SB0373: SUMMARY AS ENROLLED (Date Completed: 7-27-20)

CONTENT

The bill would amend the State School Aid Act to implement several provisions of the fiscal year (FY) 2019-20 budget agreement pertaining to K-12 schools, community colleges, and higher education. In broad terms, the bill would reduce State funding to K-12 schools by $175 per pupil, reduce State funding to community colleges and higher education by roughly 11.2% applied to each institution's operations and performance funding, include fund shifts freeing up School Aid Fund (SAF) revenues, reduce and eliminate certain categoricals, include technical consensus cost adjustments in various line items, and appropriate Federal Coronavirus Relief Fund (CRF) money for K-12, community colleges, and higher education. The tables below identify specific dollar changes found in the bill.

In addition, the bill would include language to ensure charter schools received the same minimum foundation allowance that local districts at the minimum receive and would allow Great Start Readiness Program subrecipients to identify up to 10% of indirect costs. The bill also would include a requirement that the Department of Education continue the model value-added growth and projection analytics system, specifies conditions for funding the model in the future, would require that the Department and platform vendor provide statewide training for educators, and would require the Department and Center for Educational Performance and Information (CEPI) to provide a report on district's use of the model. Finally, the bill would extend the date by which recent high school graduates may apply for the Tuition Incentive Program.

Table 1

Changes in State Funding for K-12, Community Colleges, and Higher Education to Effectuate Budget Agreement
Line Item Name/Description	Initial Appropriation	Amount of Reduction
K-12:
Per-Pupil Reduction........................	$0	($256,000,000)
MPSERS Costs...............................	42,571,000	(14,200,000)
School Safety Grants......................	10,000,000	(10,000,000)
State Assessments.........................	32,009,400	(6,000,000)
Robotics.......................................	4,700,000	(800,000)
CEPI Operations.............................	16,457,200	(411,400)
Restore 10 Cents a Meal.................	0	+575,000
Community Colleges:
Operations and Performance Funding	$325,473,400	($36,276,400)
Higher Education:
Operations and Performance Funding	$1,536,854,300	($163,723,600)

Table 2

Fund Shifts and Work Project Lapses in K-12/School Aid
Line Item Name/Description	Initial Appropriation	Amount of Adjustment
Talent Investment Fund - lapse a portion of the remaining work project (roughly $62 million would remain) and use as a fund source for career and technical education	$100,000,000	($9,717,800)
Education Data Decision Support System - lapse remaining work project and deposit into the SAF	15,000,000	(3,900,000)
MPSERS Reserve Fund - unspent funds in this section would be used to support other ongoing MPSERS costs	1,900,000	30,000,000
Budget Stabilization Fund - a total of $350.0 million would be deposited from the BSF into the SAF under this bill	0	350,000,000
General Fund/General Purpose - an increase of $210,980,000 GF/GP would be deposited into the SAF to offset projected SAF shortfalls	$62,620,000	$210,980,000

Table 3

Technical Cost Adjustments for K-12/School Aid
Line Item Name/Description	Initial Appropriation	Amount of Adjustment
Cash flow borrowing - because of reduced interest rates, this appropriation would be decreased significantly	$66,000,000	($59,000,000)
Special education - technical cost adjustments are included in the bill	1,045,196,100	(21,200,000)
Foundation allowance payments - technical cost adjustments are included, driven by adjustments in pupil estimates and taxable values	9,499,000,000	(8,000,000)
Promise Zones - cost adjustments driven by updated taxable values	8,400,000	(1,000,000)
Detroit Community District Trust Fund - this is an additional deposit of Trust Fund revenues into SAF to support the cost of diverting 18-mill revenue for paying off DPS debt	$75,400,000	+$500,000 (yields $500,000 savings to SAF)

Table 4

Coronavirus Relief Fund Spending
Line Item Name/Description	Initial Appropriation	Amount of Adjustment
K-12: Per-pupil payments of $350 to districts and public school academies for CARES Act-related spending	$0	$512,000,000
Community Colleges: Payments of roughly 11% to each institution for CARES Act-related spending	0	36,276,400
Higher Education: Payments of roughly 11% to each institution for CARES Act-related spending	0	163,723,600
	Total:	$712,000,000

Another way to view the pieces of the budget agreement illustrated above is in the following table, which illustrates the initial K-12 appropriations in total, the proposed changes in appropriations, the proposed changes in revenues, and the resulting appropriations. Please see Table 5 below. For community colleges and higher education (not reflected in the table below), the State funding reduction is roughly 11.2%, applied to operations and performance funding. In addition, the CRF appropriations for community colleges and higher education are roughly 11.2%, applied to operations and performance funding. The sum total of reductions in State spending for community colleges and higher education is $200.0 million.

Table 5
Appropriation and Revenue Summary for K-12
Line Item Name	Initial Appropriation	Change in SB 373	Resulting Appropriation
Gross Appropriation	$15,177,263,600	--	--
Per Pupil Reduction	0	(256,000,000)	(256,000,000)
Federal CRF	0	512,000,000	512,000,000
CREC Adjustments	0	(89,200,000)	(89,200,000)
Eliminate School Safety Grants	10,000,000	(10,000,000)	0
Reduce MPSERS costs	42,571,000	(14,200,000)	28,371,000
State assessments	32,009,400	(6,000,000)	26,009,400
Robotics	4,700,000	(800,000)	3,900,000
CEPI operations	16,457,200	(411,400)	16,045,800
10 Cents a Meal	0	575,000	575,000
Resulting Gross..........................................		$135,963,600	$15,313,227,200
Revenue Sources
Existing Gross	$15,177,263,600	--	--
Federal	1,749,578,500	512,000,000	2,261,578,500
SAF*	13,287,765,000	(626,634,200)	12,661,130,800
GF/GP	62,620,000	210,380,000	273,000,000
MPSERS Reserve Fund	1,900,000	30,000,000	31,900,000
DPS Trust Fund	75,400,000	500,000	75,900,000
Flint Water	100	0	100
Talent Investment Fund (TIF)	0	9,717,800	9,717,800
Resulting Gross..........................................		$135,963,600	$15,313,227,200
*The bill would deposit $350.0 million from the Budget Stabilization Fund into the School Aid Fund, thereby decreasing the amount of the overall SAF shortfall.

MCL 388.1606 et al.