This is our starting text

HB-5436, As Passed House, December 8, 2005

SUBSTITUTE FOR

HOUSE BILL NO. 5436

A bill to amend 1979 PA 94, entitled

"The state school aid act of 1979,"

by amending sections 11 and 11a (MCL 388.1611 and 388.1611a), as

amended by 2005 PA 155, and by adding section 99c.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 11. (1) ~~For the fiscal year ending September 30, 2005,~~

~~there is appropriated for the public schools of this state and~~

~~certain other state purposes relating to education the sum of~~

~~$10,907,222,200.00 from the state school aid fund established by~~

~~section 11 of article IX of the state constitution of 1963, the sum~~

~~of $41,100,000.00 from the proceeds of capitalization of the school~~

~~bond loan fund revolving fund, and the sum of $165,200,000.00 from~~

~~the general fund.~~ For the fiscal year ending September 30, 2006,

there is appropriated for the public schools of this state and

certain other state purposes relating to education the sum of

~~$11,257,600,000.00~~ $11,292,350,000.00 from the state school aid

fund established by section 11 of article IX of the state

constitution of 1963, the sum of $44,500,000.00 from the proceeds

of capitalization of the school bond loan fund revolving fund, and

the sum of $62,714,000.00 from the general fund. In addition,

available federal funds are appropriated for each fiscal year.

(2) The appropriations under this section shall be allocated

as provided in this act. Money appropriated under this section from

the general fund shall be expended to fund the purposes of this act

before the expenditure of money appropriated under this section

from the state school aid fund. If the maximum amount appropriated

under this section from the state school aid fund for a fiscal year

exceeds the amount necessary to fully fund allocations under this

act from the state school aid fund, that excess amount shall not be

expended in that state fiscal year and shall not lapse to the

general fund, but instead shall be deposited into the school aid

stabilization fund created in section 11a.

(3) If the maximum amount appropriated under this section from

the state school aid fund and the school aid stabilization fund for

a fiscal year exceeds the amount available for expenditure from the

state school aid fund for that fiscal year, payments under sections

11f, 11g, 11j, 22a, 26a, 26b, 31d, 51a(2), 51a(12), 51c, 53a, and

56 shall be made in full. In addition, for districts beginning

operations after 1994-95 that qualify for payments under section

22b, payments under section 22b shall be made so that the

qualifying districts receive the lesser of an amount equal to the

1994-95 foundation allowance of the district in which the district

beginning operations after 1994-95 is located or $5,500.00. The

amount of the payment to be made under section 22b for these

qualifying districts shall be as calculated under section 22a, with

the balance of the payment under section 22b being subject to the

proration otherwise provided under this subsection and subsection

(4). If proration is necessary after 2002-2003, state payments

under each of the other sections of this act from all state funding

sources shall be prorated in the manner prescribed in subsection

(4) as necessary to reflect the amount available for expenditure

from the state school aid fund for the affected fiscal year.

However, if the department of treasury determines that proration

will be required under this subsection, or if the department of

treasury determines that further proration is required under this

subsection after an initial proration has already been made for a

fiscal year, the department of treasury shall notify the state

budget director, and the state budget director shall notify the

legislature at least 30 calendar days or 6 legislative session

days, whichever is more, before the department reduces any payments

under this act because of the proration. During the 30 calendar day

or 6 legislative session day period after that notification by the

state budget director, the department shall not reduce any payments

under this act because of proration under this subsection. The

legislature may prevent proration from occurring by, within the 30

calendar day or 6 legislative session day period after that

notification by the state budget director, enacting legislation

appropriating additional funds from the general fund,

countercyclical budget and economic stabilization fund, state

school aid fund balance, or another source to fund the amount of

the projected shortfall.

(4) If proration is necessary, the department shall calculate

the proration in district and intermediate district payments that

is required under subsection (3) as follows:

(a) The department shall calculate the percentage of total

state school aid allocated under this act for the affected fiscal

year for each of the following:

(i) Districts.

(ii) Intermediate districts.

(iii) Entities other than districts or intermediate districts.

(b) The department shall recover a percentage of the proration

amount required under subsection (3) that is equal to the

percentage calculated under subdivision (a)(i) for districts by

reducing payments to districts. This reduction shall be made by

calculating an equal dollar amount per pupil as necessary to

recover this percentage of the proration amount and reducing each

district's total state school aid from state sources, other than

payments under sections 11f, 11g, 11j, 22a, 26a, 26b, 31d, 51a(2),

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

amount required under subsection (3) that is equal to the

percentage calculated under subdivision (a)(ii) for intermediate

districts by reducing payments to intermediate districts. This

reduction shall be made by reducing the payments to each

intermediate district, other than payments under sections 11f, 11g,

26a, 26b, 51a(2), 51a(12), 53a, and 56, on an equal percentage

basis.

(d) The department shall recover a percentage of the proration

amount required under subsection (3) that is equal to the

percentage calculated under subdivision (a)(iii) for entities other

than districts and intermediate districts by reducing payments to

these entities. This reduction shall be made by reducing the

payments to each of these entities, other than payments under

sections 11j, 26a, and 26b, on an equal percentage basis.

(5) Except for the allocation under section 26a, any general

fund allocations under this act that are not expended by the end of

the state fiscal year are transferred to the school aid

stabilization fund created under section 11a.

Sec. 11a. (1) The school aid stabilization fund is created as

a separate account within the state school aid fund established by

section 11 of article IX of the state constitution of 1963.

(2) The state treasurer may receive money or other assets from

any source for deposit into the school aid stabilization fund. The

state treasurer shall deposit into the school aid stabilization

fund all of the following:

(a) Unexpended and unencumbered state school aid fund revenue

for a fiscal year that remains in the state school aid fund as of

the bookclosing for that fiscal year. For the 2005-2006 fiscal

year, this amount is estimated to be $20,000,000.00.

(b) Money statutorily dedicated to the school aid

stabilization fund.

(3) Money available in the school aid stabilization fund may

not be expended without a specific appropriation from the school

aid stabilization fund. Money in the school aid stabilization fund

shall be expended only for purposes for which state school aid fund

money may be expended.

(4) The state treasurer shall direct the investment of the

school aid stabilization fund. The state treasurer shall credit to

the school aid stabilization fund interest and earnings from fund

investments.

(5) Money in the school aid stabilization fund at the close of

a fiscal year shall remain in the school aid stabilization fund and

shall not lapse to the unreserved school aid fund balance or the

general fund.

(6) If the maximum amount appropriated under section 11 from

the state school aid fund for a fiscal year exceeds the amount

available for expenditure from the state school aid fund for that

fiscal year, there is appropriated from the school aid

stabilization fund to the state school aid fund an amount equal to

the projected shortfall as determined by the department of

treasury, but not to exceed available money in the school aid

stabilization fund. If the money in the school aid stabilization

fund is insufficient to fully fund an amount equal to the projected

shortfall, the state budget director shall notify the legislature

as required under section 11(3) and state payments in an amount

equal to the remainder of the projected shortfall shall be prorated

House Bill No. 5436 (H-1) as amended December 8, 2005

in the manner provided under section 11(4).

(7) ~~Each school fiscal year for 2004-2005 and for~~ For 2005-

2006, there is transferred from the school aid stabilization fund

to the state school aid fund the amount necessary to fully fund the

allocations under this act.

Sec. 99c. (1) [If it is determined at the January 2006 revenue

estimating conference conducted under section 367b of the management and budget act, 1984 PA 431, MCL 18.1367b, that the combined total amount of projected state school aid fund revenue for 2004-2005 and for 2005-2006 will be at least $35,000,000.00 more than that combined total amount as projected at the August 2005 revenue estimating conference conducted under section 367b of the management and budget act, 1984 PA 431, MCL 18.1367b, then from] the state school aid fund money

appropriated in section 11, there is allocated an amount not to

exceed $18,500,000.00 for 2005-2006 for payments to districts under

this section for the middle school mathematics initiative to

achieve the middle school mathematics standards and benchmarks

adopted by the state board.

(2) The amount of the payment to each district for 2005-2006

shall be an equal amount per pupil for each pupil actually enrolled

and attending school in the district in grades 6 to 8. The amount

of the payment to a district under this section for subsequent

fiscal years shall be calculated as described in subsection (4).

(3) A district shall use funds received under this section

only for activities and efforts designed to improve pupil

performance on the Michigan education assessment program

mathematics assessments administered during grades 6 to 8 and to

help the district meet adequate yearly progress requirements for

mathematics under the no child left behind act of 2001, Public Law

107-110.

(4) It is the intent of the legislature to continue to

allocate funds under this section for subsequent fiscal years.

However, beginning in 2007-2008, only eligible districts will

receive funding under this section and the amount of funding shall

be an equal amount per pupil enrolled and attending school in

grades 6 to 8 in eligible districts only. Beginning in 2007-2008, a

district shall be eligible to receive funding under this section

only if the district meets either or both of the following during

the fiscal year for which the funds are allocated:

(a) Achieves the passage rate on the Michigan education

assessment program mathematics assessments administered during

grades 6 to 8 necessary for the district to meet adequate yearly

progress requirements for those grades for mathematics under the no

child left behind act of 2001, Public Law 107-110.

(b) Achieves an increase in the passage rate on the Michigan

education assessment program mathematics assessments administered

during grades 6 to 8 of at least 10 percentage points, as compared

to that passage rate for the immediately preceding year.

(5) Notwithstanding section 17b, for 2005-2006 only, payments

under this section shall begin with the January installment.

(6) Districts receiving funding under this section and

intermediate districts receiving funding under section 99b are

encouraged to work cooperatively with each other to maximize the

benefits of programs funded under this section and section 99b.

Enacting section 1. In accordance with section 30 of article I

of the state constitution of 1963, total state spending in this

amendatory act and in 2005 PA 155 from state sources for fiscal

year 2005-2006 is estimated at $11,399,564,000.00 and state

appropriations to be paid to local units of government for fiscal

year 2005-2006 are estimated at $11,376,663,100.00.

Enacting section 2. This amendatory act does not take effect