294,171,100	0	0	345,848,900	3.2
GF/GP	165,200,000	20,200,000	96,420,100	0	0	(68,779,900)	(41.6)
Gross	$12,467,062,300	$12,808,781,900	$12,783,178,500	$0	$0	*$316,116,200*	*2.5*

NOTES: FY 2004-05 YTD figures include the revised recommendations. FY 2005-06 figures for the House include funding from HB 4831 of $289.8 million.

Overview

The School Aid budget makes appropriations to the state’s 552 local school districts, 216 public school academies, and 57 intermediate school districts for operations and certain categorical programs. It also appropriates funds to the Center for Education Performance, Department of Labor and Economic Growth, and other entities to implement certain grants and other programs related to K-12 education.

Major Budget Changes from 2004-05 YTD Appropriations:	FY 2004-05 YTD (as of5/23/05)	House Change From YTD
*1. Proposal A Obligation Payment* Recommends reducing the appropriation from the revised FY 2005 appropriation to reflect changes in taxable values, pupil membership blends, and anticipated savings from personal property tax audits. (Executive and House concur.)	Gross Restricted	$6,615,000,000 $6,615,600,000	($156,051,000) ($156,051,000)
*2. Discretionary Payment* The House recommends increasing the appropriation by $274.8 million from the revised FY 2005 appropriation to reflect the foundation allowance increase of $175 per pupil. Funding for the foundation increase is in HB 4831 (the omnibus budget) at $289.8 million. Eliminates $15.0 million funding for a district with a reform board in place. The Executive concurs with the foundation increase.	Gross Restricted	$2,923,200,000 $2,923,200,000	($15,000,000) ($15,000,000)
*3. Engineering* *Michigan's Future* The House** proposes an appropriation of $25.0 million to create a new $65 per pupil grant for each student in grades 6 through 8. Funds shall be used to improve pupil performance on the MEAP mathematics assessments and to help districts meet AYP requirements for mathematics.	Gross Restricted	$0 $0	$25,000,000 $25,000,000
*4. Competitive Math Grants and Math andScienceCenter* *Funding* The House maintains current law funding of $2.5 million to Math andScienceCenters and appropriates $2.5 million in competitive grants to programs that support middle school math curriculum and professional development for middle school math teachers. The Executive appropriates $2.5 million to the Math andScienceCenters.	Gross Federal Restricted	$6,081,300 3,581,000 $2,500,000	$3,374,700 874,700 $2,500,000
*5. School Readiness Program – Competitive Grants* The House transfers the program into school aid from the Department of Education and appropriates current-year funding of $12.25 million for the 4-year-old preschool program.	Gross Restricted	$0 $0	$12,250,000 $12,250,000
*6. Special Education Funding* The House recommends an increase of $59.5 million in restricted funds to cover anticipated costs associated with special education costs and increases the funding for special education millage equalization (Sec. 56) by $1.0 million. (Executive concurs with the $59.5 million increase.)	Gross Federal Restricted	$1,291,250,000 394,850,000 $896,400,000	$76,500,000 16,000,000 $60,500,000
*7. At-Risk Program* The House maintains current-law funding. The Executive increases the funding for at-risk students by $33.0 million to a total funding of $347.2 million.	Gross Restricted	$314,200,000 $314,200,000	$0 $0
*8. Intermediate School Districts (ISDs) General Operations* The House maintains current-law funding for general operations of $77.7 million and maintains funding for Sec. 32j (parent involvement program) in this line. Adds $3.0 million in restricted funds for hearing and vision screening programs and requires ISDs to contract with their local public health departments to provide the service and adds $200,000 for a strategic planning grant to a consortium or associations of ISDs. (See major boilerplate changes Sec. 81(6) for more detail.) The Executive recommends funding ISDs at $80.0 million, an increase of $2.3 million or 2.6% after adjusting for sec. 32j transfer. Also adds $200,000 for a strategic planning grant to a consortium or association of ISDs.	Gross Restricted	$81,028,100 $81,028,100	$3,200,000 $3,200,000
*9. Federal No Child Left Behind Grants* Increases federal No Child Left Behind funding by $14.3 million to $657.6 million. (Executive and House concur.)	Gross Federal	$643,237,500 $643,327,500	$14,328,800 $14,328,800
*10. School Lunch Programs (State and Federal)* Increases the funding for state lunch programs by $1.4 million to $22.5 million in order to meet the mandate under the "Durant" court decision. Federal funding is increased by $17.2 million to $306.7 million. (Executive and House concur.)	Gross Federal Restricted	$310,095,100 289,000,000 $21,095,100	$18,590,000 17,190,000 $1,400,000
*11. Center for Education Performance and Information* The House maintains current-law funding. The Executive recommends increasing the state appropriation by $2.7 million to a total of $4.2 million for operations and increases federal funds by $1.0 million for the development and implementation of a new pre-K to 20 tracking system.	Gross Federal GF/GP	$3,546,300 2,046,300 $1,500,000	($3,100) (3,100) $0
*12.* *Michigan* *Virtual High School* The House recommends an increase of $2.25 million for development of middle and high school math curriculum as required by the grade level content expectations. The Executive increases the general fund appropriation by $1.0 million for the development of theMichigan scholar curriculum. Increases the federal Title II funds by $4.0 million to support e-learning and virtual school initiatives contained in the U.S. National Educational Technology Plan.	Gross Federal GF/GP	$3,000,000 2,250,000 $750,000	$2,250,000 0 $2,250,000
*13. Freedom to Learn Grants* The House reduces the funding for 6^th grade laptops to $3.0 million in restricted funds and $8.0 million in federal funds, of which $3.0 million is from carryforward funding. The Executive eliminates all funding for the 6^th grade laptop program.	Gross Federal Restricted	$21,043,200 17,343,200 $3,700,000	($10,043,200) (9,343,200) ($700,000)
*14. School Bond Redemption Fund* Proposes restructuring the school bond loan fund by creating a revolving loan fund starting in FY 2005. By creating a revolving fund, all future borrowing for bonds and all new debt service from those bonds would be incorporated within the revolving fund. A payment of $41.1 million in FY 2005 and $44.5 million in FY 2006 from the revolving fund would be realized, however; payments from the old debt would resume in FY 2007. (Executive and House concur.)	Gross Restricted GF/GP	$41,100,000 0 $41,100,000	$3,400,000 44,500,000 ($41,100,000)
*15. Renaissance Zone Reimbursement* Recommends an $8.8 million increase to cover anticipated costs associated with renaissance zones. This allocation is to reimburse school districts, ISDs and state education tax for property tax losses associated with the zones. (Executive and House concur.)	Gross Restricted	$36,200,000 $36,200,000	$8,800,000 $8,800,000
*16. Payment In Lieu of Taxes (PILT) Reimbursement* Reimbursement to districts, ISDs, and community colleges for PILT obligations per PA 513 of 2004. (Executive and House concur.)	Gross Restricted	$0 $0	$2,400,000 $2,400,000
*17. Court Placed Students* The House increases funding for this program by $1.0 million to a total of $9.0 million. (See major boilerplate Sec. 24 for language changes.)	Gross Restricted	$8,000,000 $8,000,000	$1,000,000 $1,000,000
*18. Adult Education Funding* The House increases funding for adult education programs by $1.0 million to a total of $21.0 million. (See major boilerplate Sec. 107a for language changes.)	Gross Restricted	$20,000,000 $20,000,000	$1,000,000 $1,000,000
*19. Early Childhood Grants (Age 0-3)* The House transfers the funding for this program to the Department of Human Services.	Gross Restricted	$250,000 $250,000	($250,000) ($250,000)
*20.* *National* *Charter* *School* *Development and Performance Institute* The House appropriates $500,000 to the National Charter School Development and Performance Institute.	Gross GF/GP	$0 $0	$500,000 $500,000
*21. Special Education Evaluation Lending Library* The House appropriates $250,000 to establish a lending library to provide special needs assessment tools to districts and ISDs.	Gross Restricted	$0 $0	$250,000 $250,000
*22. High School Curriculum Cost Support* The House does not include funding for the high school curriculum grant. The Executive proposes an appropriation of $26.3 million to create a new $50 per pupil grant for each student in grades 9 through 12.	Gross Restricted	$0 $0	$0 $0

Major Budget Changes from 2004-05 YTD Appropriations:

FY 2004-05 YTD

(as of5/23/05)

House Change

From YTD

1. Proposal A Obligation Payment

Recommends reducing the appropriation from the revised FY 2005 appropriation to reflect changes in taxable values, pupil membership blends, and anticipated savings from personal property tax audits. (Executive and House concur.)

Gross

Restricted

$6,615,000,000

$6,615,600,000

($156,051,000)

($156,051,000)

2. Discretionary Payment

The House recommends increasing the appropriation by $274.8 million from the revised FY 2005 appropriation to reflect the foundation allowance increase of $175 per pupil. Funding for the foundation increase is in HB 4831 (the omnibus budget) at $289.8 million. Eliminates $15.0 million funding for a district with a reform board in place. The Executive concurs with the foundation increase.

Gross

Restricted

$2,923,200,000

$2,923,200,000

($15,000,000)

($15,000,000)

3. Engineering Michigan's Future

The House proposes an appropriation of $25.0 million to create a new $65 per pupil grant for each student in grades 6 through 8. Funds shall be used to improve pupil performance on the MEAP mathematics assessments and to help districts meet AYP requirements for mathematics.

Gross

Restricted

$25,000,000

$25,000,000

4. Competitive Math Grants and Math andScienceCenter Funding

The House maintains current law funding of $2.5 million to Math andScienceCenters and appropriates $2.5 million in competitive grants to programs that support middle school math curriculum and professional development for middle school math teachers. The Executive appropriates $2.5 million to the Math andScienceCenters.

Gross

Federal

Restricted

$6,081,300

3,581,000

$2,500,000

$3,374,700

874,700

$2,500,000

5. School Readiness Program – Competitive Grants

The House transfers the program into school aid from the Department of Education and appropriates current-year funding of $12.25 million for the 4-year-old preschool program.

Gross

Restricted

$12,250,000

$12,250,000

6. Special Education Funding

The House recommends an increase of $59.5 million in restricted funds to cover anticipated costs associated with special education costs and increases the funding for special education millage equalization (Sec. 56) by $1.0 million. (Executive concurs with the $59.5 million increase.)

Gross

Federal

Restricted

$1,291,250,000

394,850,000

$896,400,000

$76,500,000

16,000,000

$60,500,000

7. At-Risk Program

The House maintains current-law funding. The Executive increases the funding for at-risk students by $33.0 million to a total funding of $347.2 million.

Gross

Restricted

$314,200,000

$314,200,000

8. Intermediate School Districts (ISDs) General Operations

The House maintains current-law funding for general operations of $77.7 million and maintains funding for Sec. 32j (parent involvement program) in this line. Adds $3.0 million in restricted funds for hearing and vision screening programs and requires ISDs to contract with their local public health departments to provide the service and adds $200,000 for a strategic planning grant to a consortium or associations of ISDs. (See major boilerplate changes Sec. 81(6) for more detail.) The Executive recommends funding ISDs at $80.0 million, an increase of $2.3 million or 2.6% after adjusting for sec. 32j transfer. Also adds $200,000 for a strategic planning grant to a consortium or association of ISDs.

Gross

Restricted

$81,028,100

$81,028,100

$3,200,000

$3,200,000

9. Federal No Child Left Behind Grants

Increases federal No Child Left Behind funding by $14.3 million to $657.6 million. (Executive and House concur.)

Gross

Federal

$643,237,500

$643,327,500

$14,328,800

$14,328,800

10. School Lunch Programs (State and Federal)

Increases the funding for state lunch programs by $1.4 million to $22.5 million in order to meet the mandate under the "Durant" court decision. Federal funding is increased by $17.2 million to $306.7 million. (Executive and House concur.)

Gross

Federal

Restricted

$310,095,100

289,000,000

$21,095,100

$18,590,000

17,190,000

$1,400,000

11. Center for Education Performance and Information

The House maintains current-law funding. The Executive recommends increasing the state appropriation by $2.7 million to a total of $4.2 million for operations and increases federal funds by $1.0 million for the development and implementation of a new pre-K to 20 tracking system.

Gross

Federal

GF/GP

$3,546,300

2,046,300

$1,500,000

($3,100)

(3,100)

12. Michigan Virtual High School

The House recommends an increase of $2.25 million for development of middle and high school math curriculum as required by the grade level content expectations. The Executive increases the general fund appropriation by $1.0 million for the development of theMichigan scholar curriculum. Increases the federal Title II funds by $4.0 million to support e-learning and virtual school initiatives contained in the U.S. National Educational Technology Plan.

Gross

Federal

GF/GP

$3,000,000

2,250,000

$750,000

$2,250,000

$2,250,000

13. Freedom to Learn Grants

The House reduces the funding for 6^th grade laptops to $3.0 million in restricted funds and $8.0 million in federal funds, of which $3.0 million is from carryforward funding. The Executive eliminates all funding for the 6^th grade laptop program.

Gross

Federal

Restricted

$21,043,200

17,343,200

$3,700,000

($10,043,200)

(9,343,200)

($700,000)

14. School Bond Redemption Fund

Proposes restructuring the school bond loan fund by creating a revolving loan fund starting in FY 2005. By creating a revolving fund, all future borrowing for bonds and all new debt service from those bonds would be incorporated within the revolving fund. A payment of $41.1 million in FY 2005 and $44.5 million in FY 2006 from the revolving fund would be realized, however; payments from the old debt would resume in FY 2007. (Executive and House concur.)

Gross

Restricted

GF/GP

$41,100,000

$41,100,000

$3,400,000

44,500,000

($41,100,000)

15. Renaissance Zone Reimbursement

Recommends an $8.8 million increase to cover anticipated costs associated with renaissance zones. This allocation is to reimburse school districts, ISDs and state education tax for property tax losses associated with the zones. (Executive and House concur.)

Gross

Restricted

$36,200,000

$36,200,000

$8,800,000

$8,800,000

16. Payment In Lieu of Taxes (PILT) Reimbursement

Reimbursement to districts, ISDs, and community colleges for PILT obligations per PA 513 of 2004. (Executive and House concur.)

Gross

Restricted

$2,400,000

$2,400,000

17. Court Placed Students

The House increases funding for this program by $1.0 million to a total of $9.0 million. (See major boilerplate Sec. 24 for language changes.)

Gross

Restricted

$8,000,000

$8,000,000

$1,000,000

$1,000,000

18. Adult Education Funding

The House increases funding for adult education programs by $1.0 million to a total of $21.0 million. (See major boilerplate Sec. 107a for language changes.)

Gross

Restricted

$20,000,000

$20,000,000

$1,000,000

$1,000,000

19. Early Childhood Grants (Age 0-3)

The House transfers the funding for this program to the Department of Human Services.

Gross

Restricted

$250,000

$250,000

($250,000)

($250,000)

20. National Charter School Development and Performance Institute

The House appropriates $500,000 to the National Charter School Development and Performance Institute.

Gross

GF/GP

$500,000

$500,000

21. Special Education Evaluation Lending Library

The House appropriates $250,000 to establish a lending library to provide special needs assessment tools to districts and ISDs.

Gross

Restricted

$250,000

$250,000

22. High School Curriculum Cost Support

The House does not include funding for the high school curriculum grant. The Executive proposes an appropriation of $26.3 million to create a new $50 per pupil grant for each student in grades 9 through 12.

Gross

Restricted

Major Boilerplate Changes from 2004-05:
**Sec. 6(4) (AA). Membership Definition for Pre-Primary Special Education Pupils –NEW Defines membership for pre-primary special education pupil memberships. (Executive and House concur.**)
*Sec. 11(1). Revenue Sources/Cost Savings* – NEW The House assumes $0 in revenue from the elimination of tax expenditures assumes $41.1 million and $44.5 million from the revisions of the school bond loan fund and reduces the general fund contribution to $96.4 million.
**Sec. 11(4). Proration Language –ELIMINATED The House** removes districts that are under an emergency financial manger as being protected from any proration under this act.
*Sec. 20(1). Basic Foundation Allowance* – INCREASED Increases basic per-pupil foundation allowances by $175 to $6,875 for FY 2005-06. (Executive and House concur.)
*Sec. 20(20). Reform Board Allocation* – MODIFIED The House eliminates funding of $15.0 million for a school district with a former reform board in place.
*Sec. 24. Court Place Students –* MODIFIED Incorporates a special task force funding recommendation to pay juvenile facilities based on a per-pupil allocation. The new language phases out the current funding method of paying facilities for their added costs of education over the next four years. (Executive and House concur.)
**Sec. 51a. Special Education Itinerant Staff –MODIFIED Amends current language to restrict districts and PSAs from shifting their itinerant employees (speech therapists, physical therapists, school psychologists, etc.) to the ISD for purposes of claiming the special education reimbursement when there was no actual change in the delivery of service being provided within the district or PSA. (Executive and House concur.**)
*Sec. 57. Advance and Accelerated Grants –* MODIFIED The House changes the current program from a per pupil allocation to a competitive grant program for middle school summer institutes and comprehensive programs with a focus on math.
**Sec. 81(6). Intermediate School Districts Strategic Planning Grant –NEW Adds language for a strategic planning grant to a consortium or association of ISDs to conduct a study and make recommendations on best practices to more efficiently perform district functions. (Executive and House concur.) Starting in FY 2006-07 districts with fewer than 4,500 students must be in a consortium with at least one other district or ISD to implement at least one of the best practices recommended in the study. (House**)
**Sec. 98b. Freedom to Learn Grants–MODIFIED The House** amends the language to change the amount of the grant from $250 per pupil to $1,000 per pupil and $1,200 per teacher for purchase of the laptops in the current fiscal year instead of purchasing them over four years. The House also changes the per pupil match from $25 per pupil to $40 per pupil.
*Sec. 107a. Adult Education –* MODIFIED The House changes the distribution of payments to districts for funding adult education students from 90% for enrollment and 10% for completion to 75% for enrollment and 25% for completion.
*Sec. 107b. Adult Learning Pilot Programs –* ELIMINATED The House repeals this section.
*Sec. 147. MPSERS Contribution Subsidy –* MODIFIED Estimates the percentage of payroll that districts must allocate for public school employee retirement at 16.34%. (Executive and House concur.)

Major Boilerplate Changes from 2004-05:

Sec. 6(4) (AA). Membership Definition for Pre-Primary Special Education Pupils –NEW

Defines membership for pre-primary special education pupil memberships. (Executive and House concur.)

Sec. 11(1). Revenue Sources/Cost Savings – NEW

The House assumes $0 in revenue from the elimination of tax expenditures assumes $41.1 million and $44.5 million from the revisions of the school bond loan fund and reduces the general fund contribution to $96.4 million.

Sec. 11(4). Proration Language –ELIMINATED

The House removes districts that are under an emergency financial manger as being protected from any proration under this act.

Sec. 20(1). Basic Foundation Allowance – INCREASED

Increases basic per-pupil foundation allowances by $175 to $6,875 for FY 2005-06. (Executive and House concur.)

Sec. 20(20). Reform Board Allocation – MODIFIED

The House eliminates funding of $15.0 million for a school district with a former reform board in place.

Sec. 24. Court Place Students – MODIFIED

Incorporates a special task force funding recommendation to pay juvenile facilities based on a per-pupil allocation. The new language phases out the current funding method of paying facilities for their added costs of education over the next four years. (Executive and House concur.)

Sec. 51a. Special Education Itinerant Staff –MODIFIED

Amends current language to restrict districts and PSAs from shifting their itinerant employees (speech therapists, physical therapists, school psychologists, etc.) to the ISD for purposes of claiming the special education reimbursement when there was no actual change in the delivery of service being provided within the district or PSA. (Executive and House concur.)

Sec. 57. Advance and Accelerated Grants – MODIFIED

The House changes the current program from a per pupil allocation to a competitive grant program for middle school summer institutes and comprehensive programs with a focus on math.

Sec. 81(6). Intermediate School Districts Strategic Planning Grant –NEW

Adds language for a strategic planning grant to a consortium or association of ISDs to conduct a study and make recommendations on best practices to more efficiently perform district functions. (Executive and House concur.) Starting in FY 2006-07 districts with fewer than 4,500 students must be in a consortium with at least one other district or ISD to implement at least one of the best practices recommended in the study. (House)

Sec. 98b. Freedom to Learn Grants–MODIFIED

The House amends the language to change the amount of the grant from $250 per pupil to $1,000 per pupil and $1,200 per teacher for purchase of the laptops in the current fiscal year instead of purchasing them over four years. The House also changes the per pupil match from $25 per pupil to $40 per pupil.

Sec. 107a. Adult Education – MODIFIED

The House changes the distribution of payments to districts for funding adult education students from 90% for enrollment and 10% for completion to 75% for enrollment and 25% for completion.

Sec. 107b. Adult Learning Pilot Programs – ELIMINATED

The House repeals this section.

Sec. 147. MPSERS Contribution Subsidy – MODIFIED

Estimates the percentage of payroll that districts must allocate for public school employee retirement at 16.34%. (Executive and House concur.)