SB0138: SENATE SUBCOMMITTEE REC. (Date Completed: 3-29-17)

FY 2017-18 HIGHER EDUCATION BUDGET S.B. 138 (S-1, Draft 2): SENATE SUBCOMMITTEE REC.

Senate Bill 138 (S-1, Draft 2 as reported) Throughout this document Senate means Subcommittee.

Committee: Appropriations

			CHANGES FROM FY 2016-17 YEAR-TO-DATE
FULL-TIME EQUATED (FTE) CLASSIFIED POSITIONS/FUNDING SOURCE	FY 2016-17 YEAR-TO-DATE	FY 2017-18 SENATE SUBCOMM.	AMOUNT	PERCENT
FTE Positions..............................................................	N/A	N/A	0.0	0.0
GROSS.........................................................................	1,582,640,400	1,630,224,400	47,584,000	3.0
Less:
Interdepartmental Grants Received.....................	0	0	0	0.0
ADJUSTED GROSS..................................................	1,582,640,400	1,630,224,400	47,584,000	3.0
Less:
Federal Funds..........................................................	101,526,400	111,526,400	10,000,000	9.8
Local and Private....................................................	0	0	0	0.0
TOTAL STATE SPENDING.......................................	1,481,114,000	1,518,698,000	37,584,000	2.5
Less:
Other State Restricted Funds................................	237,209,500	235,743,500	(1,466,000)	(0.6)
GENERAL FUND/GENERAL PURPOSE..............	1,243,904,500	1,282,954,500	39,050,000	3.1
PAYMENTS TO LOCALS..........................................	0	0	0	0.0

FY 2016-17 Year-to-Date Gross Appropriation.....................................................................

$1,582,640,400

Changes from FY 2016-17 Year-to-Date:

1. University Operations. The Governor included an overall $35.0 million GF/GP (2.5%) increase for university operations. The formula continues performance metrics used in FY 2016-17. Half of the funding increase is allocated proportional to FY 2010-11 (across-the-board). Prerequisites for receiving performance funding are continued. Tuition restraint is set at the greater of 3.8% or $475 (FY 2016-17 tuition restraint was 4.2%). The Senate reduced the increase to $28.0 million (2.0%) and concurred with the formula and tuition restraint recommended by the Governor. Table 1 provides details of formula allocations and Table 2 compares the Senate to the Governor.

28,000,000

2. MSU AgBioResearch. MSU AgBioResearch performs agricultural research to promote efficient production, marketing, distribution, and use of farm products. The Governor included a 2.5% GF/GP increase for MSU AgBioResearch, increasing funding from $33,243,100 to $34,074,200. The Senate reduced the increase to $670,000 (2.0%).

670,000

3. MSU Extension. MSU Extension identifies and solves farm, home, and community problems through the practical application of research findings. MSU Extension operates Michigan's Expanded Food and Nutrition Education Program (EFNEP), serves as a resource for youth 4-H programs, and provides information on family financial planning. The Governor included a 2.5% GF/GP increase for MSU Extension, increasing funding from $28,672,600 to $29,391,500. The Senate reduced the increase to $580,000 (2.0%)

580,000

4. Competitive Scholarships. Public Act 208 of 1964 established State competitive scholarships. Undergraduate students at Michigan two-year and four-year, public and private institutions are eligible for up to 10 semesters if they have financial need and a qualifying ACT score. The Governor recommended increasing funding by 8.0 million GF/GP (43.6%), from $18,361,700 to $26,361,700. The Senate concurred.

8,000,000

5. Tuition Grants. Public Act 313 of 1966 established Tuition Grants. Undergraduate students at Michigan two-year and four-year private institutions are eligible for up to 10 semesters, if they have financial need. The Governor recommended increasing funding by $3.0 million GF/GP (8.6%), from $35,021,500 to $38,021,500. The Senate concurred.

3,000,000

6. Tuition Incentive Program (TIP). The TIP is a financial aid program targeted toward low-income middle school and high school students. It was established in FY 1986-87 through language in the Department of Social Services appropriation bill and was transferred to the Higher Education budget in FY 1992-93. The TIP provides an incentive to students to complete high school and go on to college by pledging to pay their tuition and fees for associate degree or certificate programs (Phase I), as well as up to $2,000 at a four-year institution (Phase II). Students in grades 6 through 12 who are Michigan Medicaid-eligible for 24 months in a 36-consecutive-month period can qualify for TIP. The Governor increased funding from $53.0 million to $58.3 million, funded from Federal Temporary Assistance for Needy Families (TANF). A supplemental of $2.6 million (TANF) is also recommended for FY 2016-17 based on projected costs. The Governor recommended additional limits to the program beginning in FY 2018-19. (See item #8 in boilerplate changes, which the Senate did not concur with.) A $4.7 funding shift from General Fund to TANF is also included in the Governor's FY 2017-18 recommendation. The Senate concurred with the funding adjustments recommended by the Governor, and also included the $2.6 million FY 2016-17 supplemental.

5,300,000

7. Michigan Public School Employees' Retirement System (MPSERS). Adjustments for the seven universities (Central, Eastern, Ferris, Lake Superior, Michigan Tech, Northern, and Western) include an increase of $2,411,000 (SAF) due to decreasing the assumed rate of return for the UAAL; a one-time increase of $419,000 (SAF) due to decreasing the assumed rate of return for the normal cost offset; and a decrease of $4,296,000 (SAF) due to investment gains and positive health experience. The Senate concurred with the Governor.

(1,466,000)

8. MSU Animal Agriculture Initiative. The Animal Agriculture Initiative is a partnership between livestock producers, industry groups, MSU and the Michigan Department of Agriculture and Rural Development. The initiative develops sustainable farm production practices, environmentally sound manure management systems, efficient new energy sources, safer food products and more humane animal care systems based on science. The one-time funding grant of $2.5 million GF/GP recommended by the Governor represents a portion of the $3.5 million request from MSU. It will fund new and continuing projects directly tied to problems limiting growth and sustainability of Michigan animal agriculture industries, provide investments in infrastructure and operations to support ongoing animal agriculture research, and support emergency funding to quickly address emerging issues. The Senate concurred with the Governor.

2,500,000

9. MSU Agriculture Workforce Initiative. The Governor recommended one-time funding of $1.2 million GF/GP to develop a food-processing curriculum and expand partnerships with community colleges. The Initiative provides direct support for Michigan’s agriscience programs and teachers. Funding will also be used to expand educational and training opportunities in animal agriculture (swine, dairy and meat industries) to improve food-borne illness detection, quality control, production monitoring and distribution related to food safety. The funding represents a portion of the $2.5 million requested by MSU. The Senate concurred with the Governor.

1,200,000

10. North 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 in university operation budgets have not kept pace with actual costs. In FY 2015-16, universities absorbed $6.1 million of waiver costs. The Senate added a separate appropriation of $300,000 to partially offset the shortfall. Estimated allocations to universities are as follows:

Central	$42,300	Michigan State	8,100	U of M-Ann Arbor	1,900
Eastern	3,200	Michigan Tech	5,500	U of M-Dearborn	10,500
Ferris	33,800	Northern	41,200	U of M- Flint	32,900
Grand Valley	35,000	Oakland	9,600	Wayne State	2,200
Lake Superior	47,400	Saginaw Valley	13,600	Western	12,800
				Total	$300,000

300,000

11. One-Time Appropriation. The FY 2016-17 budget included a one-time appropriation for the MSU Diagnostic Center for Population and Animal Health (DCPAH).

(500,000)

12. Comparison to Governor's Recommendation. The Senate is $7.0 million (all GF/GP) under the Governor.

Total Changes.....................................................................................................................	$47,584,000
FY 2017-18 Senate Appropriations Subcommittee Gross Appropriation..............................	$1,630,224,400

Boilerplate Changes from FY 2016-17 Year-to-Date:

1. P-20 Education Longitudinal Data System. A public university receiving funds in section 236 shall cooperate with all measures taken by the State to develop, operate, and maintain the statewide P-20 longitudinal data system described in section 94a. Governor removed "shall cooperate with all measures taken …………. "; and replaced with "provide its longitudinal data system data set for the preceding academic year …" Senate concurred. (Sec. 244)

2. Budget Transparency. Requires public university to maintain a public transparency website available through a link on its website homepage with specified budget and other information. Governor removed State Budget Director's authority to determine compliance and withhold funds for noncompliance. Senate restored. (Sec. 245)

3. Children of Veterans and Officer's Survivor Tuition Grant Programs. The Governor included new language providing that the funds appropriated for the programs shall be supported with revenue from the restricted account created in section 5 of the Children of Veterans Tuition Grant Act and unexpended funds remaining in the restricted account at the end of the fiscal year shall not lapse to the general fund. The general fund/general purpose funds appropriated for the grant programs shall also be deposited into the restricted account as required in section 5 of the Children of Veterans Tuition Grant Act. Funds deposited into the restricted account are appropriated and available for allocation as required in the Children of Veterans Tuition Grant act. The Senate concurred. (Sec. 249)

4. Financial Aid Requirement. The Governor added new language stating that to be considered eligible for any scholarship or grant financial aid program administered by treasury the student must file the free application for federal student aid (FAFSA) annually. The Senate did not include this provision. (Sec. 250)

5. State Competitive Scholarship Program. Provides that grants for the State Competitive Scholarship Program shall be distributed pursuant to 1964 PA 208, MCL 390.971 to 390.981 and includes other criteria. The Department of Treasury determines an actual maximum state competitive scholarship award per student, which shall be not less than $575.00. The Governor increased the per student award stated in this section from $575 to $1,000. The Senate concurred and also added carryforward authority similar to the Tuition Grant Program. (Sec. 251)

6. State Tuition Grant Program. Provides that grants for the State Tuition Grant Program shall be distributed pursuant to 1966 PA 313 and includes other criteria. The Department of Treasury determines an actual maximum state tuition grant award per student, which shall not be less than $1,512. The section also provides that not more than $3.2 in tuition grants shall be awarded to eligible students enrolled in the same independent nonprofit institution. The Governor increased the per student award stated in this section from $1,512 to $2,000; beginning with FY 2018-19 changed application due date from July 1to June 1; added that in addition to the ten semester limit on grants provided for in Public Act 313 an eligible applicant has to complete using the grant with ten years after eligibility is determined; eliminated carryforward authorization for unexpended funds; and updated date references. The Senate maintained the carryforward authorization; moved the application deadline up to March 1, beginning with FY 2018-19; increased the per institution cap from $3.2 million to $3.5 million, and concurred with Governor's other recommendations. (Sec. 252)

7. Student Financial Aid Distribution. Sets quarterly distribution schedule for the State Competitive Scholarship, Tuition Incentive, and Tuition Grant programs. The Governor modified schedule for Tuition Incentive Program to 65% the first quarter and 35% the second quarter. The Senate concurred. (Sec. 254)

8. Tuition Incentive Program. Provides criteria for the Tuition Incentive Program. The Governor modified this section by providing:

· Students must be enrolled in a certificate or associate degree program and taking classes within the program of study for a certificate or associate degree. Tuition will not be covered for courses outside of a certificate or associate degree program.

· For students attending a 5 year middle college approved by the Michigan Department of Education, be less than 21 years of age when he or she graduates from high school instead of the current age limit of less than 20 years old.

· All eligibility expires six years from High School graduation or equivalency certificate.

· The Department will only accept standard per-credit hour tuition billings.

· Beginning in FY 2018-19, persons enrolled in public universities will receive a maximum per credit payment that does not exceed two times the average community college in-district per credit tuition rate for the immediately preceding academic year.

· New reporting requirements on student success, P-20 Longitudinal Data, and Pell grants.

· Beginning with FY 2018-19, requires Treasury to withhold funding from students who attend institutions that do not comply with reporting requirements.

The Senate concurred with all of the Governor's changes except the provision limiting reimbursements to public universities to twice the average community college rate. (Sec. 256)

9. AgBioResearch and MSU Extension. Requires annual report on and specifies goals. The Governor increased the metric goals for increasing the sector's total economic impact and increasing agricultural exports. The metric for increasing jobs in the food and agriculture sector by ten percent was eliminated. The Senate concurred. (Sec. 263a)

10. Tuition Restraint. The Governor changed the cap from 4.2%, to the greater of 3.8% or $475; eliminated language that states "fee” includes the annual amount a student is charged for coverage by the university-affiliated group health insurance policy; removed provision that stated universities exceeding the cap will not receive planning or construction authorizations for a State funded capital outlay project in the subsequent two fiscal years; removed provision stating that other sanctions may be imposed at any time by the Legislature for universities exceeding tuition cap, and updated date references. The Senate concurred with the new tuition restraint limit but did not include any of the other changes recommended by the Governor. (Sec. 265)

11. Performance Funding. The Governor updated Carnegie classifications categories for research; eliminated legislative intent that, beginning in the 2016‑17 State fiscal year, a university classified as improving is assigned a score of 1; and updated date references. The Senate restored the intent statement regarding changing the score for improving in the next fiscal year and included a new provision stating that it is the intent of the Legislature to increase the proportion of funds allocated through performance metrics in future years. (Sec. 265a)

12. Indian Tuition Waiver. The Governor removed the legislative intent statement that funds be allocated from the General Fund for unfunded North American Indian tuition waiver costs incurred by public universities. The Governor also, for reporting purposes, changed the reference from "fiscal" year to "academic" year; included continuing education students in number of waiver students reported; and defined "withdrawal" as any student awarded the waiver who withdraws from the institution at any point during the term, regardless of enrollment in subsequent terms. The Senate concurred with the Governor's changes and added new language regarding the distribution of additional funds appropriated for waiver costs. (Sec. 268)

13. Unexpended Grant Funds. The Governor modified reporting requirements for select student support services, college/university partnerships, visiting professors programs and the educator development program to provide information on amount of unobligated and unexpended funds remaining funds as of March 31, 2018, and requires a plan to expend the remaining funds by the end of the fiscal year. The Senate concurred. (Sec, 282)

14. Academic Progress Reports - High Schools and Community Colleges. Process for providing information to high schools and community colleges regarding the academic progress of former students. The Governor and Senate modified based on use of data provided to CEPI and the P-20 Longitudinal Data System. (Sec. 283 and Sec. 284)

15. Academic Program Partnerships. First included in the FY 2016-17 budget, the section requires a report detailing the number of academic program partnerships between public community colleges, public universities, and private colleges and universities. The Governor continued the report in FY 2017-18. The Senate deleted. (Sec. 286a)