SB-0197, As Passed Senate, December 15, 2011

SUBSTITUTE FOR

SENATE BILL NO. 197

A bill to amend 1979 PA 94, entitled

"The state school aid act of 1979,"

by amending sections 11, 11j, 11m, 22a, 22b, 26a, 31d, 31f, 51a,

51c, 53a, and 62 (MCL 388.1611, 388.1611j, 388.1611m, 388.1622a,

388.1622b, 388.1626a, 388.1631d, 388.1631f, 388.1651a, 388.1651c,

388.1653a, and 388.1662), as amended by 2011 PA 62.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 11. (1) Subject to subsection (3), for the fiscal year

ending September 30, 2011, there is appropriated for the public

schools of this state and certain other state purposes relating to

education the sum of ~~$10,757,260,500.00~~ $10,784,760,500.00 from the

state school aid fund and the sum of $18,642,400.00 from the

general fund. For the fiscal year ending September 30, 2011, there

is also appropriated the remaining balance of the federal funding

awarded to this state under title XIV of the American recovery and

reinvestment act of 2009, Public Law 111-5, estimated at

$184,256,600.00, to be used solely for the purpose of funding the

primary funding formula calculated under section 20, in accordance

with federal law. Subject to subsection (3), for the fiscal year

ending September 30, 2012, there is appropriated for the public

schools of this state and certain other state purposes relating to

education the sum of $10,887,098,700.00 from the state school aid

fund and the sum of $118,642,400.00 from the general fund. In

addition, all other available federal funds, except those otherwise

appropriated under section 11p, are appropriated for the fiscal

year ending September 30, 2011 and for the fiscal year ending

September 30, 2012.

(2) The appropriations under this section shall be allocated

as provided in this article. Money appropriated under this section

from the general fund shall be expended to fund the purposes of

this article before the expenditure of money appropriated under

this section from the state school aid fund.

(3) Any general fund allocations under this article 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. 11j. From the appropriation in section 11, there is

allocated an amount not to exceed $2,837,800.00 for 2010-2011 and

an amount not to exceed $93,575,300.00 for 2011-2012 for payments

to the school loan bond redemption fund in the department of

treasury on behalf of districts and intermediate districts.

Notwithstanding section 11 or any other provision of this act,

funds allocated under this section are not subject to proration and

shall be paid in full.

Sec. 11m. From the appropriations in section 11, there is

allocated for 2010-2011 an amount not to exceed ~~$15,000,000.00~~

$6,847,000.00 and there is allocated for 2011-2012 an amount not to

exceed $20,000,000.00 for fiscal year cash-flow borrowing costs

solely related to the state school aid fund established by section

11 of article IX of the state constitution of 1963.

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

allocated an amount not to exceed ~~$5,737,000,000.00~~

$5,831,273,900.00 for 2010-2011 and an amount not to exceed

$5,691,000,000.00 for 2011-2012 for payments to districts,

qualifying university schools, and qualifying public school

academies to guarantee each district, qualifying university school,

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.

(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.

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

qualifying public school academy or qualifying university school,

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, or to the board

of the public university operating the qualifying university

school, an amount equal to the 1994-95 per pupil payment to the

qualifying public school academy or qualifying university school

under section 20.

(4) A district, qualifying university school, or qualifying

public school academy may use funds allocated under this section in

conjunction with any federal funds for which the district,

qualifying university school, or qualifying public school academy

otherwise would be eligible.

(5) 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.

(6) 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.

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.

(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.

(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.

(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.

(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.

(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.

(j) "Qualifying university school" means a university school

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

operation in the current fiscal year.

(k) "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.

(l) "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.

(m) "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.

(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.

Sec. 22b. (1) From the state funds appropriated in section 11,

there is allocated for 2010-2011 an amount not to exceed

~~$3,558,424,700.00~~ $3,551,097,700.00 and there is allocated for

2011-2012 an amount not to exceed $3,032,300,000.00 for

discretionary nonmandated payments to districts 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 22a and 51c in order to fully fund those calculated

allocations for the same fiscal year.

(2) In addition to the funds allocated in subsection (1),

there is allocated an amount estimated at $184,256,600.00 for 2010-

2011 from the federal funds awarded to this state under title XIV

of the American recovery and reinvestment act of 2009, Public Law

111-5. These funds shall be distributed in a form and manner

determined by the department based on an equal dollar amount per

the number of membership pupils used to calculate the final state

aid payment of the immediately preceding fiscal year and shall be

expended in a manner prescribed by federal law.

(3) Subject to subsection (4) and section 11, the allocation

to a district under this section shall be an amount equal to the

sum of the amounts calculated under sections 20, 51a(2), 51a(3),

and 51a(12), minus the sum of the allocations to the district under

sections 22a and 51c.

(4) In order to receive an allocation under subsection (1),

each district shall do all of the following:

(a) Administer in each grade level that it operates in grades

1 to 5 a standardized assessment approved by the department of

grade-appropriate basic educational skills. A district may use the

Michigan literacy progress profile to satisfy this requirement for

grades 1 to 3. Also, if the revised school code is amended to

require annual assessments at additional grade levels, in order to

receive an allocation under this section each district shall comply

with that requirement.

(b) Comply with sections 1278a and 1278b of the revised school

code, MCL 380.1278a and 380.1278b.

federal law to the center and the department in the form and manner

specified by the center or the department, as applicable.

(d) Comply with section 1230g of the revised school code, MCL

380.1230g.

(5) Districts are encouraged to use funds allocated under this

section for the purchase and support of payroll, human resources,

and other business function software that is compatible with that

of the intermediate district in which the district is located and

with other districts located within that intermediate district.

(6) From the allocation in subsection (1), the department

shall pay up to $1,000,000.00 in litigation costs incurred by this

state related to commercial or industrial property tax appeals,

including, but not limited to, appeals of classification, that

impact revenues dedicated to the state school aid fund.

(7) From the allocation in subsection (1), the department

shall pay up to $1,000,000.00 in litigation costs incurred by this

state associated with lawsuits filed by 1 or more districts or

intermediate districts against this state. If the allocation under

this section is insufficient to fully fund all payments required

under this section, the payments under this subsection shall be

made in full before any proration of remaining payments under this

section.

(8) It is the intent of the legislature that all

constitutional obligations of this state have been fully funded

under sections 22a, 31d, 51a, 51c, and 152a. If a claim is made by

an entity receiving funds under this article that challenges the

legislative determination of the adequacy of this funding or

alleges that there exists an unfunded constitutional requirement,

the state budget director may escrow or allocate from the

discretionary funds for nonmandated payments under this section the

amount as may be necessary to satisfy the claim before making any

payments to districts under subsection (3). If funds are escrowed,

the escrowed funds are a work project appropriation and the funds

are carried forward into the following fiscal year. The purpose of

the work project is to provide for any payments that may be awarded

to districts as a result of litigation. The work project shall be

completed upon resolution of the litigation.

(9) If the local claims review board or a court of competent

jurisdiction makes a final determination that this state is in

violation of section 29 of article IX of the state constitution of

1963 regarding state payments to districts, the state budget

director shall use work project funds under subsection (8) or

allocate from the discretionary funds for nonmandated payments

under this section the amount as may be necessary to satisfy the

amount owed to districts before making any payments to districts

under subsection (3).

(10) If a claim is made in court that challenges the

legislative determination of the adequacy of funding for this

state's constitutional obligations or alleges that there exists an

unfunded constitutional requirement, any interested party may seek

an expedited review of the claim by the local claims review board.

If the claim exceeds $10,000,000.00, this state may remove the

action to the court of appeals, and the court of appeals shall have

and shall exercise jurisdiction over the claim.

(11) If payments resulting from a final determination by the

local claims review board or a court of competent jurisdiction that

there has been a violation of section 29 of article IX of the state

constitution of 1963 exceed the amount allocated for discretionary

nonmandated payments under this section, the legislature shall

provide for adequate funding for this state's constitutional

obligations at its next legislative session.

(12) If a lawsuit challenging payments made to districts

related to costs reimbursed by federal title XIX medicaid funds is

filed against this state, then, for the purpose of addressing

potential liability under such a lawsuit, the state budget director

may place funds allocated under this section in escrow or allocate

money from the funds otherwise allocated under this section, up to

a maximum of 50% of the amount allocated in subsection (1). If

funds are placed in escrow under this subsection, those funds are a

work project appropriation and the funds are carried forward into

the following fiscal year. The purpose of the work project is to

provide for any payments that may be awarded to districts as a

result of the litigation. The work project shall be completed upon

resolution of the litigation. In addition, this state reserves the

right to terminate future federal title XIX medicaid reimbursement

payments to districts if the amount or allocation of reimbursed

funds is challenged in the lawsuit. As used in this subsection,

"title XIX" means title XIX of the social security act, 42 USC 1396

to 1396v.

Sec. 26a. From the state school aid fund appropriation in

section 11, there is allocated an amount not to exceed

$22,932,000.00 for 2010-2011 and an amount not to exceed

$26,300,000.00 for 2011-2012 to reimburse districts and

intermediate districts pursuant to section 12 of the Michigan

renaissance zone act, 1996 PA 376, MCL 125.2692, for taxes levied

in 2011. The allocations shall be made not later than 60 days after

the department of treasury certifies to the department and to the

state budget director that the department of treasury has received

all necessary information to properly determine the amounts due to

each eligible recipient.

Sec. 31d. (1) From the appropriations in section 11, there is

allocated an amount not to exceed $21,627,100.00 for 2010-2011 and

an amount not to exceed $22,495,100.00 for 2011-2012 for the

purpose of making payments to districts and other eligible entities

under this section.

(2) The amounts allocated from state sources under this

section shall be used to pay the amount necessary to reimburse

districts for 6.0127% of the necessary costs of the state mandated

portion of the school lunch programs provided by those districts.

The amount due to each district under this section shall be

computed by the department using the methods of calculation adopted

by the Michigan supreme court in the consolidated cases known as

Durant v State of Michigan, Michigan supreme court docket no.

104458-104492.

(3) The payments made under this section include all state

payments made to districts so that each district receives at least

6.0127% of the necessary costs of operating the state mandated

portion of the school lunch program in a fiscal year.

(4) The payments made under this section to districts and

other eligible entities that are not required under section 1272a

of the revised school code, MCL 380.1272a, to provide a school

lunch program shall be in an amount not to exceed $10.00 per

eligible pupil plus 5 cents for each free lunch and 2 cents for

each reduced price lunch provided, as determined by the department.

(5) From the federal funds appropriated in section 11, there

is allocated for 2011-2012 all available federal funding, estimated

at $400,000,000.00, for the national school lunch program and all

available federal funding, estimated at $2,506,000.00, for the

emergency food assistance program.

(6) Notwithstanding section 17b, payments to eligible entities

other than districts under this section shall be paid on a schedule

determined by the department.

(7) In purchasing food for a school lunch program funded under

this section, preference shall be given to food that is grown or

produced by Michigan businesses if it is competitively priced and

of comparable quality.

Sec. 31f. (1) From the appropriations in section 11, there is

allocated an amount not to exceed $3,800,000.00 for 2010-2011 and

an amount not to exceed $9,625,000.00 for 2011-2012 for the purpose

of making payments to districts to reimburse for the cost of

providing breakfast.

(2) The funds allocated under this section for school

breakfast programs shall be made available to all eligible

applicant districts that meet all of the following criteria:

(a) The district participates in the federal school breakfast

program and meets all standards as prescribed by 7 CFR parts 220

and 245.

(b) Each breakfast eligible for payment meets the federal

standards described in subdivision (a).

(3) The payment for a district under this section is at a per

meal rate equal to the lesser of the district's actual cost or 100%

of the statewide average cost of a breakfast served, as determined

and approved by the department, less federal reimbursement,

participant payments, and other state reimbursement. The statewide

average cost shall be determined by the department using costs as

reported in a manner approved by the department for the preceding

school year.

(4) Notwithstanding section 17b, payments under this section

may be made pursuant to an agreement with the department.

(5) In purchasing food for a school breakfast program funded

under this section, preference shall be given to food that is grown

or produced by Michigan businesses if it is competitively priced

and of comparable quality.

Sec. 51a. (1) From the appropriation in section 11, there is

allocated for 2010-2011 an amount not to exceed ~~$947,683,000.00~~

$909,087,100.00 and there is allocated for 2011-2012 an amount not

to exceed $977,469,100.00 from state sources and all available

federal funding under sections 611 to 619 of part B of the

individuals with disabilities education act, 20 USC 1411 to 1419,

estimated at $385,700,000.00 for 2010-2011, and estimated at

$363,400,000.00 for 2011-2012, plus any carryover federal funds

from previous year appropriations. The allocations under this

subsection are for the purpose of reimbursing districts and

intermediate districts for special education programs, services,

and special education personnel as prescribed in article 3 of the

revised school code, MCL 380.1701 to 380.1766; net tuition payments

made by intermediate districts to the Michigan schools for the deaf

and blind; and special education programs and services for pupils

who are eligible for special education programs and services

according to statute or rule. For meeting the costs of special

education programs and services not reimbursed under this article,

a district or intermediate district may use money in general funds

or special education funds, not otherwise restricted, or

contributions from districts to intermediate districts, tuition

payments, gifts and contributions from individuals, or federal

funds that may be available for this purpose, as determined by the

intermediate district plan prepared pursuant to article 3 of the

revised school code, MCL 380.1701 to 380.1766. All federal funds

allocated under this section in excess of those allocated under

this section for 2002-2003 may be distributed in accordance with

the flexible funding provisions of the individuals with

disabilities education act, Public Law 108-446, including, but not

limited to, 34 CFR 300.206 and 300.208. Notwithstanding section

17b, payments of federal funds to districts, intermediate

districts, and other eligible entities under this section shall be

paid on a schedule determined by the department.

(2) From the funds allocated under subsection (1), there is

allocated each fiscal year the amount necessary, estimated at

~~$236,300,000.00~~ $233,199,100.00 for 2010-2011 and estimated at

$245,500,000.00 for 2011-2012, for payments toward reimbursing

districts and intermediate districts for 28.6138% of total approved

costs of special education, excluding costs reimbursed under

section 53a, and 70.4165% of total approved costs of special

education transportation. Allocations under this subsection shall

be made as follows:

(a) The initial amount allocated to a district under this

subsection toward fulfilling the specified percentages shall be

calculated by multiplying the district's special education pupil

membership, excluding pupils described in subsection (12), times

the foundation allowance under section 20 of the pupil's district

of residence, not to exceed the basic foundation allowance under

section 20 for the current fiscal year, or, for a special education

pupil in membership in a district that is a public school academy

or university school, times an amount equal to the amount per

membership pupil calculated under section 20(6). For an

intermediate district, the amount allocated under this subdivision

toward fulfilling the specified percentages shall be an amount per

special education membership pupil, excluding pupils described in

subsection (12), and shall be calculated in the same manner as for

a district, using the foundation allowance under section 20 of the

pupil's district of residence, not to exceed the basic foundation

allowance under section 20 for the current fiscal year.

(b) After the allocations under subdivision (a), districts and

intermediate districts for which the payments calculated under

subdivision (a) do not fulfill the specified percentages shall be

paid the amount necessary to achieve the specified percentages for

the district or intermediate district.

(3) From the funds allocated under subsection (1), there is

allocated for 2010-2011 only the amount necessary, estimated at

~~$1,400,000.00~~ $1,734,000.00 for 2010-2011, to make payments to

districts and intermediate districts under this subsection. From

the funds allocated under subsection (1), there is allocated for

2011-2012 an amount not to exceed $1,000,000.00 to make payments to

districts and intermediate districts under this subsection. If the

amount allocated to a district or intermediate district for a

fiscal year under subsection (2)(b) is less than the sum of the

amounts allocated to the district or intermediate district for

1996-97 under sections 52 and 58, there is allocated to the

district or intermediate district for the fiscal year an amount

equal to that difference, adjusted by applying the same proration

factor that was used in the distribution of funds under section 52

in 1996-97 as adjusted to the district's or intermediate district's

necessary costs of special education used in calculations for the

fiscal year. This adjustment is to reflect reductions in special

education program operations or services between 1996-97 and

subsequent fiscal years. Adjustments for reductions in special

education program operations or services shall be made in a manner

determined by the department and shall include adjustments for

program or service shifts.

(4) If the department determines that the sum of the amounts

allocated for a fiscal year to a district or intermediate district

under subsection (2)(a) and (b) is not sufficient to fulfill the

specified percentages in subsection (2), then the shortfall shall

be paid to the district or intermediate district during the fiscal

year beginning on the October 1 following the determination and

payments under subsection (3) shall be adjusted as necessary. If

the department determines that the sum of the amounts allocated for

a fiscal year to a district or intermediate district under

subsection (2)(a) and (b) exceeds the sum of the amount necessary

to fulfill the specified percentages in subsection (2), then the

department shall deduct the amount of the excess from the

district's or intermediate district's payments under this act for

the fiscal year beginning on the October 1 following the

determination and payments under subsection (3) shall be adjusted

as necessary. However, if the amount allocated under subsection

(2)(a) in itself exceeds the amount necessary to fulfill the

specified percentages in subsection (2), there shall be no

deduction under this subsection.

(5) State funds shall be allocated on a total approved cost

basis. Federal funds shall be allocated under applicable federal

requirements, except that an amount not to exceed $3,500,000.00 may

be allocated by the department each fiscal year for 2010-2011 and

for 2011-2012 to districts, intermediate districts, or other

eligible entities on a competitive grant basis for programs,

equipment, and services that the department determines to be

designed to benefit or improve special education on a statewide

scale.

(6) From the amount allocated in subsection (1), there is

allocated an amount not to exceed $1,700,000.00 for 2010-2011 and

an amount not to exceed $2,200,000.00 for ~~2010-2011 and for~~ 2011-

2012 to reimburse 100% of the net increase in necessary costs

incurred by a district or intermediate district in implementing the

revisions in the administrative rules for special education that

became effective on July 1, 1987. As used in this subsection, "net

increase in necessary costs" means the necessary additional costs

incurred solely because of new or revised requirements in the

administrative rules minus cost savings permitted in implementing

the revised rules. Net increase in necessary costs shall be

determined in a manner specified by the department.

(7) For purposes of sections 51a to 58, all of the following

apply:

(a) "Total approved costs of special education" shall be

determined in a manner specified by the department and may include

indirect costs, but shall not exceed 115% of approved direct costs

for section 52 and section 53a programs. The total approved costs

include salary and other compensation for all approved special

education personnel for the program, including payments for social

security and medicare and public school employee retirement system

contributions. The total approved costs do not include salaries or

other compensation paid to administrative personnel who are not

special education personnel as defined in section 6 of the revised

school code, MCL 380.6. Costs reimbursed by federal funds, other

than those federal funds included in the allocation made under this

article, are not included. Special education approved personnel not

utilized full time in the evaluation of students or in the delivery

of special education programs, ancillary, and other related

services shall be reimbursed under this section only for that

portion of time actually spent providing these programs and

services, with the exception of special education programs and

services provided to youth placed in child caring institutions or

juvenile detention programs approved by the department to provide

an on-grounds education program.

(b) Beginning with the 2004-2005 fiscal year, a district or

intermediate district that employed special education support

services staff to provide special education support services in

2003-2004 or in a subsequent fiscal year and that in a fiscal year

after 2003-2004 receives the same type of support services from

another district or intermediate district shall report the cost of

those support services for special education reimbursement purposes

under this article. This subdivision does not prohibit the transfer

of special education classroom teachers and special education

classroom aides if the pupils counted in membership associated with

those special education classroom teachers and special education

classroom aides are transferred and counted in membership in the

other district or intermediate district in conjunction with the

transfer of those teachers and aides.

fiscal year that the amounts allocated for that fiscal year under

subsections (2), (3), (6), (8), and (12) and sections 53a, 54, and

56 will exceed expenditures for that fiscal year under subsections

(2), (3), (6), (8), and (12) and sections 53a, 54, and 56, then for

a district or intermediate district whose reimbursement for that

fiscal year would otherwise be affected by subdivision (b),

subdivision (b) does not apply to the calculation of the

reimbursement for that district or intermediate district and

reimbursement for that district or intermediate district shall be

calculated in the same manner as it was for 2003-2004. If the

amount of the excess allocations under subsections (2), (3), (6),

(8), and (12) and sections 53a, 54, and 56 is not sufficient to

fully fund the calculation of reimbursement to those districts and

intermediate districts under this subdivision, then the

calculations and resulting reimbursement under this subdivision

shall be prorated on an equal percentage basis.

(d) Reimbursement for ancillary and other related services, as

defined by R 340.1701c of the Michigan administrative code, shall

not be provided when those services are covered by and available

through private group health insurance carriers or federal

reimbursed program sources unless the department and district or

intermediate district agree otherwise and that agreement is

approved by the state budget director. Expenses, other than the

incidental expense of filing, shall not be borne by the parent. In

addition, the filing of claims shall not delay the education of a

pupil. A district or intermediate district shall be responsible for

payment of a deductible amount and for an advance payment required

until the time a claim is paid.

(e) Beginning with calculations for 2004-2005, if an

intermediate district purchases a special education pupil

transportation service from a constituent district that was

previously purchased from a private entity; if the purchase from

the constituent district is at a lower cost, adjusted for changes

in fuel costs; and if the cost shift from the intermediate district

to the constituent does not result in any net change in the revenue

the constituent district receives from payments under sections 22b

and 51c, then upon application by the intermediate district, the

department shall direct the intermediate district to continue to

report the cost associated with the specific identified special

education pupil transportation service and shall adjust the costs

reported by the constituent district to remove the cost associated

with that specific service.

(8) From the allocation in subsection (1), there is allocated

for 2010-2011 only an amount not to exceed $15,313,900.00 to

intermediate districts. The payment under this subsection to each

intermediate district shall be equal to the amount of the 1996-97

allocation to the intermediate district under subsection (6) of

this section as in effect for 1996-97.

(9) A pupil who is enrolled in a full-time special education

program conducted or administered by an intermediate district or a

pupil who is enrolled in the Michigan schools for the deaf and

blind shall not be included in the membership count of a district,

but shall be counted in membership in the intermediate district of

residence.

(10) Special education personnel transferred from 1 district

to another to implement the revised school code shall be entitled

to the rights, benefits, and tenure to which the person would

otherwise be entitled had that person been employed by the

receiving district originally.

(11) If a district or intermediate district uses money

received under this section for a purpose other than the purpose or

purposes for which the money is allocated, the department may

require the district or intermediate district to refund the amount

of money received. Money that is refunded shall be deposited in the

state treasury to the credit of the state school aid fund.

(12) From the funds allocated in subsection (1), there is

allocated each fiscal year the amount necessary, estimated at

$5,000,000.00 for 2010-2011, and estimated at $6,800,000.00 for

2011-2012, to pay the foundation allowances for pupils described in

this subsection. The allocation to a district under this subsection

shall be calculated by multiplying the number of pupils described

in this subsection who are counted in membership in the district

times the foundation allowance under section 20 of the pupil's

district of residence, not to exceed the basic foundation allowance

under section 20 for the current fiscal year, or, for a pupil

described in this subsection who is counted in membership in a

district that is a public school academy or university school,

times an amount equal to the amount per membership pupil under

section 20(6). The allocation to an intermediate district under

this subsection shall be calculated in the same manner as for a

district, using the foundation allowance under section 20 of the

pupil's district of residence, not to exceed the basic foundation

allowance under section 20 for the current fiscal year. This

subsection applies to all of the following pupils:

(a) Pupils described in section 53a.

(b) Pupils counted in membership in an intermediate district

who are not special education pupils and are served by the

intermediate district in a juvenile detention or child caring

facility.

by an intermediate district and provided educational services by

the department of community health.

(13) If it is determined that funds allocated under subsection

(2) or (12) or under section 51c will not be expended, funds up to

the amount necessary and available may be used to supplement the

allocations under subsection (2) or (12) or under section 51c in

order to fully fund those allocations. After payments under

subsections (2) and (12) and section 51c, the remaining

expenditures from the allocation in subsection (1) shall be made in

the following order:

(a) 100% of the reimbursement required under section 53a.

(b) 100% of the reimbursement required under subsection (6).

(d) 100% of the payment required under subsection (3).

(e) 100% of the payment required under subsection (8).

(f) 100% of the payments under section 56.

(14) The allocations under subsections (2), (3), and (12)

shall be allocations to intermediate districts only and shall not

be allocations to districts, but instead shall be calculations used

only to determine the state payments under section 22b.

(15) If a public school academy enrolls pursuant to this

section a pupil who resides outside of the intermediate district in

which the public school academy is located and who is eligible for

special education programs and services according to statute or

rule, or who is a child with disabilities, as defined under the

individuals with disabilities education act, Public Law 108-446,

the provision of special education programs and services and the

payment of the added costs of special education programs and

services for the pupil are the responsibility of the district and

intermediate district in which the pupil resides unless the

enrolling district or intermediate district has a written agreement

with the district or intermediate district in which the pupil

resides or the public school academy for the purpose of providing

the pupil with a free appropriate public education and the written

agreement includes at least an agreement on the responsibility for

the payment of the added costs of special education programs and

services for the pupil.

Sec. 51c. As required by the court in the consolidated cases

known as Durant v State of Michigan, Michigan supreme court docket

no. 104458-104492, from the allocation under section 51a(1), there

is allocated each fiscal year for 2010-2011 and for 2011-2012 the

amount necessary, estimated at ~~$635,400,000.00~~ $601,271,000.00 for

2010-2011 and estimated at $669,900,000.00 for 2011-2012, for

payments to reimburse districts for 28.6138% of total approved

costs of special education excluding costs reimbursed under section

53a, and 70.4165% of total approved costs of special education

transportation. 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 22a and 22b in order to fully fund those

calculated allocations for the same fiscal year.

Sec. 53a. (1) For districts, reimbursement for pupils

described in subsection (2) shall be 100% of the total approved

costs of operating special education programs and services approved

by the department and included in the intermediate district plan

adopted pursuant to article 3 of the revised school code, MCL

380.1701 to 380.1766, minus the district's foundation allowance

calculated under section 20. For intermediate districts,

reimbursement for pupils described in subsection (2) shall be

calculated in the same manner as for a district, using the

foundation allowance under section 20 of the pupil's district of

residence, not to exceed the basic foundation allowance under

section 20 for the current fiscal year.

(2) Reimbursement under subsection (1) is for the following

special education pupils:

(a) Pupils assigned to a district or intermediate district

through the community placement program of the courts or a state

agency, if the pupil was a resident of another intermediate

district at the time the pupil came under the jurisdiction of the

court or a state agency.

(b) Pupils who are residents of institutions operated by the

department of community health.

health institutions for the developmentally disabled who are placed

in community settings other than the pupil's home.

(d) Pupils enrolled in a department-approved on-grounds

educational program longer than 180 days, but not longer than 233

days, at a residential child care institution, if the child care

institution offered in 1991-92 an on-grounds educational program

longer than 180 days but not longer than 233 days.

(e) Pupils placed in a district by a parent for the purpose of

seeking a suitable home, if the parent does not reside in the same

intermediate district as the district in which the pupil is placed.

(3) Only those costs that are clearly and directly

attributable to educational programs for pupils described in

subsection (2), and that would not have been incurred if the pupils

were not being educated in a district or intermediate district, are

reimbursable under this section.

(4) The costs of transportation shall be funded under this

section and shall not be reimbursed under section 58.

(5) Not more than $12,300,000.00 of the allocation for 2010-

2011 and not more than $13,500,000.00 of the allocation for 2011-

2012 in section 51a(1) shall be allocated under this section.

Sec. 62. (1) For the purposes of this section:

(a) "Membership" means for a particular fiscal year the total

membership for the immediately preceding fiscal year of the

intermediate district and the districts constituent to the

intermediate district or the total membership for the immediately

preceding fiscal year of the area vocational-technical program.

(b) "Millage levied" means the millage levied for area

vocational-technical education pursuant to sections 681 to 690 of

the revised school code, MCL 380.681 to 380.690, including a levy

for debt service obligations incurred as the result of borrowing

for capital outlay projects and in meeting capital projects fund

requirements of area vocational-technical education.

districts constituent to an intermediate district or area

vocational-technical education program, except that if a district

has elected not to come under sections 681 to 690 of the revised

school code, MCL 380.681 to 380.690, the membership and taxable

value of that district shall not be included in the membership and

taxable value of the intermediate district. However, the membership

and taxable value of a district that has elected not to come under

sections 681 to 690 of the revised school code, MCL 380.681 to

380.690, shall be included in the membership and taxable value of

the intermediate district if the district meets both of the

following:

(i) The district operates the area vocational-technical

education program pursuant to a contract with the intermediate

district.

(ii) The district contributes an annual amount to the operation

of the program that is commensurate with the revenue that would

have been raised for operation of the program if millage were

levied in the district for the program under sections 681 to 690 of

the revised school code, MCL 380.681 to 380.690.

(2) From the appropriation in section 11, there is allocated

an amount not to exceed $8,693,000.00 for 2010-2011 and an amount

not to exceed $9,000,000.00 ~~each fiscal year~~ for 2011-2012 to

reimburse intermediate districts and area vocational-technical

education programs established under section 690(3) of the revised

school code, MCL 380.690, levying millages for area vocational-

technical education pursuant to sections 681 to 690 of the revised

school code, MCL 380.681 to 380.690. The purpose, use, and

expenditure of the reimbursement shall be limited as if the funds

were generated by those millages.

(3) Reimbursement for the millages levied in 2010-2011 shall

be made in 2011-2012 at an amount per 2010-2011 membership pupil

computed by subtracting from $190,400.00 the 2010-2011 taxable

value behind each membership pupil and multiplying the resulting

difference by the 2010-2011 millage levied.

Enacting section 1. In accordance with section 30 of article

IX of the state constitution of 1963, total state spending on

school aid under article I of the state school aid act of 1979,

1979 PA 94, MCL 388.1601 to 388.1772, in this amendatory act, in

2010 PA 110, in 2010 PA 204, in 2010 PA 205, in 2010 PA 217, and in

2011 PA 62 from state sources for fiscal year 2010-2011 is

estimated at $10,803,402,900.00 and state appropriations to be paid

to local units of government for fiscal year 2010-2011 are