4228: CONFERENCE REPORT (Date Completed: 5-23-13)

FY 2013-14 SCHOOL AID BUDGET H.B. 4228 (CR-1): CONFERENCE REPORT

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FY 2012-13 Year-to-Date Gross Appropriation.....................................................................

$12,944,687,000

Changes from FY 2012-13 Year-to-Date:
Items Included by the Senate and House
1. MPSERS Rate Cap. $273.3 million School Aid Fund increase to pay for the cost of the rate cap (average value $250 per pupil). Conference added $1.3 million for library costs.	274,600,000
2. Pupil Performance Grants. House and Senate increased funding to fully fund grants.	16,400,000
3. Technical Cost Adjustments. Appropriations were adjusted based on newer cost data, and were adjusted for anticipated Federal funds. One-time items were removed.	(22,993,200)
4. Transfer of Library Payments to MDE. Payments were transferred to the MDE budget.	(1,304,300)
5. Student-Centric Grants. New competitive grants for student-centric learning.	8,000,000
6. Economic Adjustments. Includes $287,500 Gross and $216,700 GF/GP.	287,500
Conference Agreement on Items of Difference
7. Great Start Readiness Program (GSRP) Grants. Conference concurred with Governor and Senate to increase grants for at-risk four-year-olds by $65.0 million (SAF).	65,000,000
8. Increase Per-Pupil Spending. Conference added a $30 increase in the basic foundation allowance and a $60 increase in the minimum foundation allowance (to $7,026). Also, an equity payment is provided for districts with foundation allowances below $7,076.	116,000,000
9. Michigan Virtual University. Conference concurred with one-half of the Governor's proposed increase to expand the role of MVU in online learning activities and support.	5,000,000
10. Best Practices, Tech, Class Size. Conference restored Governor's $55.0 million reduction in best practices. Other items not reduced are tech grants and class size grants. Also, Conference retained $5.0 million (of $10.0 million currently) for district consolidation.	(5,000,000)
11. MPSERS Offset. Conference reduced MPSERS offset by $55.0 million to $100.0 million.	(55,000,000)
12. Hold Harmless & Communities in Schools. Conference concurred with Senate to add $1.1 million to hold ISDs to no more than a 25% loss in equalization funding. Conference added $6.0 million to ensure districts receive at least a $5 increase in per-pupil funding.	7,067,000
13. Bilingual Education. House included $1.3 million for bilingual education grants. Senate did not include. Conference included $1.2 million.	1,200,000
14. Center for Educational Performance and Information Pupil Transfer Process. House added $99,800 to develop a pupil transfer application. Conference concurred at $100,000.	100,000
15. Items Not Included. Conference did not include computer adaptive tests, education reserve fund, communities in schools, or math/science pilot coalitions.	0
16. Other Changes. Conference concurred with Senate to increase rural schools by $559,600 and math/science centers $125,000. Conference added $3.0 million for FIRST Robotics; $1.0 million for CTE centers to integrate Michigan Merit Curriculum in STEM areas; $1.0 million for partnerships between districts and postsecondary to develop articulation and transfer agreements; and a $1.7 million increase for library Renaissance Zone funding.	7,759,600

Total Changes.....................................................................................................................	$417,116,600
FY 2013-14 Conference Report Ongoing/One-Time Gross Appropriation............................	$13,361,803,600
Amount Over/(Under) GF/GP Target: $0

FY 2013-14 SCHOOL AID BUDGET BOILERPLATE HIGHLIGHTS

Changes from FY 2012-13 Year-to-Date:

Items Included by the Senate and House

1. Consolidation Incentive. Senate and House included new language providing up to a $100 per-pupil consolidation incentive grant for districts, built into the combined foundation allowance. (Sec. 20)

2. Pupil Transfer after Count Date. Senate and House included new language requiring the development of a pupil transfer application process to allow for funding to follow a student that transfers districts after count date. (Sec. 25e)

3. Itinerant Reimbursement. Governor proposed eliminating the reimbursement to ISDs for itinerant staff, adversely affected by changes in special education funding implemented in FY 2003-04. Senate and House kept. (Sec. 51a(7))

Conference Agreement on Items of Difference

4. Student Membership Blend. Senate and Conference changed the blend from 90% fall plus 10% prior February to 90% fall plus 10% current-year February. House blend was 80% fall plus 20% current-year February. (Sec. 6)

5. Online Learning. Conference changed pupil definitions and included a new section (21f) regarding online learning. Students enrolling in a district offering online learning under Sec. 21f need not obtain permission from the resident district first. Students in grades 5 to 12 could enroll in up to two online courses; legislative intent to study increasing the cap for pupils that demonstrate success in online courses. Districts would be required to pay for online courses 80% upon enrollment and 20% upon completion. Conference included restrictions on how much districts pay for an online course, capped at 1/12 of foundation allowance per semester or 1/18 per trimester. Conference allowed home district to determine granting of academic credit based upon successful completion. (Sec. 6 and 21f)

6. Online Course Foundation. House changed the foundation allowance for a cyber school or for pupils attending a district under a seat-time waiver for a 100% online model to 85% of the foundation allowance of the district in which it is located. Conference did not include the House change. (Sec. 20)

7. Education Achievement Authority (EAA) Spending. Senate prohibited the EAA from expending any funds from any sources unless the funds are appropriated by the Legislature. Conference did not include (Sec. 22b)

8. Best Practices. Conference amended best practices criteria to allow a Voluntary Employees Beneficiary Association (VEBA) to qualify as policy holder; to require a comparison of competitive bids to exclude the cost of unfunded accrued liabilities; to require a district to publish online course syllabi for each online course offered; to offer health or physical education (without meeting State Board standards, as found in current law); and to include in the dashboard projections of revenues and expenditures, debt service, and total outstanding debt. (Section 22f)

9. Technology Infrastructure Grants. Conference retained technology infrastructure competitive grants based on need and limited uses to technology infrastructure, shared service consolidation of technology and data, and hardware. Also, Conference earmarked $5.0 million out of the $50.0 million total appropriation for a competitive bid for provision of 'whole-school' technology. (Sec. 22i)

10. Great Start Readiness Program. Conference eliminated the use of funds for parenting programs formerly funded under Sec. 32b; aligned the age eligibility to kindergarten eligibility; restricted grants to providers with at least three stars under the tiered rating system; ensured 90% of children participating are below 250% of the Federal poverty level (FPL), with children from the poorest families being enrolled prior to children in less poor families; established a sliding scale of tuition for students in families above 250% FPL; and allowed transportation costs to be reimbursed. Half-day per-slot reimbursement was increased from $3,400 to $3,625. (Sec. 32d and Sec. 39).

11. Michigan Virtual University. Conference included most of the new initiatives recommended by the Governor, including the expansion of statewide professional development and training for at least 500 teachers; establishing an internet platform to create and implement student-centric learning tools and resources; establish a public statewide catalog of online courses offered by public schools; and providing leadership for the state's system of online learning. (Sec. 98)

12. Instructional Days and Hours. House deleted provision allowing for 38 hours of professional development to be counted towards the 1,098 minimum number of instruction hours required, and increased minimum number of days required from 170 to 175. Conference concurred. (Sec. 101)

Date Completed: 5-23-13 Fiscal Analyst: Kathryn Summers

FY 2013-14 COMMUNITY COLLEGES BUDGET H.B. 4228 (CR-1): CONFERENCE REPORT

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FY 2012-13 Year-to-Date Gross Appropriation.....................................................................

$294,130,500

Changes from FY 2012-13 Year-to-Date:
Items Included by the Senate and House
1. Performance Funding. Governor included a $5.8 million GF/GP (2.0%) increase for community college operations distributed through a modified version of the Performance Indicators Task Force Formula. Governor removed $1,277,500 allocated to community colleges in FY 2012-13 based on local strategic value and reallocated those funds based on his proposed FY 2013-14 formula distribution. Governor replaced the local strategic value component of the formula with a new allocation based on the number of skilled trades program students placed in a relevant job or apprenticeship, with extra weighting for placing a student-veteran. Senate and House maintained FY 2012-13 base appropriations and distributed the FY 2013-14 $5.8 million increase through the current Performance Indicators Task Force Formula. Table 1 provides details by college.	5,847,100
2. Michigan Public School Employees Retirement System (MPSERS) Rate Cap. Governor, Senate, and House included $31.4 million GF/GP to fund the difference between the employer's capped contribution rate for unfunded accrued liabilities (20.96%) and the actual unfunded actuarial accrued liability contribution rate pursuant to MPSERS reform legislation. Conference also included an FY 2012-13 supplemental appropriation of $12.5 million GF/GP to fund FY 2012-13 rate cap costs (See Sec. 201b).	31,400,000
3. MPSERS Retiree Health Care. In FY 2012-13 the Governor recommended a $1,733,600 appropriation from the School Aid Fund for the purpose of offsetting a portion of MPSERS retirement contributions attributable to retiree health care costs. Distributions were to be based on the FY 2011-12 MPSERS payroll. The FY 2012-13 enacted budget included the funding, but allocated funds to community colleges on an across-the-board basis. Governor, Senate, and House continue funding, but distribute the funds based on college MPSERS payroll. Table 2 delineates the estimated allocation differences.	0
4. Renaissance Zone Reimbursements. Governor, Senate, and House included $3.5 million GF/GP for Renaissance Zone tax reimbursements. This appropriation was included in the Department of Treasury budget in FY 2012-13 at the same level of funding.	3,500,000
Conference Agreement on Items of Difference
5. FY 2013-14 One-Time Appropriations - Virtual Learning Collaborative. Governor and the Senate included $1.1 million GF/GP for the Virtual Learning Collaborative. The Collaborative provides access to courses offered by all Michigan public community colleges. In 2009 the Michigan Community College Association Board of Directors approved an affiliate membership for four-year institutions. To date, Lawrence Tech and Grand Valley State University have become members. The new State funding will be used for the development of course aggregator software, development of a "pathway to credential" tool that will identify courses toward a career path, develop analytics software that informs colleges of course demand for decision making of future offerings, and development of a repository of online courses and resources for use by faculty at member institutions. The House eliminated the appropriation. Conference concurred with Senate.	1,100,000

Total Changes.....................................................................................................................	$41,847,100
FY 2013-14 Conference Report Ongoing/One-Time Gross Appropriation.............................	$335,977,600
Amount Over/(Under) GF/GP Target: $0

FY 2013-14 COMMUNITY COLLEGES BUDGET BOILERPLATE HIGHLIGHTS

Changes from FY 2012-13 Year-to-Date:

Items Included by the Senate and House

1. MPSERS Reimbursements. MPSERS Reimbursement shall be distributed based MPSERS payroll. (Sec. 201 (4))

2. MPSERS Reform Costs. Payment of the difference between the unfunded actuarial accrued liability contribution rate calculated pursuant to the MPSERS Act and the statutory maximum employer rate of 20.96%. (Sec. 201 (5))

3. Renaissance Zone Reimbursements. Provides for distribution pursuant to Public Act 376 of 1996. (Sec 201 (6))

4. Collaborations with Four-Year Universities. Governor, Senate, and House added the goal of developing equivalency standards of core college courses and identifying equivalent courses offered by institutions. (Sec. 210(4))

5. Restored Provisions. Senate and House restored the following sections that were deleted by the Governor: Buy American/buy Michigan intent language (Sec. 204); depressed and deprived communities compete for and perform college contracts (Sec. 205); encourages community colleges to achieve efficiencies through collaborations (Sec. 212); prohibition on use of appropriations for purchase or lease of foreign automobiles (Sec. 227); and prohibition on disciplinary action against an employee for communicating with a member of the Legislature. (Sec. 228)

6. Core College Courses. Governor and Senate deleted provision for committee to develop a process to improve transferability of core college courses between colleges and universities (Sec. 210(a)).

Conference Agreement on Items of Difference

7. Anticipated Appropriations subsequent Fiscal Year. Legislative intent to provide the same level of appropriations for the next fiscal year, except that the line-items will be adjusted for changes in caseload and related costs, Federal fund match rates, economic factors, and available revenue, which will be determined after the January Revenue Estimating Conference. House changed January to May Revenue Estimating Conference. Senate and Conference retained current-year language. (Sec. 201a)

8. Virtual Learning Collaborative. Governor and Senate included language outlining the criteria for this one-time project. Requires report on use of funds upon request. (Sec. 201(7))

9. Appropriation Limitations/JCOS Compliance. Prohibits the use of appropriations in Part 1 for the construction or maintenance of a self-liquidating project. Provides that community colleges shall comply with current Joint Capital Outlay Subcommittee (JCOS) use and finance requirements. Provides for 1% penalty for each violation. Senate and Conference modified this language based on recent capital outlay reform legislation. (Sec. 208)

10. Transparency. Senate and Conference added reporting requirement for estimated costs incurred due to Affordable Health Care Act. House eliminated posting of board resolution regarding compliance with best practices, Senate and Conference restored. (Sec. 209)

11. Block Transfer Committee. Conference added legislative intent language that the Michigan Association of Collegiate Registrars and Admissions Officers implement any agreement or agreements among the community colleges and universities concerning the transferability of college courses resulting from the recommendations of the committee created under former Section 210a. Requires implementation update report. (Sec. 210b)

12. Statutory Mandates. House maintained this section. Governor, Senate, and Conference eliminated language stating legislative intent that interested parties review statutory mandates imposed on community colleges and determine whether those mandates are necessary and also review estimated costs and benefits. Provides for report. (Sec. 216)

13. Veterans Tuition and Fees. Senate added intent language to review the issue of in-district tuition and fee rates for veterans. House did not include. Conference concurred with Senate. (Sec. 229 (2))

14. Skilled Trades Jobs Placement. Senate included new language that required the Department of Technology, Management, and Budget (DTMB) to prepare a report by February 1, 2014, on the number of students that successfully completed a skilled trades program and obtained an apprenticeship or job in a field related to that skilled trades program. The report shall also indicate the number of these students that are veterans. Conference modified to requires DTMB to prepare a report by September 1, 2014, on the feasibility of providing accurate information on student educational outcomes in the employment market. (Sec. 229b)

Date Completed: 5-23-13 Fiscal Analyst: Bill Bowerman

FY 2013-14 HIGHER EDUCATION BUDGET H.B. 4228 (CR-1): CONFERENCE REPORT

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WHITE TEXT

FY 2012-13 Year-to-Date Gross Appropriation.....................................................................

$1,399,220,400

Changes from FY 2012-13 Year-to-Date:
Items Included by the Senate and House
1. Tuition Incentive Program (TIP). Governor, Senate, and House increased this program by $3.2 million GF/GP (7.3%), from $43.8 million to $47.0 million. The program pays tuition and fees for associate degree or certificate programs, as well as up to a maximum amount of $2,000 for junior and senior years combined at a four-year institution.	3,200,000
2. Children of Veterans/Officers Survivors Tuition Grants. Governor, Senate, and House increased funding from $1.2 million to $1.4 million.	200,000
3. College Access Program. Governor's recommendation transferred this program from the Department of Education to the Higher Education Budget. There is no adjustment to the FY 2012-13 level of funding. House and Senate concurred.	2,000,000
Conference Agreement on Items of Difference
4. Performance Funding. House included $4.0 million more than the Senate for performance funding. The formula used by the House scored Carnegie classification distributions as follows: 3 for improving, 2 for top 20%, and 1 for above the national median. House modified the distribution formula for Carnegie classifications by weighting the distribution by the number of resident undergraduate fiscal year equated students (FYES). Senate changed the scoring to: 3 for top 20%, 2 for above the national median, and 2 for improving. Conference included Senate scoring and weighted by all undergraduate students (resident and non-resident) for Carnegie distributions. See Table 1 for differences in funding allocations by university.	21,869,000
5. MPSERS reimbursements. The FY 2012-13 budget included $446,200 for the purpose of offsetting a portion of the MPSERS contributions. Senate increased this appropriation by $2.0 million GF/GP. House did not include this increase. Conference concurred with the Senate.	2,000,000
6. American Indian Tuition Waiver. Public Act 174 of 1976 provides for free tuition for Michigan resident North American Indians who attend Michigan public community colleges, universities, and certain Federal tribally controlled community colleges. State appropriations have not kept pace with actual costs. In FY 2012-13, universities absorbed $4.5 million of waiver costs. Senate added $2.0 million to offset part of the shortfall. House and Conference did not include this adjustment.	0
7. MSU AgBioResearch and MSU Extension. Governor included a $1,084,100 (2.0%) increase. House separated the appropriation into two line items, MSU AgBioResearch $29,706,600, and MSU Extension $25,582,100. Conference concurred with two line items and increased funding by $1.0 million over the Governor, Senate, and House.	2,084,100

Total Changes.....................................................................................................................	$31,353,100
FY 2013-14 Conference Report Ongoing/One-Time Gross Appropriation............................	$1,430,573,500
Amount Over/(Under) GF/GP Target: $0

FY 2013-14 HIGHER EDUCATION BUDGET BOILERPLATE HIGHLIGHTS

Changes from FY 2012-13 Year-to-Date:

Items Included by the Senate and House

1. State Tuition Grant Program. Governor changed application deadlines, eliminated work project authorization, and required new reporting. Senate and House did not include the Governor's changes. Conference made technical corrections to the carry-forward provision. (Sec. 252)

2. Other Sections. Senate and House restored the following sections removed by the Governor: Second-year appropriation intent (Sec. 236a); Buy American intent (Sec. 239); purchase of foreign automobiles prohibition (Sec. 239a); performance funding reporting (portion of Sec. 265a); and human embryonic stem cell research report (Sec. 274). Senate and House concurred on eliminating legislative intent regarding nonprofit worker centers. (Sec 273a).

Conference Agreement on Items of Difference

3. Federal and Private Funds. Governor and House removed statement that the acceptance and use of Federal or private funds does not obligate the Legislature to continue program. Senate and Conference retained. (Sec. 242)

4. Posting of Expenditures. Governor, Senate, and Conference removed listing of individual names. Senate and Conference require posting block transfer policies and reverse agreements. (Sec. 245)

5. Tuition Incentive Program. Governor eliminated program criteria and recommended a new statute to govern the program. The proposed legislation would limit the amount paid for Phase I students attending a university to 300.0% of the average statewide community college per-credit-hour cost beginning in FY 2014-15. Conference retained current-year language and did not include Senate and House intent statement limiting future grant amounts. (Sec. 256)

6. U of M Douglas Lake Biological Station. Governor and House removed intent statement to protect and preserve the research value of the biological station area and Douglas Lake. Senate and Conference retained. (Sec. 261)

7. Textbook Cost Review. Senate and Conference added language stating intent that universities develop policies to minimize the cost of textbooks and course materials. (Sec 262a)

8. Tuition Restraint. House and Senate included tuition restraint as a perquisite for performance funding. House set tuition restraint at 3.0%; Senate set at less than 4.0%. Conference set tuition restraint at 3.75%. (Sec. 265)

9. Unfunded Indian Tuition Waiver Costs. Senate included language related to new funding and provided for new reporting requirements. Conference included only new reporting requirements (new funding eliminated). (Sec. 268)

10. Transfer Credits. House and Conference added language requiring universities to report on the number of transfer credits, with grade of C or better, rejected for incoming students. (Sec. 272a)

11. Counseling Degree Programs/Student's Religious Beliefs. Report on efforts to accommodate religious beliefs of students in counseling degree programs. Governor and Senate removed, House and Conference retained. (Sec. 273)

12. Adult Co-resident Health Benefits. Intent statement that universities not provide health insurance/benefits for any adult co-resident of a university employee who is not a spouse or dependent. Governor and Senate removed. House and Conference retained. (Sec. 274a)

13. Yellow Ribbon GI Education Enhancement Program. Senate and Conference included intent that universities consider veterans residents for the purpose of tuition rates and fees, and also waive enrollment fees. (Sec. 275)

14. Self-liquidating Projects/JCOS Rule Compliance. Governor and House removed. Senate and Conference modified based on recent capital outlay reforms. (Sec. 275a)

15. Martin Luther King, Jr.-Cesar Chavez-Rosa Parks Grant Funds. Governor allows unexpended funds to be used by Workforce Development Agency (WDA) for administration costs. House, Senate, and Conference did not include. (Sec. 282)

16. New Degree Programs. Provides that public universities may establish the degree programs listed in this section. House maintained; Governor and Senate removed. Conference removed listing, but retained reporting requirement and legislative authority to exclude certain credit hours from HEIDI reports. (Sec. 289 and Sec. 290)

17. Federal Educational Rights & Privacy Act (FERPA). Requires universities to provide information from records pursuant to written authorization from student. Governor and House removed; Senate and Conference retained. (Sec. 293)

Date Completed: 5-23-13 Fiscal Analyst: Bill Bowerman

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.