SB-1095, As Passed House, May 31, 2006

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 1095

     A bill to amend 1979 PA 94, entitled

"The state school aid act of 1979,"

by amending sections 11 and 17b (MCL 388.1611 and 388.1617b),

section 11 as amended by 2005 PA 155 and section 17b as amended by

2005 PA 150.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 11. (1)  For the fiscal year ending September 30, 2005,

there is appropriated for the public schools of this state and

certain other state purposes relating to education the sum of

$10,907,222,200.00 from the state school aid fund established by

section 11 of article IX of the state constitution of 1963, the sum

of $41,100,000.00 from the proceeds of capitalization of the school

bond loan fund revolving fund, and the sum of $165,200,000.00 from

the general fund.  For the fiscal year ending September 30, 2006,

there is appropriated for the public schools of this state and

certain other state purposes relating to education the sum of

$11,257,600,000.00  $_________________ from the state school aid

fund established by section 11 of article IX of the state

constitution of 1963, the sum of $44,500,000.00 from the proceeds

of capitalization of the school bond loan fund revolving fund, and

the sum of  $62,714,000.00  $_____________ from the general fund.

For the fiscal year ending September 30, 2007, there is

appropriated for the public schools of this state and certain other

state purposes relating to education the sum of $_________________

from the state school aid fund established by section 11 of article

IX of the state constitution of 1963 and the sum of $_____________

from the general fund. In addition, available federal funds are

appropriated for each fiscal year.

     (2) The appropriations under this section shall be allocated

as provided in this act. Money appropriated under this section from

the general fund shall be expended to fund the purposes of this act

before the expenditure of money appropriated under this section

from the state school aid fund. If the maximum amount appropriated

under this section from the state school aid fund for a fiscal year

exceeds the amount necessary to fully fund allocations under this

act from the state school aid fund, that excess amount shall not be

expended in that state fiscal year and shall not lapse to the

general fund, but instead shall be deposited into the school aid

stabilization fund created in section 11a.

     (3) If the maximum amount appropriated under this section from

the state school aid fund and the school aid stabilization fund for

a fiscal year exceeds the amount available for expenditure from the

state school aid fund for that fiscal year, payments under sections

11f, 11g, 11j, 22a, 26a, 26b, 31d, 51a(2), 51a(12), 51c, 53a, and

56 shall be made in full. In addition, for districts beginning

operations after 1994-95 that qualify for payments under section

22b, payments under section 22b shall be made so that the

qualifying districts receive the lesser of an amount equal to the

1994-95 foundation allowance of the district in which the district

beginning operations after 1994-95 is located or $5,500.00. The

amount of the payment to be made under section 22b for these

qualifying districts shall be as calculated under section 22a, with

the balance of the payment under section 22b being subject to the

proration otherwise provided under this subsection and subsection

(4). If proration is necessary after 2002-2003, state payments

under each of the other sections of this act from all state funding

sources shall be prorated in the manner prescribed in subsection

(4) as necessary to reflect the amount available for expenditure

from the state school aid fund for the affected fiscal year.

However, if the department of treasury determines that proration

will be required under this subsection, or if the department of

treasury determines that further proration is required under this

subsection after an initial proration has already been made for a

fiscal year, the department of treasury shall notify the state

budget director, and the state budget director shall notify the

legislature at least 30 calendar days or 6 legislative session

days, whichever is more, before the department reduces any payments

under this act because of the proration. During the 30 calendar day

or 6 legislative session day period after that notification by the

state budget director, the department shall not reduce any payments

under this act because of proration under this subsection. The

legislature may prevent proration from occurring by, within the 30

calendar day or 6 legislative session day period after that

notification by the state budget director, enacting legislation

appropriating additional funds from the general fund,

countercyclical budget and economic stabilization fund, state

school aid fund balance, or another source to fund the amount of

the projected shortfall.

     (4) If proration is necessary, the department shall calculate

the proration in district and intermediate district payments that

is required under subsection (3) as follows:

     (a) The department shall calculate the percentage of total

state school aid allocated under this act for the affected fiscal

year for each of the following:

     (i) Districts.

     (ii) Intermediate districts.

     (iii) Entities other than districts or intermediate districts.

     (b) The department shall recover a percentage of the proration

amount required under subsection (3) that is equal to the

percentage calculated under subdivision (a)(i) for districts by

reducing payments to districts. This reduction shall be made by

calculating an equal dollar amount per pupil as necessary to

recover this percentage of the proration amount and reducing each

district's total state school aid from state sources, other than

payments under sections 11f, 11g, 11j, 22a, 26a, 26b, 31d, 51a(2),

51a(12), 51c, and 53a, by that amount.

     (c) The department shall recover a percentage of the proration

amount required under subsection (3) that is equal to the

percentage calculated under subdivision (a)(ii) for intermediate

districts by reducing payments to intermediate districts. This

reduction shall be made by reducing the payments to each

intermediate district, other than payments under sections 11f, 11g,

26a, 26b, 51a(2), 51a(12), 53a, and 56, on an equal percentage

basis.

     (d) The department shall recover a percentage of the proration

amount required under subsection (3) that is equal to the

percentage calculated under subdivision (a)(iii) for entities other

than districts and intermediate districts by reducing payments to

these entities. This reduction shall be made by reducing the

payments to each of these entities, other than payments under

sections 11j, 26a, and 26b, on an equal percentage basis.

     (5) Except for the allocation under section 26a, any general

fund allocations under this act that are not expended by the end of

the state fiscal year are transferred to the school aid

stabilization fund created under section 11a.

     Sec. 17b. (1) Not later than October 20, November 20, December

20, January 20, February 20, March 20, April 20, May 20, June 20,

July 20, and August 20, the department shall prepare a statement of

the amount to be distributed under this act in the installment to

the districts and intermediate districts and deliver the statement

to the state treasurer, and the state treasurer shall pay the

installments on each of those dates or, if the date is not a

business day, on the immediately preceding business day before that

date. Except as otherwise provided in this act, the portion of the

district's or intermediate district's state fiscal year entitlement

to be included in each installment shall be 1/11. A district or

intermediate district shall accrue the payments received in July

and August to the school fiscal year ending the immediately

preceding June 30.

     (2) The state treasurer shall make payment under this section

by drawing a warrant in favor of the treasurer of each district or

intermediate district for the amount payable to the district or

intermediate district according to the statement and delivering the

warrant to the treasurer of each district or intermediate district,

or if the state treasurer receives a written request by the

treasurer of the district or intermediate district specifying an

account, by electronic funds transfer to that account of the amount

payable to the district or intermediate district according to the

statement. The department may make adjustments in payments made

under this section through additional payments when changes in law

or errors in computation cause the regularly scheduled payment to

be less than the amount to which the district or intermediate

district is entitled pursuant to this act.

     (3) Except as otherwise provided in this act, grant payments

under this act shall be paid according to subsection (1).

     (4) Upon the written request of a district or intermediate

district and the submission to the superintendent of proof

satisfactory to the department of a need of a temporary and

nonrecurring nature, the superintendent, with the written

concurrence of the state treasurer and the state budget director,

may authorize an advance release of funds due a district or

intermediate district under this act. An advance authorized under

this subsection shall not cause funds to be paid to a district or

intermediate district more than 30 days earlier than the

established payment date for those funds.