SB0123: SENATE SUBCOMMITTEE REC. (Date Completed: 4-20-15)

FY 2015-16 HIGHER EDUCATION BUDGET S.B. 123 (S-1, Draft 1): SENATE SUBCOMMITTEE REC.

Senate Bill 123 (S-1, Draft 1 as reported) Throughout this document Senate means Subcommitttee.

Committee: Appropriations

			CHANGES FROM FY 2014-15 YEAR-TO-DATE
FULL-TIME EQUATED (FTE) CLASSIFIED POSITIONS/FUNDING SOURCE	FY 2014-15 YEAR-TO-DATE	FY 2015-16 SENATE SUBCOMM.	AMOUNT	PERCENT
FTE Positions..............................................................	N/A	N/A	N/A	N/A
GROSS.........................................................................	1,516,496,300	1,541,219,200	24,722,900	1.6
Less:
Interdepartmental Grants Received.....................	0	0	0	0.0
ADJUSTED GROSS..................................................	1,516,496,300	1,541,219,200	24,722,900	1.6
Less:
Federal Funds..........................................................	97,026,400	97,026,400	0	0.0
Local and Private....................................................	0	0	0	0.0
TOTAL STATE SPENDING.......................................	1,419,469,900	1,444,192,800	24,722,900	1.7
Less:
Other State Restricted Funds................................	206,567,900	205,279,500	(1,288,400)	(0.6)
GENERAL FUND/GENERAL PURPOSE..............	1,212,902,000	1,238,913,300	26,011,300	2.1
PAYMENTS TO LOCALS..........................................	0	0	0	0.0

FY 2014-15 Year-to-Date Gross Appropriation.............................................................................

$1,516,496,300

Changes from FY 2014-15 Year-to-Date:
1. University Operations Increase. The Governor and the Senate included a 2.0% increase for university operations funded by the State General Fund (GF/GP). In FY 2014-15, half of the funding increase was distributed across-the-board. The Governor and the Senate eliminated the across-the-board distribution for FY 2015-16. The performance-based metrics from the previous year are maintained. The allocation based on students receiving Pell Grants is changed from the absolute number of students to the percentage of students at each institution that receive Pell Grants. Prerequisites in order to receive performance funding (Sec. 265a) are continued. Tuition restraint is set at 2.8% (Sec. 265). Details of allocations by university are included in Table 1.	26,799,100
2. Michigan Public School Employees Retirement System (MPSERS) Rate Cap. The FY 2014-15 budget included $2,446,200 School Aid Fund (SAF) in ongoing appropriations for MPSERS reimbursements. ($2.0 million GF/GP originally included in this appropriation was replaced by SAF in an FY 2014-15 Supplemental, 2015 PA 5.) The Governor increased ongoing appropriations from $2,446,200 to $5,160,000, supported entirely by the SAF. Senate concurred with Governor. The Governor's proposal included implementing an employer's cap on contributions for MPSERS unfunded accrued liability (UAL) payments (25.73% of payroll). This is similar to the cap that was implemented for K-12 and community college employers. The cap is based on FY 2011-12 UAL payments by MPSERS universities. The affected universities include Central, Eastern, Ferris, Lake Superior, Michigan Tech, Northern, and Western. Payments by the State for the cap will increase from $5.2 million in FY 2015-16 to $10.3 million in FY 2035-36. Over that time period, the cost to the State is estimated at $156.1 million. Amendments to the MPSERS Act are necessary to implement the proposed cap.	2,713,800
3. MSU AgBioResearch. AgBioResearch performs agricultural research to promote efficient production, marketing, distribution, and use of farm products. The Governor included a 2.0% GF/GP increase for MSU AgBioResearch, increasing funding from $32,027,900 to 32,668,500. The Senate concurred with the Governor.	640,600
4. MSU Extension. MSU Extension Services identify and solve farm, home, and community problems through the practical application of Federal and State research findings. MSU Extension Services operates Michigan's Expanded Food and Nutrition Education Program (EFNEP), and serves as a resource for youth 4-H programs. The Governor included a 2.0% GF/GP increase for MSU Extension, increasing funding from $27,581,100 to $28,132,700. The Senate concurred with the Governor.	551,600
5. Midwest Higher Education Compact Dues. The 12-member states of the Compact are: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. The work of the Compact is financed through member state dues and foundation grants. Examples of Compact projects are the Midwest Student Exchange Program, the Distributed Learning Workshop, and collaborations on computing, insurance, and telecommunications issues. The Governor increased the appropriation from $95,000 to $115,000 GF/GP. The Senate concurred with the Governor.	20,000
6. Michigan College Access Network. The $2.0 million GF/GP appropriation supports Michigan college access network operations, programming, and services to local college access networks. The Governor transferred the program to the K-12 budget. The Senate concurred.	(2,000,000)
7. Indian Tuition Waiver. Public Act 174 of 1976 provides for free tuition for Michigan resident North American Indians who attend Michigan public community colleges, universities, and certain Federal tribally controlled community colleges. Since the waiver appropriations were rolled into the operations funding for each university in FY 1996-97, State appropriations have not kept pace with actual costs. In FY 2014-15, universities absorbed $4.7 million of waiver costs. The FY 2014-15 budget included $500,000 GF/GP to offset a portion of the shortfall. The Governor transferred the $500,000 to university operations appropriations based on the number of students receiving waivers at each institution compared to that institution's total fiscal year equated students. The Senate concurred.
8. Eliminate FY 2014-15 One-Time Funding. The Governor and the Senate eliminated the FY 2014-15 one-time appropriation from the SAF for MPSERS reimbursements.	(4,002,200)
9. Comparison to Governor’s Recommendation. The Senate is $0 Gross and $0 GF/GP over/under the Governor.

Total Changes.............................................................................................................................	$24,722,900
FY 2015-16 Senate Appropriations Subcommittee Gross Appropriation......................................	$1,541,219,200

The changes show the differences between the schedule of programs proposed by the Governor and the prior-year line items.

Boilerplate Changes from FY 2014-15 Year-to-Date:

1. Payment Schedule. Provides for distributions by the State Treasurer to the respective institutions in 11 equal monthly installments. Subjects payments to Section 265a (submitting HEIDI data). The Governor and The Senate added compliance with Section 244 (submitting P-20 data to CEPI) as condition for receiving monthly payments. (Sec. 241)

2. Budget Transparency. Posting of financial and other information on university websites. The Governor eliminated the State Budget Director's authority to determine compliance and dual enrollment reporting. The Senate maintained current-year provisions. (Sec. 245)

3. MPSERS Reimbursement. The Governor modified this section based on his proposal to cap the rate for UAL payments by MPSERS universities at 25.73%. Requires universities to use appropriations for MPSERS payments. The Senate concurred. (Sec. 246)

4. State Tuition Grant Program. The Governor changed application deadline from July 1, to March 1 beginning with 2015-2016 academic year; eliminated the carry-forward of unexpended grants; removed reporting of projected balances and changes reporting from twice a year to once a year; reduced limit on how much can be awarded to students at a single institution from $3.2 million to $3.0 million; and required institutions to provide P-20 Data for students to receive tuition grant awards beginning with September 30, 2016. The Senate did not concur with the Governor and maintained current-year language. The Senate also clarified existing reporting requirements. (Sec. 252)

5. Needs Analysis Criteria. The Department of Treasury shall determine the needs analysis criteria for students to qualify for the State Competitive Scholarship Program and Tuition Grant Program. The Governor and the Senate included the Independent Part-Time Student Grant Program. (Sec. 255/Sec.215)

6. Tuition Incentive Program. Sets criteria and financial thresholds for the Tuition Incentive Program (TIP). TIP provides an incentive to students to complete high school and go on to college. Students in grades 6 through 12 who are Medicaid-eligible for 24 months can qualify for TIP. Certification of Medicaid eligibility can only be provided by Department of Human Services. Incarcerated individuals are not eligible for TIP. The Governor eliminated the provision that limits Phase II of TIP to credits earned at a four-year college or university. The Senate did not concur. (Sec. 256)

7. Student Financial Aid Programs Report. Requires that the Department of Treasury shall post to its publicly available website a report for the preceding fiscal year on all student financial aid programs for which funds are appropriated in section 236. The Governor and the Senate added programs included in Section 201. (Sec. 258)

8. Common Application. The Governor added a new section stating that a public university is encouraged to adopt the common application, managed by the common application, incorporated, to make postsecondary education more accessible to students in this State. The Senate did not concur with the Governor. (Sec. 260)

9. Tuition Restraint. The Governor set tuition restraint at 2.8%, removed university required health insurance costs from fee calculation, and included date revisions. The Senate concurred with setting tuition restraint at 2.8% and date revisions, but did not concur with revisions to fee calculations. (Sec. 265)

10. Performance Funding Criteria. The Governor maintained current prerequisites and in addition required "active" participation in and "timely updates submitted to" the Michigan Transfer Network. Formula changes include elimination of the across-the-board distribution from performance funding and adjusting allocations for other criteria, changing Pell portion of formula to distribution based on percentage of Pell students instead of absolute number, and eliminating intent statement to change improving scoring for Carnegie distributions to a value of one. The Senate concurred with formula adjustments but did not concur with modifications to the Michigan Transfer Network prerequisite and maintained the intent statement to change the score for improving in FY 2016-17. (Sec. 265a)

11. Indian Tuition Waiver. The Governor removed legislative intent statement that funds be allocated from the General Fund for unfunded North American Indian tuition waiver costs incurred by public universities. The Governor also removed distribution of FY 2014-15 funds due to rolling the appropriation into university operation appropriations. A new provision was included stating universities shall provide to the Department of Civil Rights any information necessary for preparing the report required in this section. The Senate concurred with the Governor. (Sec. 268)

12. Transfer Credits. Requires public universities to submit a report on the number of credits earned by incoming resident students at other postsecondary institutions that were rejected by the university for transfer along with explanatory information regarding the rationale for the rejection of the credits. The Senate removed this Section. (Sec. 272a)

13. Restored Sections. The Senate restored the following sections that were removed by the Governor: intent regarding appropriations for the next fiscal year (Sec. 236a); purchase of foreign automobiles prohibition (Sec. 239a); provision stating the acceptance and use of Federal or private funds does not place an obligation upon the Legislature to continue the purposes for which the funds are made available (last sentence of Sec. 242); intent regarding protection/ preservation of U of M Douglas Lake Biological Station (Sec. 261); discouraged instruction activity (Sec. 271a); human embryonic stem cell research report (Sec. 274); Yellow Ribbon GI Education Enhancement Program notice/reporting requirements (portion of Sec. 275); prohibits use of funds for the construction or maintenance of a self-liquidating project, requires compliance with Section 238 of 1984 PA 431 and JCOS use and finance requirements, and includes penalty provisions (Sec. 275a); and Federal Educational Rights & Privacy Act compliance (Sec. 293). The Senate also restored legislative intent references in sections 263a and 286.

14. Deleted Provisions. The Governor and the Senate removed the following sections: College Access Program (Program transferred to K-12, Sec. 259); language stating intent that universities develop policies to minimize the cost of textbooks and course materials and requires report (Sec 262a); counseling degree programs/student's religious beliefs (Sec. 273); and legislative intent regarding adult co-resident health benefits (Sec. 274a).

Date Completed: 4-20-15 Fiscal Analyst: Bill Bowerman