HOUSE BILL No. 4815

 

June 6, 2013, Introduced by Reps. Rogers and Rutledge and referred to the Committee on Education.

 

     A bill to amend 1979 PA 94, entitled

 

"The state school aid act of 1979,"

 

by amending sections 7, 11g, 17a, 20, and 22a (MCL 388.1607,

 

388.1611g, 388.1617a, 388.1620, and 388.1622a), section 7 as

 

amended by 1996 PA 300, sections 11g, 20, and 22a as amended by

 

2012 PA 201, and section 17a as amended by 2012 PA 2.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 7. Costs for school operating purposes include all

 

expenditures necessary to carry out the powers and the financial

 

obligations of the district or intermediate district under the

 

revised school code.

 

     Sec. 11g. (1) From the appropriation in section 11, there is

 

allocated for this section an amount not to exceed $39,000,000.00

 

for the fiscal year ending September 30, 2013, and for each

 


succeeding fiscal year through the fiscal year ending September 30,

 

2015, after which these payments will cease. These allocations are

 

for paying the amounts described in subsection (3) to districts and

 

intermediate districts, other than those receiving a lump-sum

 

payment under section 11f(2), that were not plaintiffs in the

 

consolidated cases known as Durant v State of Michigan, Michigan

 

supreme court docket no. 104458-104492 and that, on or before March

 

2, 1998, submitted to the state treasurer a waiver resolution

 

described in section 11f. The amounts paid under this section

 

represent offers of settlement and compromise of any claim or

 

claims that were or could have been asserted by these districts and

 

intermediate districts, as described in this section.

 

     (2) This section does not create any obligation or liability

 

of this state to any district or intermediate district that does

 

not submit a waiver resolution described in section 11f. This

 

section and any other provision of this article are not intended to

 

admit liability or waive any defense that is or would be available

 

to this state or its agencies, employees, or agents in any

 

litigation or future litigation with a district or intermediate

 

district regarding these claims or potential claims.

 

     (3) The amount paid each fiscal year to each district or

 

intermediate district under this section shall be 1 of the

 

following:

 

     (a) If the district or intermediate district does not borrow

 

money and issue bonds under section 11i, 1/30 of the total amount

 

listed in section 11h for the district or intermediate district

 

through the fiscal year ending September 30, 2013.

 


     (b) If the district or intermediate district borrows money and

 

issues bonds under section 11i, an amount in each fiscal year

 

calculated by the department of treasury that is equal to the debt

 

service amount in that fiscal year on the bonds issued by that

 

district or intermediate district under section 11i and that will

 

result in the total payments made to all districts and intermediate

 

districts in each fiscal year under this section being no more than

 

the amount appropriated under this section in each fiscal year.

 

     (4) The entire amount of each payment under this section each

 

fiscal year shall be paid on May 15 of the applicable fiscal year

 

or on the next business day following that date. If a district or

 

intermediate district borrows money and issues bonds under section

 

11i, the district or intermediate district shall use funds received

 

under this section to pay debt service on bonds issued under

 

section 11i. If a district or intermediate district does not borrow

 

money and issue bonds under section 11i, the district or

 

intermediate district shall use funds received under this section

 

only for the following purposes, in the following order of

 

priority:

 

     (a) First, to pay debt service on voter-approved bonds issued

 

by the district or intermediate district before the effective date

 

of this section.

 

     (b) Second, to pay debt service on other limited tax

 

obligations.

 

     (c) Third, for deposit into a sinking fund established by the

 

district or intermediate district under the revised school code.

 

     (5) To the extent payments under this section are used by a

 


district or intermediate district to pay debt service on debt

 

payable from millage revenues, and to the extent permitted by law,

 

the district or intermediate district may make a corresponding

 

reduction in the number of mills levied for debt service.

 

     (6) A district or intermediate district may pledge or assign

 

payments under this section as security for bonds issued under

 

section 11i, but shall not otherwise pledge or assign payments

 

under this section.

 

     (7) If a district eligible for payments under this section is

 

dissolved under section 12 of the revised school code, MCL 380.12,

 

each receiving district to which some or all of the dissolved

 

district was attached shall receive an amount otherwise payable to

 

the dissolved district proportionate to the receiving district's

 

share of the state equalized value of the dissolved district

 

attached to the receiving district. The receiving district that

 

received the largest share of the state equalized valuation of the

 

dissolved district shall perform any functions and responsibilities

 

of the board and other officers of the dissolved district necessary

 

under this section on behalf of the dissolved district.

 

     Sec. 17a. (1) The department may withhold all or part of any

 

payment that a district or intermediate district is entitled to

 

receive under this act to the extent the withholdings are a

 

component part of a plan, developed and implemented pursuant to the

 

revised municipal finance act, 2001 PA 34, MCL 141.2101 to

 

141.2821, or other statutory authority, for financing an

 

outstanding obligation upon which the district or intermediate

 

district defaulted. Amounts withheld shall be used to pay, on

 


behalf of the district or intermediate district, unpaid amounts or

 

subsequently due amounts, or both, of principal and interest on the

 

outstanding obligation upon which the district or intermediate

 

district defaulted.

 

     (2) The state treasurer may withhold all or part of any

 

payment that a district or intermediate district is entitled to

 

receive under this act to the extent authorized or required under

 

section 15 of the school bond qualification, approval, and loan

 

act, 2005 PA 92, MCL 388.1935.

 

     (3) Under an agreement entered into by a district or

 

intermediate district assigning all or a portion of the payment

 

that it is eligible to receive under this act to the Michigan

 

finance authority or to the trustee of a pooled arrangement or

 

pledging the amount for payment of an obligation it incurred with

 

the Michigan finance authority or with the trustee of a pooled

 

arrangement, the state treasurer shall transmit to the Michigan

 

finance authority or a trustee designated by the Michigan finance

 

authority or to the trustee of a pooled arrangement the amount of

 

the payment that is assigned or pledged under the agreement.

 

     (4) If a district or intermediate district for which an

 

emergency manager has been appointed pursuant to the local

 

government and school district fiscal accountability act, 2011 PA

 

4, MCL 141.1501 to 141.1531, local financial stability and choice

 

act, 2012 PA 436, MCL 141.1541 to 141.1575, or that has an approved

 

deficit elimination plan under section 102, enters into or has

 

entered into an agreement described in subsection (3) pursuant to

 

section 1225(2) of the revised school code, MCL 380.1225, whether

 


the obligation was issued before or after the effective date of

 

this subsection, the portion of state school aid paid or to be paid

 

on behalf of the district or intermediate district directly to the

 

Michigan finance authority, or to a trustee designated by the

 

Michigan finance authority, for the sole purpose of paying the

 

principal of and interest on the obligation is subject to a lien

 

and trust that is a statutory lien and trust, paramount and

 

superior to all other liens and interests of any kind, for the sole

 

purpose of paying the principal of and interest on the obligation.

 

The statutory lien and trust applies to the state school aid

 

received or to be received by the Michigan finance authority, or

 

trustee designated by the Michigan finance authority, on behalf of

 

the district or intermediate district, immediately upon the later

 

of the effective date of this subsection or the time when the state

 

school aid is allocated to the district or intermediate district,

 

but is subject to any subsequent reduction of the state school aid

 

allocation by operation of law or executive order. The lien and

 

trust imposed by this section with respect to state school aid has

 

a priority as established in the agreement, except that the

 

agreement shall not impair any existing lien and trust previously

 

created pursuant to this section, including any lien and trust

 

applicable to a multi-year repayment agreement under section 1225

 

of the revised school code, 1976 PA 451, MCL 380.1225. Except as

 

otherwise provided in this subsection, the lien and trust created

 

under this subsection for the benefit of holders of the obligation

 

issued pursuant to this section is valid and binding against a

 

party having a claim of any kind in tort, contract, or otherwise

 


against the district or intermediate district that has issued the

 

obligation secured by a pledge of state school aid pursuant to this

 

section, regardless of whether that party has notice of the pledge.

 

A pledge made pursuant to this section for the benefit of the

 

holders of obligations or others is perfected without delivery,

 

recording, or notice. The state school aid paid or to be paid on

 

behalf of a district or intermediate district to the Michigan

 

finance authority, or trustee designated by the Michigan finance

 

authority, shall be held in trust for the sole benefit of the

 

holders of the obligation issued pursuant to this section or

 

section 1225 of the revised school code, MCL 380.1225, and is

 

exempt from being levied upon, taken, sequestered, or applied

 

toward paying the debts or liabilities of the district or

 

intermediate district other than for payment of the obligation to

 

which the lien applies. However, nothing in this subsection alters

 

the ability of the state treasurer to withhold state school aid

 

from a district or intermediate district as provided by law.

 

     (5) Notwithstanding the payment dates prescribed by this act

 

for distributions under this act, the state treasurer may advance

 

all or part of a payment that is dedicated for distribution or for

 

which the appropriation authorizing the payment has been made if

 

and to the extent, under the terms of an agreement entered into by

 

a district or intermediate district and the Michigan finance

 

authority, the payment that the district or intermediate district

 

is eligible to receive has been assigned to or pledged for payment

 

of an obligation it incurred with the Michigan finance authority.

 

     (6) This section does not require the state to make an

 


appropriation to any school district or intermediate school

 

district and shall not be construed as creating an indebtedness of

 

the state, and any agreement made pursuant to this section shall

 

contain a statement to that effect.

 

     (7) As used in this section, "trustee of a pooled arrangement"

 

means the trustee of a trust approved by the state treasurer and,

 

subject to the conditions and requirements of that approval,

 

established for the purpose of offering for sale, as part of a

 

pooled arrangement, certificates representing undivided interests

 

in notes issued by districts or intermediate districts under

 

section 1225 of the revised school code, 1976 PA 451, MCL 380.1225.

 

     (8) If a trustee applies to the state treasurer for approval

 

of a trust for the purposes of this section, the state treasurer

 

shall approve or disapprove the trust within 10 days after receipt

 

of the application.

 

     Sec. 20. (1) For 2011-2012, and for 2012-2013, the basic

 

foundation allowance is $8,019.00.

 

     (2) The amount of each district's foundation allowance shall

 

be calculated as provided in this section, using a basic foundation

 

allowance in the amount specified in subsection (1).

 

     (3) Except as otherwise provided in this section, the amount

 

of a district's foundation allowance shall be calculated as

 

follows, using in all calculations the total amount of the

 

district's foundation allowance as calculated before any proration:

 

     (a) For a district that had a foundation allowance for the

 

immediately preceding state fiscal year that was at least equal to

 

the sum of $7,108.00 plus the total dollar amount of all

 


adjustments made from 2006-2007 to the immediately preceding state

 

fiscal year in the lowest foundation allowance among all districts,

 

but less than the basic foundation allowance for the immediately

 

preceding state fiscal year, the district shall receive a

 

foundation allowance in an amount equal to the sum of the

 

district's foundation allowance for the immediately preceding state

 

fiscal year plus the difference between twice the dollar amount of

 

the adjustment from the immediately preceding state fiscal year to

 

the current state fiscal year made in the basic foundation

 

allowance and [(the dollar amount of the adjustment from the

 

immediately preceding state fiscal year to the current state fiscal

 

year made in the basic foundation allowance minus $20.00) times

 

(the difference between the district's foundation allowance for the

 

immediately preceding state fiscal year and the sum of $7,108.00

 

plus the total dollar amount of all adjustments made from 2006-2007

 

to the immediately preceding state fiscal year in the lowest

 

foundation allowance among all districts) divided by the difference

 

between the basic foundation allowance for the current state fiscal

 

year and the sum of $7,108.00 plus the total dollar amount of all

 

adjustments made from 2006-2007 to the immediately preceding state

 

fiscal year in the lowest foundation allowance among all

 

districts]. For 2011-2012, for a district that had a foundation

 

allowance for the immediately preceding state fiscal year that was

 

at least equal to the sum of $7,108.00 plus the total dollar amount

 

of all adjustments made from 2006-2007 to the immediately preceding

 

state fiscal year in the lowest foundation allowance among all

 

districts, but less than the basic foundation allowance for the

 


immediately preceding state fiscal year, the district shall receive

 

a foundation allowance in an amount equal to the district's

 

foundation allowance for 2010-2011, minus $470.00. Except as

 

otherwise provided in subdivision (h), for 2012-2013, for a

 

district that had a foundation allowance for the immediately

 

preceding state fiscal year that was at least equal to the sum of

 

$7,108.00 plus the total dollar amount of all adjustments made from

 

2006-2007 to the immediately preceding state fiscal year in the

 

lowest foundation allowance among all districts, but less than the

 

basic foundation allowance for the immediately preceding state

 

fiscal year, the district shall receive a foundation allowance in

 

an amount equal to the district's foundation allowance for the

 

immediately preceding state fiscal year. However, the foundation

 

allowance for a district that had less than the basic foundation

 

allowance for the immediately preceding state fiscal year shall not

 

exceed the basic foundation allowance for the current state fiscal

 

year.

 

     (b) Except as otherwise provided in this subsection, for a

 

district that in the immediately preceding state fiscal year had a

 

foundation allowance in an amount at least equal to the amount of

 

the basic foundation allowance for the immediately preceding state

 

fiscal year, the district shall receive a foundation allowance for

 

2011-2012 in an amount equal to the district's foundation allowance

 

for 2010-2011, minus $470.00. For 2012-2013, except as otherwise

 

provided in this subsection, for a district that in the immediately

 

preceding state fiscal year had a foundation allowance in an amount

 

at least equal to the amount of the basic foundation allowance for

 


the immediately preceding state fiscal year, the district shall

 

receive a foundation allowance for 2012-2013 in an amount equal to

 

the district's foundation allowance for the immediately preceding

 

state fiscal year.

 

     (c) Except as otherwise provided in subdivision (d), for a

 

district that in the 1994-95 state fiscal year had a foundation

 

allowance greater than $6,500.00, the district's foundation

 

allowance is an amount equal to the sum of the district's

 

foundation allowance for the immediately preceding state fiscal

 

year plus the lesser of the increase in the basic foundation

 

allowance for the current state fiscal year, as compared to the

 

immediately preceding state fiscal year, or the product of the

 

district's foundation allowance for the immediately preceding state

 

fiscal year times the percentage increase in the United States

 

consumer price index in the calendar year ending in the immediately

 

preceding fiscal year as reported by the May revenue estimating

 

conference conducted under section 367b of the management and

 

budget act, 1984 PA 431, MCL 18.1367b. Except as otherwise provided

 

in subdivision (d), for 2011-2012, for a district that in the 1994-

 

1995 state fiscal year had a foundation allowance greater than

 

$6,500.00, the district's foundation allowance is an amount equal

 

to the district's foundation allowance for the 2010-2011 fiscal

 

year minus $470.00. For 2012-2013, except as otherwise provided in

 

subdivision (d), for a district that in the 1994-1995 state fiscal

 

year had a foundation allowance greater than $6,500.00, the

 

district's foundation allowance is an amount equal to the

 

district's foundation allowance for the immediately preceding state

 


fiscal year.

 

     (d) For a district that in the 1994-95 state fiscal year had a

 

foundation allowance greater than $6,500.00 and that had a

 

foundation allowance for the 2009-2010 state fiscal year, as

 

otherwise calculated under this section, that was less than the

 

basic foundation allowance, the district's foundation allowance for

 

2011-2012 and each succeeding fiscal year shall be considered to be

 

an amount equal to the basic foundation allowance.

 

     (e) For a district that has a foundation allowance that is not

 

a whole dollar amount, the district's foundation allowance shall be

 

rounded up to the nearest whole dollar.

 

     (f) For a district that received a payment under section 22c

 

as that section was in effect for 2001-2002, the district's 2001-

 

2002 foundation allowance shall be considered to have been an

 

amount equal to the sum of the district's actual 2001-2002

 

foundation allowance as otherwise calculated under this section

 

plus the per pupil amount of the district's equity payment for

 

2001-2002 under section 22c as that section was in effect for 2001-

 

2002.

 

     (g) For a district that received a payment under section 22c

 

as that section was in effect for 2006-2007, the district's 2006-

 

2007 foundation allowance shall be considered to have been an

 

amount equal to the sum of the district's actual 2006-2007

 

foundation allowance as otherwise calculated under this section

 

plus the per pupil amount of the district's equity payment for

 

2006-2007 under section 22c as that section was in effect for 2006-

 

2007.

 


     (h) For 2012-2013, for a district that had a foundation

 

allowance for the 2011-2012 state fiscal year of less than

 

$6,966.00, the district's foundation allowance is an amount equal

 

to $6,966.00.

 

     (4) Except as otherwise provided in this subsection, the state

 

portion of a district's foundation allowance is an amount equal to

 

the district's foundation allowance or the basic foundation

 

allowance for the current state fiscal year, whichever is less,

 

minus the difference between the sum of the product of the taxable

 

value per membership pupil of all property in the district that is

 

nonexempt property times the district's certified mills and, for a

 

district with certified mills exceeding 12, the product of the

 

taxable value per membership pupil of property in the district that

 

is commercial personal property times the certified mills minus 12

 

mills and the quotient of the ad valorem property tax revenue of

 

the district captured under tax increment financing acts divided by

 

the district's membership excluding special education pupils. For a

 

district described in subsection (3)(c), the state portion of the

 

district's foundation allowance is an amount equal to $6,962.00

 

plus the difference between the district's foundation allowance for

 

the current state fiscal year and the district's foundation

 

allowance for 1998-99, minus the difference between the sum of the

 

product of the taxable value per membership pupil of all property

 

in the district that is nonexempt property times the district's

 

certified mills and, for a district with certified mills exceeding

 

12, the product of the taxable value per membership pupil of

 

property in the district that is commercial personal property times

 


the certified mills minus 12 mills and the quotient of the ad

 

valorem property tax revenue of the district captured under tax

 

increment financing acts divided by the district's membership

 

excluding special education pupils. For a district that has a

 

millage reduction required under section 31 of article IX of the

 

state constitution of 1963, the state portion of the district's

 

foundation allowance shall be calculated as if that reduction did

 

not occur. For a receiving district, if school operating taxes

 

continue to be levied on behalf of a dissolved district to satisfy

 

debt obligations of the dissolved district under section 12 of the

 

revised school code, MCL 380.12, when calculating the taxable value

 

per membership pupil of property in the receiving district under

 

this subsection, the taxable value of property within the

 

geographic area of the dissolved district shall be excluded.

 

     (5) The allocation calculated under this section for a pupil

 

shall be based on the foundation allowance of the pupil's district

 

of residence. For a pupil enrolled pursuant to section 105 or 105c

 

in a district other than the pupil's district of residence, the

 

allocation calculated under this section shall be based on the

 

lesser of the foundation allowance of the pupil's district of

 

residence or the foundation allowance of the educating district.

 

For a pupil in membership in a K-5, K-6, or K-8 district who is

 

enrolled in another district in a grade not offered by the pupil's

 

district of residence, the allocation calculated under this section

 

shall be based on the foundation allowance of the educating

 

district if the educating district's foundation allowance is

 

greater than the foundation allowance of the pupil's district of

 


residence.

 

     (6) Except as otherwise provided in this subsection, for

 

pupils in membership, other than special education pupils, in a

 

public school academy, the allocation calculated under this section

 

is an amount per membership pupil other than special education

 

pupils in the public school academy equal to the foundation

 

allowance of the district in which the public school academy is

 

located or the state maximum public school academy allocation,

 

whichever is less. However, a public school academy that had an

 

allocation under this subsection before 2009-2010 that was equal to

 

the sum of the local school operating revenue per membership pupil

 

other than special education pupils for the district in which the

 

public school academy is located and the state portion of that

 

district's foundation allowance shall not have that allocation

 

reduced as a result of the 2010 amendment to this subsection.

 

Notwithstanding section 101, for a public school academy that

 

begins operations after the pupil membership count day, the amount

 

per membership pupil calculated under this subsection shall be

 

adjusted by multiplying that amount per membership pupil by the

 

number of hours of pupil instruction provided by the public school

 

academy after it begins operations, as determined by the

 

department, divided by the minimum number of hours of pupil

 

instruction required under section 101(3). The result of this

 

calculation shall not exceed the amount per membership pupil

 

otherwise calculated under this subsection.

 

     (7) Except as otherwise provided in this subsection, for

 

pupils attending an achievement school and in membership in the

 


education achievement system, other than special education pupils,

 

the allocation calculated under this section is an amount per

 

membership pupil other than special education pupils equal to the

 

foundation allowance of the district in which the achievement

 

school is located, not to exceed the basic foundation allowance.

 

Notwithstanding section 101, for an achievement school that begins

 

operation after the pupil membership count day, the amount per

 

membership pupil calculated under this subsection shall be adjusted

 

by multiplying that amount per membership pupil by the number of

 

hours of pupil instruction provided by the achievement school after

 

it begins operations, as determined by the department, divided by

 

the minimum number of hours of pupil instruction required under

 

section 101(3). The result of this calculation shall not exceed the

 

amount per membership pupil otherwise calculated under this

 

subsection. For the purposes of this subsection, if a public school

 

is transferred from a district to the state school reform/redesign

 

district or the achievement authority under section 1280c of the

 

revised school code, that public school is considered to be an

 

achievement school within the education achievement system and not

 

a school that is part of a district, and a pupil attending that

 

public school is considered to be in membership in the education

 

achievement system and not in membership in the district that

 

operated the school before the transfer.

 

     (8) For the 4 fiscal years following the dissolution of a

 

dissolved district, a receiving district may elect to receive

 

either of the following foundation allowances under this section

 

for each resident of the geographic area of the dissolved school

 


district enrolled in and in membership in the receiving school

 

district:

 

     (a) A foundation allowance equal to the foundation allowance

 

under this section for a resident of the receiving district

 

enrolled in and in membership in the receiving school district

 

multiplied by 1.1.

 

     (b) A foundation allowance equal to the foundation allowance

 

under this section for a resident of the dissolved school district

 

enrolled in and in membership in the dissolved school district had

 

the dissolved district not been dissolved and continued to educate

 

directly on its own residents of the dissolved district multiplied

 

by 1.1.

 

     (9) (8) Subject to subsection subsections (4) and (8), for a

 

district that is formed or reconfigured after June 1, 2002 by

 

consolidation of 2 or more districts or by annexation, the

 

resulting district's foundation allowance under this section

 

beginning after the effective date of the consolidation or

 

annexation shall be the average of the foundation allowances of

 

each of the original or affected districts, calculated as provided

 

in this section, weighted as to the percentage of pupils in total

 

membership in the resulting district who reside in the geographic

 

area of each of the original or affected districts. Subject to

 

subsection (4), after the 4 fiscal years following the dissolution

 

of a dissolved district when the payment of a foundation allowance

 

for a receiving district is calculated under subsection (8), the

 

receiving district's foundation allowance under this section shall

 

be the average of the foundation allowances of the receiving

 


district and the dissolved district, calculated as provided in this

 

section, weighted as to the percentage of pupils in total

 

membership in the receiving district who reside in the geographic

 

area of the portion of the dissolved district attached to the

 

receiving district.

 

     (10) (9) Each fraction used in making calculations under this

 

section shall be rounded to the fourth decimal place and the dollar

 

amount of an increase in the basic foundation allowance shall be

 

rounded to the nearest whole dollar.

 

     (11) (10) State payments related to payment of the foundation

 

allowance for a special education pupil are not calculated under

 

this section but are instead calculated under section 51a.

 

     (12) (11) To assist the legislature in determining the basic

 

foundation allowance for the subsequent state fiscal year, each

 

revenue estimating conference conducted under section 367b of the

 

management and budget act, 1984 PA 431, MCL 18.1367b, shall

 

calculate a pupil membership factor, a revenue adjustment factor,

 

and an index as follows:

 

     (a) The pupil membership factor shall be computed by dividing

 

the estimated membership in the school year ending in the current

 

state fiscal year, excluding intermediate district membership, by

 

the estimated membership for the school year ending in the

 

subsequent state fiscal year, excluding intermediate district

 

membership. If a consensus membership factor is not determined at

 

the revenue estimating conference, the principals of the revenue

 

estimating conference shall report their estimates to the house and

 

senate subcommittees responsible for school aid appropriations not

 


later than 7 days after the conclusion of the revenue conference.

 

     (b) The revenue adjustment factor shall be computed by

 

dividing the sum of the estimated total state school aid fund

 

revenue for the subsequent state fiscal year plus the estimated

 

total state school aid fund revenue for the current state fiscal

 

year, adjusted for any change in the rate or base of a tax the

 

proceeds of which are deposited in that fund and excluding money

 

transferred into that fund from the countercyclical budget and

 

economic stabilization fund under the management and budget act,

 

1984 PA 431, MCL 18.1101 to 18.1594, by the sum of the estimated

 

total school aid fund revenue for the current state fiscal year

 

plus the estimated total state school aid fund revenue for the

 

immediately preceding state fiscal year, adjusted for any change in

 

the rate or base of a tax the proceeds of which are deposited in

 

that fund. If a consensus revenue factor is not determined at the

 

revenue estimating conference, the principals of the revenue

 

estimating conference shall report their estimates to the house and

 

senate subcommittees responsible for school aid appropriations not

 

later than 7 days after the conclusion of the revenue conference.

 

     (c) The index shall be calculated by multiplying the pupil

 

membership factor by the revenue adjustment factor. However, for

 

2011-2012, the index shall be 0.93575 and for 2012-2013, the index

 

shall be 1.00. If a consensus index is not determined at the

 

revenue estimating conference, the principals of the revenue

 

estimating conference shall report their estimates to the house and

 

senate subcommittees responsible for school aid appropriations not

 

later than 7 days after the conclusion of the revenue conference.

 


     (12) For a district in which 7.75 mills levied in 1992 for

 

school operating purposes in the 1992-93 school year were not

 

renewed in 1993 for school operating purposes in the 1993-94 school

 

year, the district's combined state and local revenue per

 

membership pupil shall be recalculated as if that millage reduction

 

did not occur and the district's foundation allowance shall be

 

calculated as if its 1994-95 foundation allowance had been

 

calculated using that recalculated 1993-94 combined state and local

 

revenue per membership pupil as a base. A district is not entitled

 

to any retroactive payments for fiscal years before 2000-2001 due

 

to this subsection. A district receiving an adjustment under this

 

subsection shall not receive as a result of this adjustment an

 

amount that exceeds 50% of the amount the district received as a

 

result of this adjustment for 2010-2011. This adjustment shall not

 

be made after 2011-2012.

 

     (13) For a district in which an industrial facilities

 

exemption certificate that abated taxes on property with a state

 

equalized valuation greater than the total state equalized

 

valuation of the district at the time the certificate was issued or

 

$700,000,000.00, whichever is greater, was issued under 1974 PA

 

198, MCL 207.551 to 207.572, before the calculation of the

 

district's 1994-95 foundation allowance, the district's foundation

 

allowance for 2002-2003 is an amount equal to the sum of the

 

district's foundation allowance for 2002-2003, as otherwise

 

calculated under this section, plus $250.00. A district receiving

 

an adjustment under this subsection shall not receive as a result

 

of this adjustment an amount that exceeds 50% of the amount the

 


district received as a result of this adjustment for 2010-2011.

 

This adjustment shall not be made after 2011-2012.

 

     (13) (14) For a district that received a grant under former

 

section 32e for 2001-2002, the district's foundation allowance for

 

2002-2003 and each succeeding fiscal year shall be adjusted to be

 

an amount equal to the sum of the district's foundation allowance,

 

as otherwise calculated under this section, plus the quotient of

 

100% of the amount of the grant award to the district for 2001-2002

 

under former section 32e divided by the number of pupils in the

 

district's membership for 2001-2002 who were residents of and

 

enrolled in the district. Except as otherwise provided in this

 

subsection, a district qualifying for a foundation allowance

 

adjustment under this subsection shall use the funds resulting from

 

this adjustment for at least 1 of grades K to 3 for purposes

 

allowable under former section 32e as in effect for 2001-2002. For

 

an individual school or schools operated by a district qualifying

 

for a foundation allowance under this subsection that have been

 

determined by the department to meet the adequate yearly progress

 

standards of the federal no child left behind act of 2001, Public

 

Law 107-110, in both mathematics and English language arts at all

 

applicable grade levels for all applicable subgroups, the district

 

may submit to the department an application for flexibility in

 

using the funds resulting from this adjustment that are

 

attributable to the pupils in the school or schools. The

 

application shall identify the affected school or schools and the

 

affected funds and shall contain a plan for using the funds for

 

specific purposes identified by the district that are designed to

 


reduce class size, but that may be different from the purposes

 

otherwise allowable under this subsection. The department shall

 

approve the application if the department determines that the

 

purposes identified in the plan are reasonably designed to reduce

 

class size. If the department does not act to approve or disapprove

 

an application within 30 days after it is submitted to the

 

department, the application is considered to be approved. If an

 

application for flexibility in using the funds is approved, the

 

district may use the funds identified in the application for any

 

purpose identified in the plan. A district receiving an adjustment

 

under this subsection shall not receive as a result of this

 

adjustment an amount that exceeds 68.5% of the amount the district

 

received as a result of this adjustment for 2010-2011.

 

     (15) For a district that levied 1.9 mills in 1993 to finance

 

an operating deficit, the district's foundation allowance shall be

 

calculated as if those mills were included as operating mills in

 

the calculation of the district's 1994-1995 foundation allowance. A

 

district is not entitled to any retroactive payments for fiscal

 

years before 2006-2007 due to this subsection. A district receiving

 

an adjustment under this subsection shall not receive more than

 

$800,000.00 for a fiscal year as a result of this adjustment. A

 

district receiving an adjustment under this subsection shall not

 

receive as a result of this adjustment an amount that exceeds 50%

 

of the amount the district received as a result of this adjustment

 

for 2010-2011. This adjustment shall not be made after 2011-2012.

 

     (16) For a district that levied 2.23 mills in 1993 to finance

 

an operating deficit, the district's foundation allowance shall be

 


calculated as if those mills were included as operating mills in

 

the calculation of the district's 1994-1995 foundation allowance. A

 

district is not entitled to any retroactive payments for fiscal

 

years before 2006-2007 due to this subsection. A district receiving

 

an adjustment under this subsection shall not receive more than

 

$500,000.00 for a fiscal year as a result of this adjustment. A

 

district receiving an adjustment under this subsection shall not

 

receive as a result of this adjustment an amount that exceeds 50%

 

of the amount the district received as a result of this adjustment

 

for 2010-2011. This adjustment shall not be made after 2011-2012.

 

     (14) (17) Payments to districts, public school academies, or

 

the education achievement system shall not be made under this

 

section. Rather, the calculations under this section shall be used

 

to determine the amount of state payments under section 22b.

 

     (15) (18) If an amendment to section 2 of article VIII of the

 

state constitution of 1963 allowing state aid to some or all

 

nonpublic schools is approved by the voters of this state, each

 

foundation allowance or per pupil payment calculation under this

 

section may be reduced.

 

     (16) (19) As used in this section:

 

     (a) "Certified mills" means the lesser of 18 mills or the

 

number of mills of school operating taxes levied by the district in

 

1993-94.

 

     (b) "Combined state and local revenue" means the aggregate of

 

the district's state school aid received by or paid on behalf of

 

the district under this section and the district's local school

 

operating revenue.

 


     (c) "Combined state and local revenue per membership pupil"

 

means the district's combined state and local revenue divided by

 

the district's membership excluding special education pupils.

 

     (d) "Current state fiscal year" means the state fiscal year

 

for which a particular calculation is made.

 

     (e) "Dissolved district" means a district that loses its

 

organization, is attached to 1 or more other school districts, and

 

is dissolved as provided under section 12 of the revised school

 

code, MCL 380.12.

 

     (f) (e) "Immediately preceding state fiscal year" means the

 

state fiscal year immediately preceding the current state fiscal

 

year.

 

     (g) (f) "Local school operating revenue" means school

 

operating taxes levied under section 1211 of the revised school

 

code, MCL 380.1211. For a receiving district, if school operating

 

taxes are to be levied on behalf of a dissolved district to satisfy

 

debt obligations of the dissolved district under section 12 of the

 

revised school code, MCL 380.12, local school operating revenue

 

does not include school operating taxes levied within the

 

geographic area of the dissolved district.

 

     (h) (g) "Local school operating revenue per membership pupil"

 

means a district's local school operating revenue divided by the

 

district's membership excluding special education pupils.

 

     (i) (h) "Maximum public school academy allocation", except as

 

otherwise provided in this subdivision, means the maximum per-pupil

 

allocation as calculated by adding the highest per-pupil allocation

 

among all public school academies for the immediately preceding

 


state fiscal year plus the difference between twice the dollar

 

amount of the adjustment from the immediately preceding state

 

fiscal year to the current state fiscal year made in the basic

 

foundation allowance and [(the dollar amount of the adjustment from

 

the immediately preceding state fiscal year to the current state

 

fiscal year made in the basic foundation allowance minus $20.00)

 

times (the difference between the highest per-pupil allocation

 

among all public school academies for the immediately preceding

 

state fiscal year and the sum of $7,108.00 plus the total dollar

 

amount of all adjustments made from 2006-2007 to the immediately

 

preceding state fiscal year in the lowest per-pupil allocation

 

among all public school academies) divided by the difference

 

between the basic foundation allowance for the current state fiscal

 

year and the sum of $7,108.00 plus the total dollar amount of all

 

adjustments made from 2006-2007 to the immediately preceding state

 

fiscal year in the lowest per-pupil allocation among all public

 

school academies]. For 2011-2012 and 2012-2013, maximum public

 

school academy allocation means $7,110.00.

 

     (j) (i) "Membership" means the definition of that term under

 

section 6 as in effect for the particular fiscal year for which a

 

particular calculation is made.

 

     (k) (j) "Nonexempt property" means property that is not a

 

principal residence, qualified agricultural property, qualified

 

forest property, supportive housing property, industrial personal

 

property, or commercial personal property.

 

     (l) (k) "Principal residence", "qualified agricultural

 

property", "qualified forest property", "supportive housing

 


property", "industrial personal property", and "commercial personal

 

property" mean those terms as defined in section 1211 of the

 

revised school code, MCL 380.1211.

 

     (m) "Receiving district" means a school district to which some

 

or all of a dissolved district was attached under section 12 of the

 

revised school code, MCL 380.12.

 

     (n) (l) "School operating purposes" means the purposes included

 

in the operation costs of the district as prescribed in sections 7

 

and 18 and purposes authorized under section 1211 of the revised

 

school code, MCL 380.1211.

 

     (o) (m) "School operating taxes" means local ad valorem

 

property taxes levied under section 1211 of the revised school

 

code, MCL 380.1211, and retained for school operating purposes.

 

     (p) (n) "Tax increment financing acts" means 1975 PA 197, MCL

 

125.1651 to 125.1681, the tax increment finance authority act, 1980

 

PA 450, MCL 125.1801 to 125.1830, the local development financing

 

act, 1986 PA 281, MCL 125.2151 to 125.2174, the brownfield

 

redevelopment financing act, 1996 PA 381, MCL 125.2651 to 125.2672,

 

or the corridor improvement authority act, 2005 PA 280, MCL

 

125.2871 to 125.2899.

 

     (q) (o) "Taxable value per membership pupil" means taxable

 

value, as certified by the department of treasury, for the calendar

 

year ending in the current state fiscal year divided by the

 

district's membership excluding special education pupils for the

 

school year ending in the current state fiscal year.

 

     Sec. 22a. (1) From the appropriation in section 11, there is

 

allocated an amount not to exceed $5,776,000,000.00 for 2011-2012

 


and there is allocated an amount not to exceed $5,712,000,000.00

 

for 2012-2013 for payments to districts and qualifying public

 

school academies to guarantee each district and qualifying public

 

school academy an amount equal to its 1994-95 total state and local

 

per pupil revenue for school operating purposes under section 11 of

 

article IX of the state constitution of 1963. Pursuant to section

 

11 of article IX of the state constitution of 1963, this guarantee

 

does not apply to a district in a year in which the district levies

 

a millage rate for school district operating purposes less than it

 

levied in 1994. However, subsection (2) applies to calculating the

 

payments under this section. Funds allocated under this section

 

that are not expended in the state fiscal year for which they were

 

allocated, as determined by the department, may be used to

 

supplement the allocations under sections 22b and 51c in order to

 

fully fund those calculated allocations for the same fiscal year.

 

     (2) To ensure that a district receives an amount equal to the

 

district's 1994-95 total state and local per pupil revenue for

 

school operating purposes, there is allocated to each district a

 

state portion of the district's 1994-95 foundation allowance in an

 

amount calculated as follows:

 

     (a) Except as otherwise provided in this subsection, the state

 

portion of a district's 1994-95 foundation allowance is an amount

 

equal to the district's 1994-95 foundation allowance or $6,500.00,

 

whichever is less, minus the difference between the sum of the

 

product of the taxable value per membership pupil of all property

 

in the district that is nonexempt property times the district's

 

certified mills and, for a district with certified mills exceeding

 


12, the product of the taxable value per membership pupil of

 

property in the district that is commercial personal property times

 

the certified mills minus 12 mills and the quotient of the ad

 

valorem property tax revenue of the district captured under tax

 

increment financing acts divided by the district's membership. For

 

a district that has a millage reduction required under section 31

 

of article IX of the state constitution of 1963, the state portion

 

of the district's foundation allowance shall be calculated as if

 

that reduction did not occur. For a receiving district, if school

 

operating taxes are to be levied on behalf of a dissolved district

 

to satisfy debt obligations of the dissolved district under section

 

12 of the revised school code, MCL 380.12, taxable value per

 

membership pupil of all property in the district that is nonexempt

 

property and taxable value per membership pupil of property in the

 

district that is commercial personal property do not include

 

property within the geographic area of the dissolved district; ad

 

valorem property tax revenue of the district captured under tax

 

increment financing acts does not include ad valorem property tax

 

revenue captured within the geographic boundaries of the dissolved

 

district under tax increment financing acts; and certified mills do

 

not include the certified mills of the dissolved district.

 

     (b) For a district that had a 1994-95 foundation allowance

 

greater than $6,500.00, the state payment under this subsection

 

shall be the sum of the amount calculated under subdivision (a)

 

plus the amount calculated under this subdivision. The amount

 

calculated under this subdivision shall be equal to the difference

 

between the district's 1994-95 foundation allowance minus $6,500.00

 


and the current year hold harmless school operating taxes per

 

pupil. If the result of the calculation under subdivision (a) is

 

negative, the negative amount shall be an offset against any state

 

payment calculated under this subdivision. If the result of a

 

calculation under this subdivision is negative, there shall not be

 

a state payment or a deduction under this subdivision. The taxable

 

values per membership pupil used in the calculations under this

 

subdivision are as adjusted by ad valorem property tax revenue

 

captured under tax increment financing acts divided by the

 

district's membership. For a receiving district, if school

 

operating taxes are to be levied on behalf of a dissolved district

 

to satisfy debt obligations of the dissolved district under section

 

12 of the revised school code, MCL 380.12, ad valorem property tax

 

revenue captured under tax increment financing acts does not include

 

ad valorem property tax revenue captured within the geographic

 

boundaries of the dissolved district under tax increment financing

 

acts.

 

     (3) Beginning in 2003-2004, for pupils in membership in a

 

qualifying public school academy, there is allocated under this

 

section to the authorizing body that is the fiscal agent for the

 

qualifying public school academy for forwarding to the qualifying

 

public school academy an amount equal to the 1994-95 per pupil

 

payment to the qualifying public school academy under section 20.

 

     (4) A district or qualifying public school academy may use

 

funds allocated under this section in conjunction with any federal

 

funds for which the district or qualifying public school academy

 

otherwise would be eligible.

 


     (5) For Except as otherwise provided in this subsection, for a

 

district that is formed or reconfigured after June 1, 2000 by

 

consolidation of 2 or more districts or by annexation, the

 

resulting district's 1994-95 foundation allowance under this

 

section beginning after the effective date of the consolidation or

 

annexation shall be the average of the 1994-95 foundation

 

allowances of each of the original or affected districts,

 

calculated as provided in this section, weighted as to the

 

percentage of pupils in total membership in the resulting district

 

in the state fiscal year in which the consolidation takes place who

 

reside in the geographic area of each of the original districts. If

 

an affected district's 1994-95 foundation allowance is less than

 

the 1994-95 basic foundation allowance, the amount of that

 

district's 1994-95 foundation allowance shall be considered for the

 

purpose of calculations under this subsection to be equal to the

 

amount of the 1994-95 basic foundation allowance. This subsection

 

shall not apply to a receiving district.

 

     (6) Subject to conditions set forth in this subsection, from

 

the allocation in subsection (1), there is allocated for 2011-2012

 

only an amount not to exceed $6,000,000.00 for payments to

 

districts that meet the eligibility requirements under this

 

subsection, for the reduction in school operating revenues

 

resulting from a settlement or other disposition of appeals

 

described in subdivision (a). A payment may only be made under this

 

subsection if a settlement agreement is signed by all applicable

 

parties. Payments made under this subsection shall be in accordance

 

with the settlement agreement. All of the following apply to

 


payments under this subsection:

 

     (a) To be eligible for a payment under this subsection, a

 

district shall be determined by the department and the department

 

of treasury to meet all of the following:

 

     (i) The district does not receive any state portion of its

 

foundation allowance, as calculated under section 20(4).

 

     (ii) Before January 1, 2011, the owner of a natural-gas-powered

 

power plant located in a renaissance zone within the district's

 

geographic boundaries for 2009 and 2010 appealed to the Michigan

 

tax tribunal an order of the state tax commission for tax years

 

2009 and 2010 pursuant to section 154 of the general property tax

 

act, 1893 PA 206, MCL 211.154, and appealed to the state tax

 

commission the 2011 classification and valuation of the power

 

plant.

 

     (iii) The district received a reduced amount of local school

 

operating revenue for tax years 2009, 2010, and 2011 as a result of

 

the exemptions of industrial personal property and commercial

 

personal property under section 1211 of the revised school code,

 

MCL 380.1211.

 

     (iv) A settlement agreement has been signed to resolve the

 

Michigan tax tribunal appeal described in subparagraph (ii) and a

 

memorandum of understanding that stipulates terms of the settlement

 

has been executed by the parties.

 

     (b) A payment made under this subsection shall be in addition

 

to renaissance zone reimbursement amounts paid in the 2009-2010 and

 

2010-2011 state fiscal years under section 26a to districts

 

eligible for payment under this subsection. The 2009-2010 and 2010-

 


2011 state fiscal year payments under section 26a to a district

 

receiving a payment under this subsection shall not be reduced as a

 

result of the reduction to the district's 2009 and 2010 taxable

 

value of real property under the appeals described in subdivision

 

(a)(ii).

 

     (7) As used in this section:

 

     (a) "1994-95 foundation allowance" means a district's 1994-95

 

foundation allowance calculated and certified by the department of

 

treasury or the superintendent under former section 20a as enacted

 

in 1993 PA 336 and as amended by 1994 PA 283.

 

     (b) "Certified mills" means the lesser of 18 mills or the

 

number of mills of school operating taxes levied by the district in

 

1993-94.

 

     (c) "Current state fiscal year" means the state fiscal year

 

for which a particular calculation is made.

 

     (d) "Current year hold harmless school operating taxes per

 

pupil" means the per pupil revenue generated by multiplying a

 

district's 1994-95 hold harmless millage by the district's current

 

year taxable value per membership pupil. For a receiving district,

 

if school operating taxes are to be levied on behalf of a dissolved

 

district to satisfy debt obligations of the dissolved district

 

under section 12 of the revised school code, MCL 380.12, taxable

 

value per membership pupil does not include the taxable value of

 

property within the geographic area of the dissolved district.

 

     (e) "Dissolved district" means a district that loses its

 

organization, is attached to 1 or more other school districts, and

 

is dissolved as provided under section 12 of the revised school

 


code, MCL 380.12.

 

     (f) (e) "Hold harmless millage" means, for a district with a

 

1994-95 foundation allowance greater than $6,500.00, the number of

 

mills by which the exemption from the levy of school operating

 

taxes on a homestead, qualified agricultural property, qualified

 

forest property, supportive housing property, industrial personal

 

property, and commercial personal property could be reduced as

 

provided in section 1211 of the revised school code, MCL 380.1211,

 

and the number of mills of school operating taxes that could be

 

levied on all property as provided in section 1211(2) of the

 

revised school code, MCL 380.1211, as certified by the department

 

of treasury for the 1994 tax year. For a receiving district, if

 

school operating taxes are to be levied on behalf of a dissolved

 

district to satisfy debt obligations of the dissolved district

 

under section 12 of the revised school code, MCL 380.12, school

 

operating taxes do not include school operating taxes levied within

 

the geographic area of the dissolved district.

 

     (g) (f) "Homestead", "qualified agricultural property",

 

"qualified forest property", "supportive housing property",

 

"industrial personal property", and "commercial personal property"

 

mean those terms as defined in section 1211 of the revised school

 

code, MCL 380.1211.

 

     (h) (g) "Membership" means the definition of that term under

 

section 6 as in effect for the particular fiscal year for which a

 

particular calculation is made.

 

     (i) (h) "Nonexempt property" means property that is not a

 

principal residence, qualified agricultural property, qualified

 


forest property, supportive housing property, industrial personal

 

property, or commercial personal property.

 

     (j) (i) "Qualifying public school academy" means a public

 

school academy that was in operation in the 1994-95 school year and

 

is in operation in the current state fiscal year.

 

     (k) "Receiving district" means a school district to which some

 

or all of a dissolved district was attached under section 12 of the

 

revised school code, MCL 380.12.

 

     (l) (j) "School operating taxes" means local ad valorem

 

property taxes levied under section 1211 of the revised school

 

code, MCL 380.1211, and retained for school operating purposes as

 

defined in section 20.

 

     (m) (k) "Tax increment financing acts" means 1975 PA 197, MCL

 

125.1651 to 125.1681, the tax increment finance authority act, 1980

 

PA 450, MCL 125.1801 to 125.1830, the local development financing

 

act, 1986 PA 281, MCL 125.2151 to 125.2174, the brownfield

 

redevelopment financing act, 1996 PA 381, MCL 125.2651 to 125.2672,

 

or the corridor improvement authority act, 2005 PA 280, MCL

 

125.2871 to 125.2899.

 

     (n) (l) "Taxable value per membership pupil" means each of the

 

following divided by the district's membership:

 

     (i) For the number of mills by which the exemption from the

 

levy of school operating taxes on a homestead, qualified

 

agricultural property, qualified forest property, supportive

 

housing property, industrial personal property, and commercial

 

personal property may be reduced as provided in section 1211 of the

 

revised school code, MCL 380.1211, the taxable value of homestead,

 


qualified agricultural property, qualified forest property,

 

supportive housing property, industrial personal property, and

 

commercial personal property for the calendar year ending in the

 

current state fiscal year. For a receiving district, if school

 

operating taxes are to be levied on behalf of a dissolved district

 

to satisfy debt obligations of the dissolved district under section

 

12 of the revised school code, MCL 380.12, mills do not include

 

mills within the geographic area of the dissolved district.

 

     (ii) For the number of mills of school operating taxes that may

 

be levied on all property as provided in section 1211(2) of the

 

revised school code, MCL 380.1211, the taxable value of all

 

property for the calendar year ending in the current state fiscal

 

year. For a receiving district, if school operating taxes are to be

 

levied on behalf of a dissolved district to satisfy debt

 

obligations of the dissolved district under section 12 of the

 

revised school code, MCL 380.12, school operating taxes do not

 

include school operating taxes levied within the geographic area of

 

the dissolved district.