WORKING DRAFT A

HB-5872, As Passed House, August 25, 2010

SUBSTITUTE FOR

HOUSE BILL NO. 5872

A bill to amend 1979 PA 94, entitled

"The state school aid act of 1979,"

by amending section 11 (MCL 388.1611), as amended by 2010 PA 110,

and by adding section 11p.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 11. (1) For the fiscal year ending September 30, 2010,

there is appropriated for the public schools of this state and

certain other state purposes relating to education the sum of

$10,614,891,500.00 from the state school aid fund and the sum of

$30,206,200.00 from the general fund. For the fiscal year ending

September 30, 2010, there is also appropriated the sum of

$450,000,000.00 from the federal funding awarded to this state

under title XIV of the American recovery and reinvestment act of

2009, Public Law 111-5, to be used solely for the purpose of

funding the primary funding formula calculated under section 20, in

accordance with federal law. Subject to subsection (5), for the

fiscal year ending September 30, 2011, there is appropriated for

the public schools of this state and certain other state purposes

relating to education the sum of $10,949,559,200.00 from the state

school aid fund and the sum of $30,206,200.00 from the general

fund. For the fiscal year ending September 30, 2011, there is also

appropriated the ~~sum of $184,256,600.00 from~~ remaining balance of

the federal funding awarded to this state under title XIV of the

American recovery and reinvestment act of 2009, Public Law 111-5,

estimated at $184,256,600.00, to be used solely for the purpose of

funding the primary funding formula calculated under section 20, in

accordance with federal law. For the fiscal year ending September

30, 2011, there is also appropriated the amount of the federal

funding awarded to this state under section 101 of title I of

Public Law 111-226, estimated at $312,000,000.00, to be used solely

for the purpose of funding those portions of the primary funding

formulae calculated and allocated under section 11p, in accordance

with federal law. In addition, all other available federal funds

are appropriated each fiscal year for the fiscal year ending

September 30, 2010 and for the fiscal year ending September 30,

2011.

(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, 31f, 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, 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 under subsection (3), 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, 31f,

51a(2), 51a(12), 51c, and 53a, by that amount.

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) If the department reports to the chairpersons of the house

and senate appropriations subcommittees responsible for this act,

to the house and senate fiscal agencies, and to the state budget

director that the department has been notified that this state has

not been awarded a competitive grant from the federal incentive

grant program created under sections 14005 and 14006 of title XIV

of the American recovery and reinvestment act of 2009, Public Law

111-5, known as the "race to the top" grant program, then in

addition to the appropriation in subsection (1) there is also

appropriated from the state school aid fund for 2010-2011 an

additional amount not to exceed $26,167,500.00 and the general fund

appropriation in subsection (1) for 2010-2011 is reduced by

$2,363,800.00.

(6) 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. 11p. (1) For 2010-2011 only, there is allocated the

amount of the federal funding awarded to this state under section

101 of title I of Public Law 111-226, estimated at $312,000,000.00,

for the purpose of funding those portions of the primary funding

formulae that are calculated and allocated under this section.

(2) From the federal funding allocated under subsection (1),

there is allocated an amount not to exceed $246,000,000.00 to

provide a 1-time allocation for 2010-2011 only to districts and

public school academies in an amount equal to $154.00 per

membership pupil for the purposes of funding the shortfall in the

primary funding formula achieved through the reductions in section

11d. The department shall calculate and allocate to each district

or public school academy an amount equal to $154.00 per membership

pupil based on the 2010-2011 membership used for the October 2010

payment under this act.

(3) For 2010-2011 only, from the federal funding allocated

under subsection (1), there is allocated an amount not to exceed

$16,000,000.00 to provide a 1-time allocation of primary funding to

each intermediate district in an amount equal to the product of

24.5% multiplied by the amount of funding allocated to that

intermediate district under section 81 for 2010-2011.

(4) From the federal funding allocated under subsection (1),

there is allocated an amount not to exceed $50,000,000.00 to

provide to each district or public school academy for 2010-2011

only a 1-time portion of per-pupil funding to be allocated under

this subsection. The department shall calculate and allocate the 1-

time portion of per-pupil funding allocated to each district or

public school academy under this subsection as follows:

(a) First, for each district or public school academy,

calculate the amount that the district's foundation allowance or

public school academy's per pupil allocation calculated under

section 20 would be if the basic foundation allowance for 2010-2011

were $8,506.00, if the maximum public school academy allocation for

2010-2011 were $7,613.00, and if the $20.00 amount in section

20(3)(a) and 20(26)(h) were instead $10.00.

(b) Second, calculate the difference between the amount

calculated for the district or public school academy under

subdivision (a) and the amount of the district's foundation

allowance or public school academy's per pupil allocation as

actually calculated under section 20 for 2010-2011.

(b) times the district's or public school academy's 2010-2011

membership used for the October 2010 payment under this act.

(5) If there is money remaining under this section after the

allocations under subsections (2), (3), and (4) and after any

amount that is unused under those subsections because a district or

public school academy is unable to use its full allocation under

subsection (2) or (4), then in addition to the amounts allocated

under subsections (2) and (4) there is also allocated to each

district and public school academy that received money under

subsection (4) an equal per pupil amount of that remaining money,

using the district's or public school academy's 2010-2011

membership used for the October 2010 payment under this act.