FY 2019-20 SCHOOL AID BUDGET                                                                                  H.B. 4242 (P.A. 58 of 2019):

                                                                                                             INITIAL APPROPRIATIONS WITH VETOES**
















FY 2018-19


FY 2019-20




FTE Positions..............................................................















   Interdepartmental Grants Received.........................





ADJUSTED GROSS....................................................










   Federal Funds...........................................................





   Local and Private.......................................................





TOTAL STATE SPENDING.........................................










   Other State Restricted Funds..................................










PAYMENTS TO LOCALS...........................................





*As of September 30, 2019.






FY 2018-19 Year-to-Date Appropriation......................................................




Changes from FY 2018-19 Year-to-Date:



Items Included by the Senate and House



  1.  Michigan Public School Employees' Retirement System (MPSERS) - Hold Harmless for Changes in Assumed Rate of Return (AROR). Governor, House, and Senate increased funding to continue to hold districts harmless from costs arising due to changes in the AROR. Total hold harmless funding related to AROR would be $172.1 million.



  2.  Technical Special Education Cost Adjustments. Governor, House, and Senate increased standard funding for special education programs to meet constitutionally-required reimbursement levels.



  3.  Technical Adjustments - Cash Flow Borrowing, Promise Zones, Renaissance Zones, PILT, School Bond Loan Fund. Governor, House, and Senate included adjustments, updated in July 2019 for more recent estimates.



  4.  MPSERS Costs from Public Act 92 of 2017. Governor, House, and Senate included funding to reimburse districts for the costs related to PA 92 of 2017. Total costs would be $42.6 million.



  5.  Flint Declaration of Emergency. Governor, House, and Senate increased funding for Flint from $3.2 million to $8.1 million.



  6.  Federal Grants. Governor, House, and Senate increased Federal grants based on anticipated funding levels.



  7.  Technical Foundation Allowance Cost Adjustments. Governor, House, and Senate recognized $236.0 million in savings due to fewer pupils and higher taxable values than the year-to-date appropriation (updated in May).



  8.  Cyber Schools' Foundation Allowances. Governor reduced cyber schools' foundation allowances by 20%, or $22.0 million. Senate and House did not include a reduction to cyber schools' foundation allowances.



  9.  Computer Adaptive Tests. Governor eliminated reimbursement to districts for the purchase of computer adaptive tests. Senate and House retained.

Governor vetoed this item.



10.  Youth ChalleNGe. Governor, House, and Senate transferred this program to the Department of Military and Veterans Affairs.



11.  High School Per-Pupil Payments. House and Senate eliminated payments of $25 per high school student.



12.  Economic Adjustments. Includes $118,500 Gross and $100,500 GF/GP for total economic adjustments, of which an estimated $132,500 Gross and $117,500 GF/GP is for legacy retirement costs (pension and retiree health).



Conference Agreement on Items of Difference



13.  Foundation Allowance. Governor increased foundation allowances between $120 and $180 per pupil using a 1.5x formula, which would cost $235.0 million. Conference increased foundation allowances between $120 and $240 per pupil using a 2x formula, costing $304.0 million.

Governor vetoed the $240 per-pupil increase for public school academies ($35.0 million in total).



14.  Special Education. Governor increased special education reimbursement by an estimated 4% of costs. (The State is required to reimburse 28.6% of the cost of special education programming; this funding would be in addition to the required reimbursement.) Conference included $60.2 million for an estimated 2% additional reimbursement of costs.



15.  At Risk (Including Child and Adolescent Health Centers). Governor increased at risk funding by $102.0 million and restructured the formula to provide a payment equal to 11% of the minimum foundation allowance for each economically-disadvantaged pupil. (For hold harmless districts, the payment would be one-half of this amount.) Total funding for economically-disadvantaged students would be $619.0 million. Conference increased at risk funding by $5.0 million, and kept the formula in place as found in current law. In addition, Conference increased child and adolescent health centers funding by $2.0 million, from $6.0 to $8.0 million in this section.



16.  Great Start Readiness Program (GSRP). Governor increased funding by $84.0 million for GSRP preschool for at-risk four-year-olds to pay for an increase in eligibility (changing from 250% to 300% of the Federal poverty level) and to increase payment for a full day of programming from $7,250 to $8,500. Conference increased $5.0 million, but did not change eligibility or per-child payments to providers. Conference added another $50,000 GF/GP for the study of GSRP's effectiveness (for a total of $350,000).



17.  Career and Technical Education (CTE). Governor increased CTE funding and changed the formula to pay an estimated 6% of the minimum foundation allowance for each high school student in a CTE program. Total CTE funding would be $55.0 million. (Current law provides up to $50 per pupil enrolled in a high-demand CTE program.) Conference retained current law related to per-pupil payments, but increased those payments to a maximum of $100 per pupil (an increased cost of $5.0 million), and increased standard CTE reimbursement under Sec. 61a by $1.0 million. Conference also increased grants for CTE equipment, from $2.5 million to $16.0 million (Governor had eliminated these grants). Conference increased CTE early middle college funding by $2.0 million.

Governor vetoed the $16.0 million for CTE equipment upgrades, the $5.0 million increase for CTE incentives, and the $2.0 million increase for CTE early/middle college funding.



18.  Literacy Coaches and Summer School for Literacy. Governor added funding to triple the number of literacy coaches and to eliminate local cost sharing for the coaches. Conference concurred in tripling the number of coaches, but retained local cost sharing ($14.0 million cost). Conference added $15.0 million for summer school for 3rd grade reading.

Governor vetoed the $15.0 million for summer school for 3rd grade reading. In addition, Governor vetoed $3.0 million for the Michigan Education Corps.



19.  Bilingual Education. Conference increased from $6.0 to $13.0 million, and added another $3.0 million in one-time funding for capital expenses.

Governor vetoed the $3.0 million for one-time capital expenses.



20.  Panic Button and School Security. Conference included $10.0 million total, with up to $3.8 million available for a panic button application if chosen by MDE and MSP. Funds remaining after funding for a panic button application (if one is funded) are available for school security grants.

Governor vetoed this funding.



21.  Rural/Isolated Districts. House, Senate, and Conference increased funding by $1.0 million. Intermediate School District (ISD) Operations. Conference increased by 1%, or $685,000.

Governor vetoed funding for rural/isolated districts ($7.0 million).



22.  Reductions. Governor reduced FIRST Robotics $1.8 million (and removed nonpublic schools from eligibility), assessments by $1.5 million, and MPSERS rate cap costs by $1.8 million. Conference concurred in MPSERS rate cap cost reduction, reduced Partnership Model Districts funding by $1.0 million, and reduced assessments by $500,000.

Governor vetoed robotics funding for nonpublic schools ($300,000).



23.  Program Eliminations. Governor eliminated: Imagine Learning; value-added assessment growth tool; information technology certifications; dual enrollment incentive payments; strict discipline academies; online algebra tool; financial data analysis tools; Shiawassee ISD virtual CTE program; CTE counselors and restaurant association culinary grant; ALICE school bus safety program; year-round schools; dropout recovery; summer reading project; Michigan Fitness Foundation; digital assessment preparation; Detroit Precollege Engineering Program; Teach for America; reimbursement for nonpublic mandates; conductive learning center study; Pipeline 2 Promise; early learning collaborative; Grand Rapids dropout prevention program; STEM and entrepreneurship program; St. Clair ISD high demand jobs grant; and, Dana Center. Conference eliminated dropout prevention pilot ($100,000), early learning cooperative study ($175,000), summer reading pilot ($500,000), CTE counselors ($1.0 million), St. Clair RESA high demand jobs grant ($50,000), Shiawassee ISD virtual CTE ($1.2 million), dual enrollment incentives ($1.75 million), ALICE bus driver safety ($810,000), digital assessment preparation ($500,000) and STEM entrepreneurship ($60,000).

Governor vetoed Imagine Learning ($3.0 million), the value-added assessment growth tool ($2.5 million), information technology certifications ($2.3 million), strict discipline academies ($1.6 million), online algebra tool ($1.5 million), financial data tools ($1.5 million), culinary training grant ($100,000), dropout recovery ($750,000), year-round schools ($750,000), Michigan Fitness Foundation ($500,000), Teach for America ($800,000), Dana Center ($25,000), Conductive Learning Center ($250,000), Pipeline 2 Promise ($200,000), and reimbursement for nonpublic mandates ($250,000).



24.  Other. Conference funded Square One ($300,000), College Board ($80,000), Best Buddies ($250,000), principal literacy essentials training ($300,000), children's choice initiative ($350,000), multisensory education ($300,000), social-emotional learning pilot ($500,000), MITES ($50,000), Michigan Job Bank ($1.5 million), increased robotics by $200,000, increased 10 Cents a Meal by $1.4 million, increased early on by $2.15 million, autism by $350,000, and increased Teach for America by $500,000.

Governor vetoed $1,075,000 TIF funding for Michigan Virtual H.S. and $2.0 million for 10 Cents a Meal.  In addition, Governor vetoed all of the items listed in this section, with the exception of the $200,000 increase for public school robotics and the $2.15 million increase for Early On.



25.  Fund Shift. Governor reduced GF/GP support of the budget from $87.9 million to $45.0 million, resulting in a fund shift. Conference GF/GP of $75.0 million, and allocated $40.0 million in Talent Investment Funds.

The Governor vetoed all $40.0 million in TIF appropriations, as well as $12,730,000 in GF/GP appropriations. 



26.  Adjustment to Reflect FY 2018-19 Supplemental. The enacted bill included adjustments for FY 2018-19 special education and foundation allowance costs.



27.  FY 2019-20 One-Time Appropriations. The Governor vetoed all one-time items appropriated in the conference report.




Total Changes...............................................................................................



FY 2019-20 Initial Ongoing/One-Time Appropriation**.................................




Boilerplate Changes from FY 2018-19 Year-to-Date:

Items Included by the Senate and House

  1.  Pupil-Weighted Allocations. Governor included a new section with language to implement a weighted per-pupil education funding model for a per-pupil base amount and weights for additional resources.
Conference did not include. However, Conference included a listing of sections throughout the Act that provide additional weights or additional funding of some type to reflect differentiated instructional costs. (Sec. 28)

  2.  Michigan Merit Exam. Governor removed language allowing the scores for the statewide assessment and the graduation rate for consortium pupils to be included with the scores for the school building in the participating district in which the consortium pupil is enrolled or would otherwise attend. Conference retained current law. (Sec. 104b)

  3.  Michigan Public School Employees' Retirement System (MPSERS) Retirement Obligation Reform Reserve Fund. Governor included a requirement to deposit $40.0 million from the School Aid Fund into the MPSERS reform reserve fund for 2019-20. Conference did not concur. (Sec. 147b)

Conference Agreement on Items of Difference

  4.  Foreign Exchange Students. Conference struck language that will prohibit a district from counting a pupil if the district also charges tuition for that student, and they resided out of state in the prior year. (Sec. 6(4)(mm))

  5.  Hardship and Audits. Governor reduced the timeframe by which overpayments can be repaid, from nine years to four years, and extended the period by three years for which the department may conduct audits. Conference concurred in the first change, but grandfathered in existing agreements, and did not concur in the second change. (Sec. 15)

  6.  "Basic" to "Target". Conference changed "basic foundation allowance" to "target foundation allowance". (Sec. 20)

  7.  Compliance with Kindergarten Assessment. Conference added a requirement for districts to comply with requirements regarding assessing kindergarten readiness to receive their full foundation allowance. (Sec. 22b)

  8.  Partnership Districts. Conference retained current law language requiring partnership districts to comply with Sec. 22p to get their discretionary payment, and retained school closure or reconstitution as options. (Section 22b and 22p)

  9.  At Risk. Governor increased the funding to hold harmless districts for at risk payments, from 30% to 50% of the amount that a non-hold harmless district would receive. Conference did not concur. Conference increased the amount of at risk funds that can be used for professional development from 5% to 7.5%. Conference removed (16), which would have required mandated spending in areas not at least 50% proficient. Conference retained the hold harmless provision, but with adjustments for changes in enrollment. (Section 31a)

10.  Professional Development as Hours of Instruction Guidelines. Governor restored language allowing districts to count up to 38 hours of qualifying professional development as hours of pupil instruction. (This was allowed until FY 2014-15.) Governor added language stating that qualifying professional development exceeding five hours in a single day may be counted as a day of pupil instruction, and eight hours of qualifying professional development counted as hours of pupil instruction must be recommended by a districtwide professional development advisory committee. Governor also changed the definition of "qualifying professional development" to be that which is aligned to the school district improvement plan, is linked to one or more criteria in a teacher evaluation tool, is approved by the department as continuing education credits, occurs after school starts and before school ends, and where at least 75% of teachers are in attendance. Conference concurred, and allowed 10 hours to be provided before the school year begins or after the school year concludes. (Sec. 101)

11.  Changes to Kindergarten Entry Observation. Conference replaced the existing pilot kindergarten entry assessment with a program for the department to implement a Michigan kindergarten entry observation tool. (Sec. 104)

12.  Section 166 and 166a. Conference removed financial penalties against districts when school staff make abortion referrals; requires that a district or ISD implement a disciplinary policy required under Section 166. (Sec. 166, 166a)



Date Completed:  10-1-19                                                                                         Fiscal Analyst:  Kathryn Summers


**This reflects action taken by the State Administrative Board on 10-1-19 if applicable.

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.