5372: CONFERENCE REPORT (Date Completed: 6-1-12)

FY 2012-13 SCHOOL AID BUDGET S.B. 5372 (CR-1*): CONFERENCE REPORT

FY 2011-12 Year-to-Date Gross Appropriation.........................................................................

$12,744,007,800

Changes from FY 2011-12 Year-to-Date:
Items Included by the Senate and House
1. Technical Cost Adjustments. Conference included adjustments due to pupils, taxable values, cash flow borrowing costs, and changes in Federal funds.	45,714,600
2. Youth Challenge. Senate and House both funded Youth Challenge at $1.5 million.	734,400
3. New Grants. Governor, Senate, and House included $10.0 million one-time funding of a program to provide consolidation innovation grants, and a new program to provide up to $300/principal for training in effectively evaluating teachers.	11,750,000
4. Economic Adjustments. $818,300 for OPEB and $403,400 for other economics.	1,221,700
5. Other Changes. Michigan Business Tax hold harmless was eliminated.	(700,000)
Conference Agreement on Items of Difference
6. Best Practices. Conference funded Best Practices grants at $80.0 million, a decrease of $74.0 million from the current year, for districts meeting seven out of eight criteria.	(74,000,000)
7. Equity/Foundation. Conference funded equity payments at $80.0 million, boosting districts below $6,966 per pupil up to that amount (an increase up to $120 per pupil).	80,000,000
8. Technology Infrastructure Grants. Conference funded these new grants, initiated by the House, at $50.0 million, for technology improvements or access to a computer adaptive test.	50,000,000
9. District Performance Grants. Conference funded district performance grants, originally proposed by the Governor as pupil performance grants, at $30.0 million.	30,000,000
10. Class Size Reduction Grants. Conference funded class size reduction grants in FY 2012-13 at the current FY 2011-12 level.	13,300,000
11. Intermediate School District (ISD) Best Practices. Conference included $2.0 million to provide Best Practices incentive grants to ISDs, rather than earmark grants from existing funds.	2,000,000
12. Renaissance Zone Reimbursements for Libraries. Conference included a partial restoration of Renaissance Zone reimbursements for public libraries.	1,500,000
13. Great Start Readiness Program (GSRP) Grants. Conference increased GSRP grants by $5.0 million.	5,000,000
14. MPSERS Reimbursements to Districts. Conference continued the $155.0 million appropriation in FY 2011-12 into FY 2012-13.	0
15. MPSERS Reserve for Reforms. Conference included a $41.0 million appropriation into the MSPERS reserve, a decrease from the current appropriation of $133.0 million.	(92,000,000)
16. MPSERS Funding for Employer Rate Cap. Conference included $130.0 million to appropriate to the Retirement System, pursuant to Section 41 of Senate Bill 1040, which provides for a cap on employer contribution rates.	130,000,000
17. Items Not Funded. Education Reserve Fund, Computer Adaptive Test, increase in Vocational Education, restoration of Wayne-Westland and other specific adjustments.	(4,000,000)

Total Changes...........................................................................................................................	$200,520,700
FY 2012-13 Conference Report Ongoing/One-Time Gross Appropriation..................................	$12,944,528,500
Amount Over/(Under) GF/GP Target: $0

FY 2012-13 SCHOOL AID BUDGET BOILERPLATE HIGHLIGHTS

Changes from FY 2011-12 Year-to-Date:

Items Included by the Senate and House

1. Michigan Virtual University (MVU). The Governor, Senate, and House proposed changing the mission of the MVU by establishing the Center for Online Learning Research and Innovation, focused on research and innovation in online learning. The new Center also would be required to annually research and recommend criteria by which cyber schools and online course providers should be monitored and evaluated. The MVU was further charged with conducting a pilot study of 1,000 students in online courses to determine and demonstrate the merits of a payment system for online instructional programs based on student performance rather than solely on enrollment and attendance. (Sec. 98)

Conference Agreement on Items of Difference

2. Vocational and Alternative Education Programs Outside District Boundaries. Senate added language allowing districts to operate in other districts if the resident district did not offer vocational or alternative education programs. Conference did not include.

3. Pupil Count Days. House included language stating the intent to move away from the current two-count per-year system, to a system of counting students eight times a year. Conference did not include, but did amend Section 25 to allow for the Department of Education to adjust pupil membership FTEs mid-year, when pupils transfer after count day. (Sec. 6 and 25)

4. Kindergarten. Conference added language stating that, to the extent allowable under Federal law and with sufficient documentation, for districts that used Federal Title I money in the two preceding years to fund full-time kindergarten, full-time membership in kindergarten is equal to one-half of the number of hours required for full-time status in grades 1-12. The Department of Education also is required to seek clarification from the Federal Department of Education as to whether this is an allowable use of Federal Title I money. (Sec. 6)

5. Intent Language. Conference concurred with Senate to add two sections of intent language: 1) School Aid Fund name change to Comprehensive Education Fund; and, 2) intent to study categoricals and determine to what extent, if any, they should be rolled into the foundation allowance. (Secs. 11t and 11u)

6. Online Learning Cost Report. Conference included a report found in Senate Bill 619 requiring districts and ISDs offering online learning to report on the detailed costs of online learning. (Sec. 18)

7. Standardized Data Reporting. Conference included modified House language stating intent to move to a standardized data reporting system by FY 2014-15. (Sec. 19)

8. Early Childhood Block Grant. Conference repealed categorical funding for ISD early childhood funding and ECIC collaboratives, and rolled them into a new ISD early childhood block grant. (Sec. 32p)

9. Itinerant Staff Reimbursement. Conference retained language requiring the redistribution of special education funds, that otherwise would lapse, to intermediate districts affected by changes made in FY 2003-04 regarding costs associated with itinerant staffing, but with an expiration date not later than FY 2014-15. (Section 51a).

10. Best Practices Earmark for ISDs. The Governor earmarked 5% of existing intermediate district operational funding as incentive payments for ISDs meeting best practices (service consolidation, competitive bids on noninstructional services, technology plan for constituent districts, dashboard, and information management system). Conference instead added 3.2% of new funding for best practices. (Sec. 81)

11. Dropouts. Conference added a new section allowing an enrolling district to provide substantiating paperwork to the Department of Education in order to enroll a dropout who has not yet been so identified. (Sec. 101a)

12. MPSERS Rate. The FY 2012-13 MPSERS rate totaled 27.37% of payroll for employees hired before July 1, 2010, and totaled 26.14% of payroll for employees hired on or after that date. Conference included language allowing the rate to differ, if the office of Retirement Services calculates and applies a different rate pursuant to provisions enacted under Senate Bill 1040. (Sec. 147)

Date Completed: 6-1-12 Fiscal Analyst: Kathryn Summers

FY 2012-13 COMMUNITY COLLEGES BUDGET S.B. 5372 (CR-1*): CONFERENCE REPORT

FY 2011-12 Year-to-Date Gross Appropriation.....................................................................

$283,880,500

Changes from FY 2011-12 Year-to-Date:
Items Included by the Senate and House
1. There are no Items of Agreement for appropriations line items.
Conference Agreement on Items of Difference
2. Performance Funding. Governor included an $8,516,400 (3.0%) GF/GP increase to community colleges allocated through a new formula based on the average number of completions of associate degrees and certificates below baccalaureate in critical skills areas (3-year average for FY 2008-09, FY 2009-10, and FY 2010-11). Critical skills areas include: science, technology, engineering, mathematics, and health fields. Senate did not concur with Governor s proposed distribution. Senate continues using the Performance Indicators Taskforce recommendations to allocate additional funding. The local strategic value component was modified to allocate funds based on community colleges meeting certain best practice requirements. Senate allocations are based on the following: 50% proportionate to FY 2011-12 base; 10% contact hour equated students; 7.5% administrative costs; 17.5% weighted degrees; 15.0% local strategic value. House did not include formula distributions and instead allocated additional funds across-the-board and earmarked funding for MPSERS costs. Conference concurred with Senate distribution, but earmarked increase for MPSERS costs. Table 1 and Table 3 list details.	8,516,400
3. Michigan Public School Employees Retirement System (MPSERS) Health Costs. Governor and Senate included $1,733,600 from the School Aid Fund for the purpose of offsetting the increase in MPSERS retirement contributions attributable to the 0.25% increase in retiree health care costs. Distributions were to be based on the FY 2011-12 MPSERS payroll. House included the appropriation but allocated the funds across-the-board instead of basing distributions on MPSERS payroll. Conference concurred with House distribution. Table 2 shows the estimated difference between the distribution methods.	1,733,600
4. School Aid Fund. Senate shifted $96,516,400 from the State General Fund to the School Aid Fund, leaving no General Fund appropriation in the community college budget. House did not include the funding shift. Conference concurred with the House.	0
5. Renaissance Zone Reimbursements. Senate included a placeholder for Renaissance Zone tax reimbursements pursuant to Public Act 376 of 1996. The estimated cost of these reimbursements is $3.5 million. Leadership agreement included funding in the Department of Treasury budget.	0
6. Budget Format. House included all additional funding in a separate appropriation unit, total of $10,250,000 ($8,516,400 GF/GP the Governor recommended for performance funding, and $1,733,600 SAF that the Governor recommended to offset a portion of MPSERS costs). Conference included the $8,516,400 in college operations line items, and the $1,733,600 in a separate section.	0

Total Changes.....................................................................................................................	$10,250,000
FY 2012-13 Conference Report Ongoing/One-Time Gross Appropriation.............................	$294,130,500
Amount Over/(Under) GF/GP Target: $0

FY 2012-13 COMMUNITY COLLEGES BUDGET BOILERPLATE HIGHLIGHTS

Changes from FY 2011-12 Year-to-Date:

Items Included by the Senate and House

1. Performance Funding Calculations. Governor included new language basing allocations of new funding on the average number of completions of associate degrees and certificates in critical skills areas (3-year average for FY 2008-09, FY 2009-10, and FY 2010-11). Provides that community colleges shall report to the Center for Educational Performance and Information (CEPI) the number of students in the most recently completed academic year that transferred to a 4-year college or university and states that data will be used in the FY 2013-14 formula. Senate & House did not include this section. (Sec. 206(b))

2. State Building Authority Rent. Governor, Senate, & House included new language listing amounts paid by the State for previously constructed capital projects for each community college. (Sec. 229(a))

3. Restored Sections. Senate & House restored the following sections that were deleted by the Governor: Buy America intent (Sec. 204), report on budget revenue sources, expenditures and other data (Sec. 209(5)), encourages community colleges to achieve efficiencies (Sec. 212), prohibits purchase of foreign automobiles (Sec. 227), and prohibits disciplinary action against an employee for communicating with the Legislature (Sec. 228).

4. Deleted Sections. Governor, Senate & House removed a provision that creates committee to develop a common set of scores using the ACT assessment to determine placement in developmental courses at community colleges. (Sec. 214)

Conference Agreement on Items of Difference

5. Anticipated Appropriations Subsequent Fiscal Year. Governor replaced this section with line items for FY 2013-14. Senate & House did not include line items and restored this section. House changed Revenue Estimating Conference to May instead of January. Conference concurred with Senate. (Sec. 201(a))

6. Payment Distribution Schedule. Governor authorized withholding funds for failure to provide P-20 data. Budget Director shall determine compliance. Senate concurred with Governor and also added a notice requirement 10 days prior to withholding funds. House did not include notice requirement. Conference concurred with Senate. (Sec. 206)

7. Transparency. Governor eliminated language requiring community colleges post on the Internet a comprehensive report categorizing all institutional G/F expenditures by fiscal year (including a listing of all employee positions by position title, name, and annual salary) and report on budgeted revenue and expenditures. Senate revised by eliminating listing of names and salaries and added standard reporting on college website with additional information required including budget revisions, expenditures, employee costs, employee health care plans, links to collective bargaining agreements, enrollments, student retention, financial aid information, faculty to student ratios, graduation outcome rates, best practices, and also included penalty of withholding State aid payments for noncompliance. House restored section and added to the reporting requirements, including total number of full time faculty, total students enrolled, and the number of students receiving a degree in the most recent academic year. Conference modified Senate language by removing certain format requirements, modifying information requirements and linking certain data to existing information in the Activities Classification Structure. (Sec. 209)

8. P-20 Longitudinal Data System. Requires community colleges receiving funds under this act to cooperate with the State to comply with the provisions of the American Recovery and Reinvestment Act (ARRA) of 2009 requiring the establishment of a statewide P-20 Longitudinal Data System. Governor and Senate changed shall cooperate to shall comply . Removed reference to ARRA. House and Conference eliminated current year language and required colleges to provide their longitudinal data system data set for the preceding academic year to CEPI by June 30 of each year. (Sec. 219)

9. Student Academic Status. Governor, Senate, and Conference modified this language by requiring community colleges to cooperate with CEPI to design and implement a system to accomplish this work. (Sec. 224)

10. Restored Sections. Conference restored Depressed and Deprived intent (Sec. 205); compliance with JCOS use and finance requirements and penalty provisions (portion of Sec. 208); collaboration with four-year universities, local employers, and other community colleges (Sec. 210); intent that performance task force indicators be reviewed and more fully implemented for distribution of State funding in future years - Senate and Conference modified this section to reflect FY 2012-13 adjustments to the formula (Sec. 230); creates committee to develop a process to improve the transferability of core college courses between colleges and universities - House and Conference revised membership and added report (Sec. 210(a)); and review statutory mandates (Sec. 216).

11. Other Changes. Conference concurred with Governor and Senate by removing intent language for colleges to promote equal opportunity. (Sec. 211)

Date Completed: 6-1-12 Fiscal Analyst: Bill Bowerman

FY 2012-13 HIGHER EDUCATION BUDGET S.B. 5372 (CR-1*): CONFERENCE REPORT

[Please see the PDF version of this analysis, if available, to view this image.]

FY 2011-12 Year-to-Date Gross Appropriation.............................................................................

$1,364,178,400

Changes from FY 2011-12 Year-to-Date:
Items Included by the Senate and House
1. Michigan Public School Employees Retirement System (MPSERS) Retiree Health Costs. School Aid Fund support to offset the 0.25% increase in costs related to retiree health care.	446,200
2. State Competitive Scholarships. Governor, Senate, and House increased funding for this program from $18,361,700 to $20,361,700. Conference removed increase.	0
3. Federal Funds. The Robert C. Byrd scholarship was eliminated by Congress.	(1,300,000)
Conference Agreement on Items of Difference
4. MSU AgBioResearch. Conference included a 3.0% increase.	1,578,800
5. Performance Funding. (See Table 1 for details by institution.) Governor: $36,217,000 (3.0%) increase allocated by four new funding formulas based on three-year average growth of undergraduate degree completions, three-year average degree completions in critical skills areas, three-year average number of undergraduate students receiving Pell Grants, and tuition restraint. Senate: Maintained $9,054,300 tuition restraint recommendation, but changed the remaining distribution to an $18,108,400 allocation proportional to FY 2011-12 base appropriations and $9,054,300 allocated pursuant to how universities perform relative to their Carnegie classifications for eight metrics. House: Included the same overall increase but distributed funding based on a single-component formula that weights undergraduate degrees and certificates (two-year average) according to program length and provides a double weight for degrees/certificates in critical skills areas. House also redistributes 1.0% of FY 2011-12 base appropriations ($12,072,300) under the formula, along with the $36,217,000. Conference: Maintained Governor's tuition restraint, but included a modified performance funding method based on the Senate and House formulas.	36,217,000
6. MSU Facility for Rare Isotopes (FRIB). Governor and Senate included $2,339,900. House and Conference transferred funding to the General Government Budget.	0
7. Tuition Grants. Governor reduced this program by $1.0 million, from $31,664,700 to $30,664,700. Senate maintained current year funding; House increased to $32,664,700. Conference maintained current-year funding.	0
8. Tuition Incentive Program (TIP). Governor reduced this program by $1.0 million, from $43.8 million to $42.8 million. Senate reduced this program by an additional $1.0 million. House maintained the Governor's recommended level of funding. Conference maintained current-year funding.	0
9. Other Changes. Governor and House eliminated FY 2011-12 one-time appropriations for EMU Autism Collaborative Center ($500,000), MSU FRIB ($1.2 million, and WMU Economic Development and Commercialization ($200,000). Senate restored EMU Autism Collaborative Center Funding and added CMU $50,000 grant for Central Assessment Lending Library. House did not include the items added on the Senate Floor. Leadership transferred EMU and CMU items to other budgets.	(1,900,000)

Total Changes............................................................................................................................	$35,042,000
FY 2012-13 Conference Report Ongoing/One-Time Gross Appropriation....................................	$1,399,220,400
Amount Over/(Under) GF/GP Target: $0

FY 2012-13 HIGHER EDUCATION BUDGET BOILERPLATE HIGHLIGHTS

Changes from FY 2011-12 Year-to-Date:

Items Included by the Senate and House

1. Contingency Funds. Appropriates up to $6,000,000 in Federal funds for grants and financial aid. (Sec. 236b)

2. P-20 Education Longitudinal Data System. Modified to require the development of a P-20 system and allow the Budget Director to withhold funds for noncompliance. (Sec. 244)

3. State Competitive Scholarships. Governor, Senate, and House reduced awards to reflect actual amounts. (Sec. 251)

4. Academic Information-High Schools and Community Colleges. Modified to require universities to work with Center for Educational Performance and Information (CEPI) to implement a systematic approach. (Secs. 283 and 284)

5. State Building Authority Rent. Lists amounts included in the General Government bill. (Sec. 294a)

6. Restored/Modified Sections. Buy American/Buy Michigan intent (Sec. 239); purchase of foreign automobiles prohibition (Sec. 239a); U of M Douglas Lake Biological Station (Sec. 261); unfunded Indian tuition waiver costs (Sec. 268); counseling degree programs/student's religious beliefs (Sec. 273); and human embryonic stem cell report (Conference modified) (Sec. 274).

7. Deleted Sections. Research university definition (Sec. 237a); minimizing textbooks costs (Sec. 262); funding formula (Sec. 266); academic program accreditation (Sec. 271); and rejection of transfer credits report (Sec. 272).

Conference Agreement on Items of Difference

8. Second Year Appropriation Intent Language. Governor replaced with line items. Senate and House maintain boilerplate. House stated intent performance funding is included in FY 2013-14 base and referenced May Revenue Estimating Conference instead of January. Conference concurred with Senate. (Sec. 236a)

9. Posting of Expenditures. Governor eliminated listing of individual employee information. Senate concurred in part, but required additional information and uniform placement of information on university websites. Senate authorizes the Budget Director to withhold State aid for noncompliance. House maintained current-year language and added December 15 report deadline. Conference concurred with Senate but added specific salary information.(Sec. 245)

10. Tuition Grant Program. Governor changed application deadlines, eliminated carry forward, and added new reporting requirements for independent colleges (P-20 longitudinal and other data). Senate maintained current-year language. House removed carry forward, changed private college reporting requirement to intent that private institutions work with CEPI toward establishment of a student-level data reporting process, and added reporting requirement if funds are available above the $1,512 maximum award level. Conference concurred with Senate except added House reporting requirement. (Sec. 252)

11. Student Financial Aid Distributions. Governor, House, and Conference changed distribution from 50% allocated over the first two quarters to payments of 50%, 30%, 10%, and 10%. (Sec. 254)

12. Purpose of University Appropriations. House language stating the purpose of State funding is to reduce the cost charged to Michigan residents for undergraduate instructional programs. (Sec. 260)

13. Tuition Restraint. Governor revised and set the FY 2012-13 limit at 4.0%. Senate reduced limit to 3.5%. House tied tuition restraint requirements to all of performance funding and calculated FY 2012-13 tuition restraint limit on two-year basis. Conference concurred with Governor. (Sec. 265)

14. Performance Funding Criteria. Governor: requires universities to certify they participate in the Michigan Transfer Network (MTN), sets criteria, and lapses forfeited funds. Senate: changes formula, redistributes funds forfeited, and ties receipt of funds to MTN participation and compliance with stem cell report. House: changes formula, conditions receipt to compliance with tuition restraint, reporting on embryonic stem cell research, certification that the university participates in at least three reverse transfer agreements, certification that dual enrollment policies do not prevent use of credits for high school graduation, and certification that the university does not require resident undergraduate students to carry health insurance coverage. Funds forfeited for noncompliance are re-appropriated for MPSERS, MSU AgBioResearch, and the balance for additional performance funding. Conference: required reserve transfer agreement, House dual enrollment provision, and MTN participation. Forfeited funds would be allocated under tuition restraint. (Sec. 265a)

15. Non-Profit Worker Centers. House language stating legislative intent that public universities shall not collaborate with a nonprofit worker center whose documented activities include coercion through protest, demonstration, or organization against a Michigan business. Conference modified intent language. (Sec. 273a)

16. Restored Sections. Conference restored: Acceptance of Federal funds not placing an obligation on the Legislature (portion of Sec. 242); coordinate purchases (Sec. 270a); adult co-resident health benefits-legislative intent and report (Sec. 274a); Yellow Ribbon GI Education Enhancement report requirement (portion of Sec. 275); compliance with JCOS use and finance rules and penalty provisions (portion of Sec. 275a); and Federal Educational Rights & Privacy Act (Sec. 293); and new degree programs (Sec. 290).

17. Other Changes. Conference removed deprived and depressed communities (Sec. 240) and merged campus security information (Sec. 292) with Sec. 245.

Date Completed: 6-1-12 Fiscal Analyst: Bill Bowerman

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