Summary: Executive Budget Recommendation

Summary: SubcommitteeBudget Recommendation

SCHOOL AID – House Bill 4359 (H-1) Draft A

FY 2007-08

Analysts: Mary Ann Cleary, Bethany Wicksall

	FY 2006-07 YTD	FY 2007-08	FY 2007-08	FY 2007-08	FY 2007-08	*Difference: House* *From FY 2006-07 YTD*
		Executive	House Sub.	Senate	Enacted	*Amount*	%
IDG/IDT	$0	$0	$0			$0	0.0
Federal	1,411,236,900	1,410,111,700	1,410,111,700			(1,125,200)	(0.1)
Local	0	0	0			0	0.0
Private	0	0	0			0	0.0
Restricted	11,647,508,200	11,985,916,700	11,924,243,600			276,735,400	2.4
GF/GP	35,000,000	35,000,000	55,000,000			20,000,000	57.2
Gross	$13,093,745,100	$13,431,028,400	$13,389,355,300			$295,610,200	*2.3*

Note: FY 2006-07 figures include the results of supplementals and Executive Order (EO) actions throughMarch 1, 2007.

Overview

The School Aid budget makes appropriations to the state’s 552 local school districts, 229 public school academies, and 57 intermediate school districts (ISDs) for operations and certain categorical programs. It also appropriates funds to the Center for Education Performance and Information, 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 FY 2006-07 YTD Appropriations	FY 2006-07 YTD	House Change
*1. Proposal A Obligation Payment (Sec. 22a)* Exec and House provide a reduction from FY 2006-07 to reflect changes in taxable values, pupil membership blends, and includes estimated additional costs forMidland tax appeals.	Gross Restricted	$6,207,000,000 6,207,000,000	($191,000,000) (191,000,000)
*2. Discretionary Payment (Sec. 22b)* Exec adds $295.1 million to reflect an increase of 2.5% which is equal to $178 per pupil increase in the foundation allowance for FY 2007-08 and rolls the FY 2006-07 equity payment of $23 per pupil into each qualifying district's base foundation. House adds $166.1 million to reflect an increase of 1.4% which is equal to $100 per pupil increase in the foundation allowance for FY 2007-08 and rolls the FY 2006-07 equity payment of $23 per pupil into each qualifying district's base foundation.	Gross Restricted	$3,584,950,000 3,584,950,000	$166,050,000 166,050,000
*3. Equity Payment (Sec. 22c)* House includes an increase of $96.0 million to a total of $116.0 million for equity payment of up to $100 per pupil for districts with a FY 2007-08 foundation of $7,669 or less.	Gross Restricted	$20,000,000 20,000,000	$96,000,000 96,000,000
*4. Declining Enrollment (Sec. 29)* Exec and House include an increase of $16.0 million to a total of $36.0 million for declining enrollment grants to local districts (not including charters) with two years of consecutive pupil membership decline. The payment would equal the district's 3-year pupil membership average minus the actual pupil membership times the district's foundation allowance. If insufficient funds are available the funding will be prorated.	Gross Restricted	$20,000,000 20,000,000	$16,000,000 16,000,000
*5. School Readiness Program – Full-Day Grants – NEW (Sec. 32e)* Exec creates a new full-day preschool program for at-risk children to districts funded with a foundation allowance for up to 26,000 children at a cost of $194.6 million. House provides for up to 11,000 children at a cost of $87.3 million.	Gross Restricted	N/A N/A	$87,300,000 87,300,000
6 *Universal* *Pre-School* *4-year-old program – NEW (Sec. 32f)* House creates a new universal full-day preschool program for any district funded with a foundation allowance for up to 11,000 children at a cost of $87.3 million.	Gross Restricted	N/A N/A	$87,300,000 87,300,000
*7. School Readiness Program – District Grants (Sec. 32d)* Exec and House increase funding by $4.6 million to $83.4 million. The additional funding increases the per-child allocation from $3,300 to $3,500.	Gross Restricted GF/GP	$78,800,000 78,600,000 $200,000	$4,600,000 4,600,000 $0
*8. School Readiness Program – Competitive Grants (Sec. 32L)* Exec and House increase funding by $800,000 to $13.1 million. The additional funding increases the per-child allocation from $3,300 to $3,500.	Gross GF/GP	$12,250,000 12,250,000	$800,000 800,000
*9. 0-3 Secondary Prevention Early Childhood Grants (Sec. 32c)* House increases funding by $13.25 million to $15 million for interagency early childhood grants.	Gross Restricted	$1,750,000 1,750,000	$13,250,000 13,250,000
*10. Intermediate District (ISD) Parent Involvement Grants (Sec. 32j)* House increases funding by $10 million to $15 million for the 0-5 parent involvement grants ISD run by ISDs.	Gross Restricted	$5,000,000 5,000,000	$10,000,000 10,000,000
*11. Great Start Communities (ECIC) Grants (Sec. 32b)* House increases funding by $1.5 million to $2.5 million for competitive grants awarded to eligible ISDs in amounts determined by the Early Childhood Investment Corporation (ECIC).	Gross Restricted	$1,000,000 1,000,000	$1,500,000 1,500,000
*12. Intermediate School Districts (ISDs) General* *Operations (Sec. 81)* Exec increases general operations funding by 2.5% or $2.0 million to $82.1 million. House provides no increase for the general operations for ISDs.	Gross Restricted	$80,110,900 80,110,900	$0 0
*13. 21^st Century Learning Environments (Sec. 98d)* House appropriates $38 million to create a statewide initiative with new learning environments to create academic content and knowledge in digital forms. Funding shall be used to provide professional development, create a statewide content repository, coordinate efforts with other programs, and assist districts in obtaining innovative content creation and distribution tools.	Gross Restricted	N/A N/A	$38,000,000 38,000,000
*14. Transportation Grants (Sec. 77)* House appropriates $20 million for qualified districts for costs associated with transporting pupils to and from school. Allocates $15 million to districts with total square miles greater than 156 and $5 million to districts with fewer than 5.0 pupils per square mile. Payments for each would equal around $98 per pupil.	Gross Restricted	N/A N/A	$20,000,000 20,000,000
*15. Middle School Math - District Grants (Sec. 99c)* Exec and House eliminate this grant program.	Gross Restricted	$20,000,000 20,000,000	($20,000,000) (20,000,000)
*16. Consolidation of Business, Administrative, and Instructional Services - NEW* Exec provides $10.0 million for incentive payments to districts that consolidate services with their Intermediate School Districts. House does not include this section.	Gross Restricted GF/GP	N/A N/A N/A	$0 0 $0
*17. MEAP Assessment Testing Costs* Exec and House increase funding by $10.7 million for costs associated with elementary and high school assessments required under State and Federal law.	Gross Federal Restricted	$27,925,200 8,425,200 19,500,000	$10,674,800 374,800 10,300,000
*18. Health/Science Middle College Program (Sec. 64)* Exec and House include an increase of $2.0 million for a total of $4.0 million in grant funding for ISDs or Detroit Public Schools that are in consortium with a community college or state university and a hospital to create a middle college focused on health sciences. Limits the grant to four years with recipients receiving 100% of their prior year grant amount for the second year, and 50% of their prior year grant amount for each year after. House allows for current grant recipients to apply for another grant.	Gross Restricted	$2,000,000 2,000,000	$2,000,000 2,000,000
*19. Amer-I-Can Grants (Sec. 31g)* House includes two new grants for the Amer-I-Can training curriculum in life-management skills, designed to raise self-esteem and teach students how to empower themselves. Grants toDetroit for $1.5 million andGrand Rapids for $500,000.	Gross Restricted	N/A N/A	$2,000,000 2,000,000
*20. Post Secondary Education Attainment (Sec. 65a)* House includes new grant of $500,000 to Macomb ISD for the purpose of establishing a pilot program to facilitate access by students of all ages to information regarding post secondary opportunities.	Gross Restricted	N/A N/A	$500,000 500,000
*21. Freedom to Learn (Sec. 98b)* Exec and House eliminate this program as the Federal carry forward funding supporting this program will expire.	Gross Federal	$1,500,000 1,500,000	($1,500,000) (1,500,000)
*22. Refinancing of Bonds* House restructures the debt service on the Durant bonds (Sec. 11g) if notification by the Municipal Bond Authority byMay 15, 2007 and refinances some of the bonds under the school bond loan fund (Sec. 11j).	Gross Restricted	$82,961,000 82,961,000	($80,920,000) (80,920,000
*23.* *Michigan* *Virtual University (Sec. 98)* House eliminates $500,000 in School Aid funds for the My Dream Explorer career planning software statewide collaboration.	Gross Federal Restricted GF/GP	$6,000,000 3,250,000 2,250,000 500,000	($500,000) 0 (500,000) 0
*24. Child andAdolescentHealthCenters*** House increases funding by $2 million to $5.7 million for additional Adolescent Health Centers.	Gross Restricted	$3,743,000 3,743,000	$2,000,000 2,000,000
*25. Other Categorical Grants* House maintains funding Automatic External Defibrillators grant (Sec. 99d) and Mercy Education Project (Sec. 31a(8)) at $100,000 each. Appropriates $100,000WayneStateUniversity for the SEMAA (science, engineering, mathematics, aerospace academy) (Sec. 99i).	Gross Restricted	$200,000 200,000	$100,000 100,000
*26. Other Categorical Eliminations* Exec and House eliminate the following new categoricals added in PA 342 of 2006: Children of Incarcerated Parents grants, Book a Month grants, Early Intervention grants, Conductive Learning Evaluation, International Baccalaureate grants, Precollege Engineering grant to Kalamazoo, Web Based Testing grant, School Building Security Maps grants, Positive Behavioral Support grants.	Gross Restricted	$5,025,000 5,025,000	($5,025,000) (5,025,000)

Major Budget Changes from FY 2006-07 YTD Appropriations

FY 2006-07 YTD

House Change

1. Proposal A Obligation Payment (Sec. 22a)

Exec and House provide a reduction from FY 2006-07 to reflect changes in taxable values, pupil membership blends, and includes estimated additional costs forMidland tax appeals.

Gross

Restricted

$6,207,000,000

6,207,000,000

($191,000,000)

(191,000,000)

2. Discretionary Payment (Sec. 22b)

Exec adds $295.1 million to reflect an increase of 2.5% which is equal to $178 per pupil increase in the foundation allowance for FY 2007-08 and rolls the FY 2006-07 equity payment of $23 per pupil into each qualifying district's base foundation.

House adds $166.1 million to reflect an increase of 1.4% which is equal to $100 per pupil increase in the foundation allowance for FY 2007-08 and rolls the FY 2006-07 equity payment of $23 per pupil into each qualifying district's base foundation.

Gross

Restricted

$3,584,950,000

3,584,950,000

$166,050,000

166,050,000

3. Equity Payment (Sec. 22c)

House includes an increase of $96.0 million to a total of $116.0 million for equity payment of up to $100 per pupil for districts with a FY 2007-08 foundation of $7,669 or less.

Gross

Restricted

$20,000,000

20,000,000

$96,000,000

96,000,000

4. Declining Enrollment (Sec. 29)

Exec and House include an increase of $16.0 million to a total of $36.0 million for declining enrollment grants to local districts (not including charters) with two years of consecutive pupil membership decline. The payment would equal the district's 3-year pupil membership average minus the actual pupil membership times the district's foundation allowance. If insufficient funds are available the funding will be prorated.

Gross

Restricted

$20,000,000

20,000,000

$16,000,000

16,000,000

5. School Readiness Program – Full-Day Grants – NEW (Sec. 32e)

Exec creates a new full-day preschool program for at-risk children to districts funded with a foundation allowance for up to 26,000 children at a cost of $194.6 million.

House provides for up to 11,000 children at a cost of $87.3 million.

Gross

Restricted

N/A

N/A

$87,300,000

87,300,000

6 Universal Pre-School 4-year-old program – NEW (Sec. 32f)

House creates a new universal full-day preschool program for any district funded with a foundation allowance for up to 11,000 children at a cost of $87.3 million.

Gross

Restricted

N/A

N/A

$87,300,000

87,300,000

7. School Readiness Program – District Grants (Sec. 32d)

Exec and House increase funding by $4.6 million to $83.4 million. The additional funding increases the per-child allocation from $3,300 to $3,500.

Gross

Restricted

GF/GP

$78,800,000

78,600,000

$200,000

$4,600,000

4,600,000

8. School Readiness Program – Competitive Grants (Sec. 32L)

Exec and House increase funding by $800,000 to $13.1 million. The additional funding increases the per-child allocation from $3,300 to $3,500.

Gross

GF/GP

$12,250,000

12,250,000

$800,000

800,000

9. 0-3 Secondary Prevention Early Childhood Grants (Sec. 32c)

House increases funding by $13.25 million to $15 million for interagency early childhood grants.

Gross

Restricted

$1,750,000

1,750,000

$13,250,000

13,250,000

10. Intermediate District (ISD) Parent Involvement Grants (Sec. 32j)

House increases funding by $10 million to $15 million for the 0-5 parent involvement grants ISD run by ISDs.

Gross

Restricted

$5,000,000

5,000,000

$10,000,000

10,000,000

11. Great Start Communities (ECIC) Grants (Sec. 32b)

House increases funding by $1.5 million to $2.5 million for competitive grants awarded to eligible ISDs in amounts determined by the Early Childhood Investment Corporation (ECIC).

Gross

Restricted

$1,000,000

1,000,000

$1,500,000

1,500,000

12. Intermediate School Districts (ISDs) General

Operations (Sec. 81)

Exec increases general operations funding by 2.5% or $2.0 million to $82.1 million.

House provides no increase for the general operations for ISDs.

Gross

Restricted

$80,110,900

80,110,900

13. 21^st Century Learning Environments (Sec. 98d)

House appropriates $38 million to create a statewide initiative with new learning environments to create academic content and knowledge in digital forms. Funding shall be used to provide professional development, create a statewide content repository, coordinate efforts with other programs, and assist districts in obtaining innovative content creation and distribution tools.

Gross

Restricted

N/A

N/A

$38,000,000

38,000,000

14. Transportation Grants (Sec. 77)

House appropriates $20 million for qualified districts for costs associated with transporting pupils to and from school. Allocates $15 million to districts with total square miles greater than 156 and $5 million to districts with fewer than 5.0 pupils per square mile. Payments for each would equal around $98 per pupil.

Gross

Restricted

N/A

N/A

$20,000,000

20,000,000

15. Middle School Math - District Grants (Sec. 99c)

Exec and House eliminate this grant program.

Gross

Restricted

$20,000,000

20,000,000

($20,000,000)

(20,000,000)

16. Consolidation of Business, Administrative, and Instructional Services - NEW

Exec provides $10.0 million for incentive payments to districts that consolidate services with their Intermediate School Districts.

House does not include this section.

Gross

Restricted

GF/GP

N/A

N/A

17. MEAP Assessment Testing Costs

Exec and House increase funding by $10.7 million for costs associated with elementary and high school assessments required under State and Federal law.

Gross

Federal

Restricted

$27,925,200

8,425,200

19,500,000

$10,674,800

374,800

10,300,000

18. Health/Science Middle College Program (Sec. 64)

Exec and House include an increase of $2.0 million for a total of $4.0 million in grant funding for ISDs or Detroit Public Schools that are in consortium with a community college or state university and a hospital to create a middle college focused on health sciences. Limits the grant to four years with recipients receiving 100% of their prior year grant amount for the second year, and 50% of their prior year grant amount for each year after. House allows for current grant recipients to apply for another grant.

Gross

Restricted

$2,000,000

2,000,000

$2,000,000

2,000,000

19. Amer-I-Can Grants (Sec. 31g)

House includes two new grants for the Amer-I-Can training curriculum in life-management skills, designed to raise self-esteem and teach students how to empower themselves. Grants toDetroit for $1.5 million andGrand Rapids for $500,000.

Gross

Restricted

N/A

N/A

$2,000,000

2,000,000

20. Post Secondary Education Attainment (Sec. 65a)

House includes new grant of $500,000 to Macomb ISD for the purpose of establishing a pilot program to facilitate access by students of all ages to information regarding post secondary opportunities.

Gross

Restricted

N/A

N/A

$500,000

500,000

21. Freedom to Learn (Sec. 98b)

Exec and House eliminate this program as the Federal carry forward funding supporting this program will expire.

Gross

Federal

$1,500,000

1,500,000

($1,500,000)

(1,500,000)

22. Refinancing of Bonds

House restructures the debt service on the Durant bonds (Sec. 11g) if notification by the Municipal Bond Authority byMay 15, 2007 and refinances some of the bonds under the school bond loan fund (Sec. 11j).

Gross

Restricted

$82,961,000

82,961,000

($80,920,000)

(80,920,000

23. Michigan Virtual University (Sec. 98)

House eliminates $500,000 in School Aid funds for the My Dream Explorer career planning software statewide collaboration.

Gross

Federal

Restricted

GF/GP

$6,000,000

3,250,000

2,250,000

500,000

($500,000)

(500,000)

24. Child andAdolescentHealthCenters

House increases funding by $2 million to $5.7 million for additional Adolescent Health Centers.

Gross

Restricted

$3,743,000

3,743,000

$2,000,000

2,000,000

25. Other Categorical Grants

House maintains funding Automatic External Defibrillators grant (Sec. 99d) and Mercy Education Project (Sec. 31a(8)) at $100,000 each. Appropriates $100,000WayneStateUniversity for the SEMAA (science, engineering, mathematics, aerospace academy) (Sec. 99i).

Gross

Restricted

$200,000

200,000

$100,000

100,000

26. Other Categorical Eliminations

Exec and House eliminate the following new categoricals added in PA 342 of 2006: Children of Incarcerated Parents grants, Book a Month grants, Early Intervention grants, Conductive Learning Evaluation, International Baccalaureate grants, Precollege Engineering grant to Kalamazoo, Web Based Testing grant, School Building Security Maps grants, Positive Behavioral Support grants.

Gross

Restricted

$5,025,000

5,025,000

($5,025,000)

(5,025,000)

Major Boilerplate Changes from FY 2006-07
*Sec. 20(1). Basic Foundation Allowance* – REVISED Exec increases the basic per-pupil foundation allowance by $178 plus the $23 equity payment from FY 2006-07, bringing it to $7,286 for FY 2007-08. House increases the basic per-pupil foundation allowance by $100 plus the $23 equity payment from FY 2006-07, bringing it to $7,208 for FY 2007-08.
**Sec. 51a. Special Education Itinerant Staff –MAINTAINED** Exec deletes. House maintains language that allows funding that would otherwise lapse from this section to pay affected districts or ISDs on a FY 2003-04 basis for FY 2006-07 only; if sufficient excess funds are not available to pay on FY 2003-04 basis, then proration of the excess funds will occur on an equal percentage basis.
*Sec. 32. Early Childhood Education – NEW* House provides intent that by 2011-2012, all districts will provide universal full-day preschool for 4-year-olds. Also provides intent that 11% of the total appropriation spent on 4-year-old preschool programs be appropriated for 0-3 and 0-5 early childhood programs.
**Sec. 32d. School Readiness – District Grants –REVISED** Exec and Housedelete the provisions that allow school readiness funds to be used for programs formerly funded under the All Students Achieve Program-Parents Involved in Education (ASAP-PIE) and that allow funds to be used for full-day preschool programs. Also revises to require programs to use an educational curriculum approved by the State Board of Education.
**Sec. 81. ISD Operations –REVISED** Exec and House increase requirements for ISDs including that they employ someone trained in the rules, regulations, and reporting procedures for student data for high school graduation and drop out rates, comply with the new graduation requirements, comply with the school employee fingerprinting statute, and furnish data required by the State and Federal government to CEPI and DOE.
*Sec. 107. Adult Education Program –* REVISED Execthe 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 House changes the distribution to 80% for enrollment and 20% for completion. Exec and House also require grantees to submit all information requested by DLEG to administer this program and eliminate language providing funding for new programs.
*Sec. 147. MPSERS Contribution Subsidy –* REVISED Exec and House propose revaluing the Michigan Public School Employee Retirement System (MPSERS) assets to their fair market value, thus allowing the rate charged to districts to decline from 17.74% of payroll in FY 2006-07 to 16.72% in FY 2007-08. If such legislation is not adopted, the retirement rate would be 18.56%.

Major Boilerplate Changes from FY 2006-07

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

Exec increases the basic per-pupil foundation allowance by $178 plus the $23 equity payment from FY 2006-07, bringing it to $7,286 for FY 2007-08. House increases the basic per-pupil foundation allowance by $100 plus the $23 equity payment from FY 2006-07, bringing it to $7,208 for FY 2007-08.

Sec. 51a. Special Education Itinerant Staff –MAINTAINED

Exec deletes.

House maintains language that allows funding that would otherwise lapse from this section to pay affected districts or ISDs on a FY 2003-04 basis for FY 2006-07 only; if sufficient excess funds are not available to pay on FY 2003-04 basis, then proration of the excess funds will occur on an equal percentage basis.

Sec. 32. Early Childhood Education – NEW

House provides intent that by 2011-2012, all districts will provide universal full-day preschool for 4-year-olds. Also provides intent that 11% of the total appropriation spent on 4-year-old preschool programs be appropriated for 0-3 and 0-5 early childhood programs.

Sec. 32d. School Readiness – District Grants –REVISED

Exec and Housedelete the provisions that allow school readiness funds to be used for programs formerly funded under the All Students Achieve Program-Parents Involved in Education (ASAP-PIE) and that allow funds to be used for full-day preschool programs. Also revises to require programs to use an educational curriculum approved by the State Board of Education.

Sec. 81. ISD Operations –REVISED

Exec and House increase requirements for ISDs including that they employ someone trained in the rules, regulations, and reporting procedures for student data for high school graduation and drop out rates, comply with the new graduation requirements, comply with the school employee fingerprinting statute, and furnish data required by the State and Federal government to CEPI and DOE.

Sec. 107. Adult Education Program – REVISED

Execthe 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

House changes the distribution to 80% for enrollment and 20% for completion.

Exec and House also require grantees to submit all information requested by DLEG to administer this program and eliminate language providing funding for new programs.

Sec. 147. MPSERS Contribution Subsidy – REVISED

Exec and House propose revaluing the Michigan Public School Employee Retirement System (MPSERS) assets to their fair market value, thus allowing the rate charged to districts to decline from 17.74% of payroll in FY 2006-07 to 16.72% in FY 2007-08. If such legislation is not adopted, the retirement rate would be 18.56%.