HOUSE BILL No. 5516 January 28, 1998, Introduced by Reps. Agee, Wallace, Schroer, Hood, Prusi, Mans, Kelly, Martinez, LaForge, Mathieu, Tesanovich, Baade, Gubow, Wetters, Cherry, Gire, Baird, Profit, Price, Gagliardi, Hale and Basham and referred to the Committee on Appropriations. A bill to amend 1979 PA 94, entitled "The state school aid act of 1979," by amending sections 11, 20, and 51a (MCL 388.1611, 388.1620, and 388.1651a), as amended by 1997 PA 142. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 11. (1) For the fiscal year ending September 30, 1998, 2 there is appropriated for the public schools of this state and 3 certain other state purposes relating to education the sum of 4 $8,717,471,600.00 from the state school aid fund established by 5 section 11 of article IX of the state constitution of 1963 and 6 the sum of $377,935,400.00 from the general fund. For the fiscal 7 year ending September 30, 1999, there is appropriated for the 8 public schools of this state and certain other state purposes 9 relating to education the sum of $9,036,198,400.00 from the state 10 school aid fund established by section 11 of article IX of the 05188'97 TAV 2 1 state constitution of 1963 and the sum of$420,613,500.002 $642,110,200.00 from the general fund. In addition, available 3 federal funds are appropriated for 1997-98 and for 1998-99. 4 (2) The appropriations under this section shall be allocated 5 as provided in this act. Money appropriated under this section 6 from the general fund and from available federal funds shall be 7 expended to fund the purposes of this act before the expenditure 8 of money appropriated under this section from the state school 9 aid fund. If the maximum amount appropriated under this section 10 from the state school aid fund for a fiscal year exceeds the 11 amount necessary to fully fund allocations under this act from 12 the state school aid fund, that excess amount shall not be 13 expended in that state fiscal year and shall not lapse to the 14 general fund, but instead shall remain in the state school aid 15 fund. 16 (3) If the maximum amount appropriated under this section 17 and sections 11f and 11g from the state school aid fund for a 18 fiscal year exceeds the amount available for expenditure from the 19 state school aid fund for that fiscal year, payments under sec- 20 tions 11f, 11g, and 51a(2) shall be made in full and payments 21 under each of the other sections of this act shall be prorated on 22 an equal percentage basis as necessary to reflect the amount 23 available for expenditure from the state school aid fund for that 24 fiscal year. However, if the department of treasury determines 25 that proration will be required under this subsection, the 26 department of treasury shall notify the director of the 27 department of management and budget, and the director of the 05188'97 3 1 department of management and budget shall notify the legislature 2 at least 30 calendar days or 6 legislative session days, which- 3 ever is more, before the department reduces any payments under 4 this act because of the proration. During the 30 calendar day or 5 6 legislative session day period after that notification by the 6 director of the department of management and budget, the depart- 7 ment shall not reduce any payments under this act because of pro- 8 ration under this subsection. The legislature may prevent prora- 9 tion from occurring by, within the 30 calendar day or 6 legisla- 10 tive session day period after that notification by the department 11 of management and budget, enacting legislation appropriating 12 additional funds from the general fund, countercyclical budget 13 and economic stabilization fund, state school aid fund balance, 14 or another source to fund the amount of the projected shortfall. 15 Sec. 20. (1) For 1997-98,and 1998-99,the basic founda- 16 tion allowance is $5,462.00 per membership pupil. FOR 1998-99, 17 THE BASIC FOUNDATION ALLOWANCE IS $5,571.00 PER MEMBERSHIP PUPIL. 18 (2) From the appropriation in section 11, there is allocated 19 for 1997-98 an amount not to exceed $8,022,595,100.00, and for 20 1998-99 an amount not to exceed$8,091,250,000.0021 $8,305,000,000.00, to guarantee each district a foundation allow- 22 ance per membership pupil other than special education pupils and 23 to make payments under this section to public school academies 24 and university schools for membership pupils other than special 25 education pupils. The amount of each district's foundation 26 allowance shall be calculated as provided in this section, using 27 a basic foundation allowance in the amount specified in 05188'97 4 1 subsection (1). If the maximum amount allocated under this 2 section is not sufficient to fully fund payments under this sec- 3 tion, and before any proration required under section 11, the 4 amount of the payment to each district, university school, and 5 public school academy shall be prorated by reducing by an equal 6 percentage the total payment under this section to each district, 7 university school, and public school academy. However, if the 8 department determines that proration will be required under this 9 section, the superintendent of public instruction shall notify 10 the department of management and budget, and the department of 11 management and budget shall notify the legislature at least 30 12 calendar days or 6 legislative session days, whichever is more, 13 before the department reduces any payments under this section 14 because of the proration. During the 30 calendar day or 6 legis- 15 lative session day period after that notification by the depart- 16 ment of management and budget, the department shall not reduce 17 any payments under this section because of proration. The legis- 18 lature may prevent proration under this section from occurring 19 by, within the 30 calendar day or 6 legislative session day 20 period after that notification by the director, enacting legisla- 21 tion appropriating additional funds from the general fund, 22 countercyclical budget and economic stabilization fund, state 23 school aid fund balance, or another source to ensure full founda- 24 tion allowance funding for each district, university school, and 25 public school academy. 26 (3) Except as otherwise provided in this section, the amount 27 of a district's foundation allowance shall be calculated as 05188'97 5 1 follows, using in all calculations the total amount of the 2 district's foundation allowance as calculated before any 3 proration: 4 (a) For a district that in the immediately preceding state 5 fiscal year had a foundation allowance at least equal to the sum 6 of $4,200.00 plus the total dollar amount of all adjustments made 7 from 1994-95 to the immediately preceding state fiscal year in 8 the lowest foundation allowance among all districts, but less 9 than the basic foundation allowance in the immediately preceding 10 state fiscal year, the district shall receive a foundation allow- 11 ance in an amount equal to the sum of the district's foundation 12 allowance for the immediately preceding state fiscal year plus 13 the difference between twice the dollar amount of the adjustment 14 from the immediately preceding state fiscal year to the current 15 state fiscal year made in the basic foundation allowance and 16 [(the dollar amount of the adjustment from the immediately pre- 17 ceding state fiscal year to the current state fiscal year made in 18 the basic foundation allowance minus $50.00) times (the differ- 19 ence between the district's foundation allowance for the immedi- 20 ately preceding state fiscal year and the sum of $4,200.00 plus 21 the total dollar amount of all adjustments made from 1994-95 to 22 the immediately preceding state fiscal year in the lowest founda- 23 tion allowance among all districts) divided by the difference 24 between the basic foundation allowance for the current state 25 fiscal year and the sum of $4,200.00 plus the total dollar amount 26 of all adjustments made from 1994-95 to the immediately preceding 27 state fiscal year in the lowest foundation allowance among all 05188'97 6 1 districts]. However, the foundation allowance for a district 2 that had less than the basic foundation allowance in the immedi- 3 ately preceding state fiscal year shall not exceed the basic 4 foundation allowance for the current state fiscal year. 5 (b) For a district that in the immediately preceding state 6 fiscal year had a foundation allowance in an amount at least 7 equal to the amount of the basic foundation allowance for the 8 immediately preceding state fiscal year, the district shall 9 receive a foundation allowance in an amount equal to the sum of 10 the district's foundation allowance for the immediately preceding 11 state fiscal year plus the dollar amount of the adjustment from 12 the immediately preceding state fiscal year to the current state 13 fiscal year in the basic foundation allowance. 14 (c) For 1998-99, each district's foundation allowance shall 15 be at least$5,170.00$5,342.00. 16 (4) To ensure that a district receives the district's foun- 17 dation allowance, there is allocated to each district a state 18 portion of the district's foundation allowance in an amount cal- 19 culated under this subsection. The state portion of a district's 20 foundation allowance is an amount equal to the district's founda- 21 tion allowance or $6,500.00, whichever is less, minus the differ- 22 ence between the product of the taxable value per membership 23 pupil of all property in the district that is not a homestead or 24 qualified agricultural property times the lesser of 18 mills or 25 the number of mills of school operating taxes levied by the dis- 26 trict in 1993-94 and the quotient of the ad valorem property tax 27 revenue of the district captured under 1975 PA 197, MCL 125.1651 05188'97 7 1 to 125.1681, the tax increment finance authority act, 1980 PA 2 450, MCL 125.1801 to 125.1830, the local development financing 3 act, 1986 PA 281, MCL 125.2151 to 125.2174, or the Brownfield 4 redevelopment financing act, 1996 PA 381, MCL 125.2651 to 5 125.2672, divided by the district's membership excluding special 6 education pupils. For a district that has a millage reduction 7 required under section 31 of article IX of the state constitution 8 of 1963, except for a district that was notified of such a mill- 9 age reduction in 1996 after the last permissible date to schedule 10 an election to override that millage reduction, the state portion 11 of the district's foundation allowance shall be calculated as if 12 that reduction did not occur. For each fiscal year after 13 1994-95, the $6,500.00 amount prescribed in this subsection shall 14 be adjusted each year by an amount equal to the dollar amount of 15 the difference between the basic foundation allowance for the 16 current state fiscal year and $5,000.00. 17 (5) The allocation under this section for a pupil shall be 18 based on the foundation allowance of the pupil's district of 19 residence. However, for a pupil enrolled pursuant to section 105 20 in a district other than the pupil's district of residence but 21 within the same intermediate district, the allocation under this 22 section shall be based on the lesser of the foundation allowance 23 of the pupil's district of residence or the foundation allowance 24 of the educating district. For a pupil in membership in a K-5, 25 K-6, or K-8 district who is enrolled in another district in a 26 grade not offered by the pupil's district of residence, the 27 allocation under this section shall be based on the foundation 05188'97 8 1 allowance of the educating district if the educating district's 2 foundation allowance is greater than the foundation allowance of 3 the pupil's district of residence. 4 (6) Subject to subsection (7) and except as otherwise pro- 5 vided in this subsection, for pupils in membership, other than 6 special education pupils, in a public school academy or a univer- 7 sity school, there is allocated under this section for 1997-98 8 and for 1998-99 to the authorizing body that is the fiscal agent 9 for the public school academy for forwarding to the public school 10 academy, or to the board of the public university operating the 11 university school, an amount per membership pupil other than spe- 12 cial education pupils in the public school academy or university 13 school equal to the sum of the local school operating revenue per 14 membership pupil other than special education pupils for the dis- 15 trict in which the public school academy or university school is 16 located and the state portion of that district's foundation 17 allowance, or the sum of the basic foundation allowance under 18 subsection (1) plus $500.00, whichever is less. Notwithstanding 19 section 101(2), for a public school academy that begins opera- 20 tions in 1997-98 or 1998-99, as applicable, after the pupil mem- 21 bership count day, the amount per membership pupil calculated 22 under this subsection shall be adjusted by multiplying that 23 amount per membership pupil by the number of hours of pupil 24 instruction provided by the public school academy after it begins 25 operations, as determined by the department, divided by the mini- 26 mum number of hours of pupil instruction required under section 27 1284 of the revised school code, MCL 380.1284. The result of 05188'97 9 1 this calculation shall not exceed the amount per membership pupil 2 otherwise calculated under this subsection. Also, a public 3 school academy that begins operations in 1997-98 or 1998-99, as 4 applicable, after the pupil membership count day shall not 5 receive any funds under this section unless the public school 6 academy provides for the school year a number of hours of pupil 7 instruction that is at least in the same proportion to the mini- 8 mum number of hours of pupil instruction required under section 9 1284 of the revised school code, MCL 380.1284, as the number of 10 days of pupil instruction provided by the public school academy 11 for the school year is in proportion to the number of days of 12 pupil instruction required under section 1284 of the revised 13 school code, MCL 380.1284. 14 (7) If more than 25% of the pupils residing within a dis- 15 trict are in membership in 1 or more public school academies 16 located in the district, then the amount per membership pupil 17 allocated under this section to the authorizing body that is the 18 fiscal agent for a public school academy located in the district 19 for forwarding to the public school academy shall be reduced by 20 an amount equal to the difference between the product of the tax- 21 able value per membership pupil of all property in the district 22 that is not a homestead or qualified agricultural property times 23 the lesser of 18 mills or the number of mills of school operating 24 taxes levied by the district in 1993-94 and the quotient of the 25 ad valorem property tax revenue of the district captured under 26 1975 PA 197, MCL 125.1651 to 125.1681, the tax increment finance 27 authority act, 1980 PA 450, MCL 125.1801 to 125.1830, the local 05188'97 10 1 development financing act, 1986 PA 281, MCL 125.2151 to 125.2174, 2 or the Brownfield redevelopment financing act, 1996 PA 381, MCL 3 125.2651 to 125.2672, divided by the district's membership 4 excluding special education pupils, in the school fiscal year 5 ending in the current state fiscal year, calculated as if the 6 resident pupils in membership in 1 or more public school acade- 7 mies located in the district were in membership in the district. 8 In order to receive state school aid under this act, a district 9 described in this subsection shall pay to the authorizing body 10 that is the fiscal agent for a public school academy located in 11 the district for forwarding to the public school academy an 12 amount equal to that local school operating revenue per member- 13 ship pupil for each resident pupil in membership other than spe- 14 cial education pupils in the public school academy, as determined 15 by the department. 16 (8) If a district does not receive a payment under subsec- 17 tion (9); if the number of mills the district may levy on a home- 18 stead and qualified agricultural property under section 1211(1) 19 of the revised school code, MCL 380.1211, is 0.5 mills or less; 20 and if the district elects not to levy those mills, the district 21 instead shall receive a separate supplemental payment under this 22 subsection in an amount equal to the amount the district would 23 have received had it levied those mills, as determined by the 24 department of treasury. A district shall not receive a separate 25 supplemental payment under this subsection for a fiscal year 26 unless in the calendar year ending in the fiscal year the 27 district levies 18 mills or the number of mills of school 05188'97 11 1 operating taxes levied by the district in 1993, whichever is 2 less, on property that is not a homestead or qualified agricul- 3 tural property. 4 (9) For a district that had combined state and local revenue 5 per membership pupil in the 1993-94 state fiscal year of more 6 than $6,500.00 and that had fewer than 350 pupils in membership, 7 if the district elects not to reduce the number of mills from 8 which a homestead and qualified agricultural property are exempt 9 and not to levy school operating taxes on a homestead and quali- 10 fied agricultural property as provided in section 1211(1) of the 11 revised school code, MCL 380.1211, and not to levy school operat- 12 ing taxes on all property as provided in section 1211(2) of the 13 revised school code, MCL 380.1211, there is allocated under this 14 subsection for 1994-95 and each succeeding fiscal year a separate 15 supplemental payment in an amount equal to the amount the dis- 16 trict would have received per membership pupil had it levied 17 school operating taxes on a homestead and qualified agricultural 18 property at the rate authorized for the district under section 19 1211(1) of the revised school code, MCL 380.1211, and levied 20 school operating taxes on all property at the rate authorized for 21 the district under section 1211(2) of the revised school code, 22 MCL 380.1211, as determined by the department of treasury. A 23 district shall not receive a separate supplemental payment under 24 this subsection for a fiscal year unless in the calendar year 25 ending in the fiscal year the district levies 18 mills or the 26 number of mills of school operating taxes levied by the district 05188'97 12 1 in 1993, whichever is less, on property that is not a homestead 2 or qualified agricultural property. 3 (10) A district or public school academy may use any funds 4 allocated under this section in conjunction with any federal 5 funds for which the district or public school academy otherwise 6 would be eligible. 7 (11) For a district that is formed or reconfigured after 8 June 1, 1994 by consolidation of 2 or more districts or by annex- 9 ation, the resulting district's foundation allowance under this 10 section beginning after the effective date of the consolidation 11 or annexation shall be the average of the foundation allowances 12 of each of the original or affected districts, calculated as pro- 13 vided in this section, weighted as to the percentage of pupils in 14 total membership in the resulting district who reside in the geo- 15 graphic area of each of the original districts. If an affected 16 district's foundation allowance is less than the basic foundation 17 allowance, the amount of that district's foundation allowance 18 shall be considered for the purpose of calculations under this 19 subsection to be equal to the amount of the basic foundation 20 allowance. 21 (12) Each fraction used in making calculations under this 22 section shall be rounded to the fourth decimal place and the 23 dollar amount of an increase in the basic foundation allowance 24 shall be rounded to the nearest whole dollar. 25 (13) State payments related to payment of the foundation 26 allowance for a special education pupil are not funded under this 27 section but are instead funded under section 51a. 05188'97 13 1 (14) To assist the legislature in determining the basic 2 foundation allowance for the subsequent state fiscal year, except 3 for the January 1998 revenue estimating conference, each revenue 4 estimating conference conducted under section 367b of the manage- 5 ment and budget act, 1984 PA 431, MCL 18.1367b, shall calculate a 6 pupil membership factor, a revenue adjustment factor, and an 7 index as follows: 8 (a) The pupil membership factor shall be computed by divid- 9 ing the estimated membership in the school year ending in the 10 current state fiscal year, excluding intermediate district mem- 11 bership, by the estimated membership for the school year ending 12 in the subsequent state fiscal year, excluding intermediate dis- 13 trict membership. If a consensus membership factor is not deter- 14 mined at the revenue estimating conference, the principals of the 15 revenue estimating conference shall report their estimates to the 16 house and senate subcommittees responsible for school aid appro- 17 priations not later than 7 days after the conclusion of the reve- 18 nue conference. 19 (b) The revenue adjustment factor shall be computed by 20 dividing the sum of the estimated total state school aid fund 21 revenue for the subsequent state fiscal year plus the estimated 22 total state school aid fund revenue for the current state fiscal 23 year, adjusted for any change in the rate or base of a tax the 24 proceeds of which are deposited in that fund and excluding money 25 transferred into that fund from the countercyclical budget and 26 economic stabilization fund under section 353e of the management 27 and budget act, 1984 PA 431, MCL 18.1353e, by the sum of the 05188'97 14 1 estimated total school aid fund revenue for the current state 2 fiscal year plus the estimated total state school aid fund reve- 3 nue for the immediately preceding state fiscal year, adjusted for 4 any change in the rate or base of a tax the proceeds of which are 5 deposited in that fund. If a consensus revenue factor is not 6 determined at the revenue estimating conference, the principals 7 of the revenue estimating conference shall report their estimates 8 to the house and senate subcommittees responsible for school aid 9 appropriations not later than 7 days after the conclusion of the 10 revenue conference. 11 (c) The index shall be calculated by multiplying the pupil 12 membership factor by the revenue adjustment factor. However, for 13 1998-99 only, the index shall be1.001.02. If a consensus 14 index is not determined at the revenue estimating conference, the 15 principals of the revenue estimating conference shall report 16 their estimates to the house and senate subcommittees responsible 17 for school aid appropriations not later than 7 days after the 18 conclusion of the revenue conference. 19 (15) If the principals at the revenue estimating conference 20 reach a consensus on the index described in subsection (14)(c), 21 the basic foundation allowance for the subsequent state fiscal 22 year shall be at least the amount of that consensus index multi- 23 plied by the basic foundation allowance specified in subsection 24 (1). 25 (16) If the estimated amount of total state school aid fund 26 revenue available for 1998-99 as estimated at the May 1998 27 revenue estimating conference is greater than $9,036,198,400.00, 05188'97 15 1 then the revenue estimating conference shall estimate the 2 increase in the basic foundation allowance for 1998-99 and it is 3 the intent of the legislature that the amount of the basic foun- 4 dation allowance for 1998-99 shall be increased accordingly. 5 (17) If the pupil membership, excluding intermediate dis- 6 trict membership, for the school year ending in the next state 7 fiscal year is estimated at the January revenue estimating con- 8 ference to be greater than 101% of the pupil membership, exclud- 9 ing intermediate district membership, for the school year ending 10 in the current state fiscal year, then it is the intent of the 11 legislature that the executive budget proposal for the school aid 12 budget in the subsequent state fiscal year incorporate a general 13 fund/general purpose allocation that is greater than the general 14 fund/general purpose allocation in the current fiscal year, to 15 support the estimated membership in excess of 101% of the member- 16 ship in the current year. 17 (18) As used in this section: 18 (a) "Combined state and local revenue per membership pupil" 19 means the aggregate of the district's state school aid received 20 by or paid on behalf of the district under this section and the 21 district's local school operating revenue, divided by the 22 district's membership excluding special education pupils. 23 (b) "Current state fiscal year" means the state fiscal year 24 for which a particular calculation is made. 25 (c) "Homestead" means that term as defined in section 1211 26 of the revised school code, MCL 380.1211. 05188'97 16 1 (d) "Immediately preceding state fiscal year" means the 2 state fiscal year immediately preceding the current state fiscal 3 year. 4 (e) "Local school operating revenue" means school operating 5 taxes levied under section 1211 of the revised school code, MCL 6 380.1211. 7 (f) "Local school operating revenue per membership pupil" 8 means a district's local school operating revenue divided by the 9 district's membership excluding special education pupils. 10 (g) "Membership" means the definition of that term under 11 section 6 as in effect for the particular fiscal year for which a 12 particular calculation is made. 13 (h) "Qualified agricultural property" means that term as 14 defined in section 1211 of the revised school code, MCL 15 380.1211. 16 (i) "School operating purposes" means the purposes included 17 in the operation costs of the district as prescribed in 18 sections 7 and 18. 19 (j) "School operating taxes" means local ad valorem property 20 taxes levied under section 1211 of the revised school code, MCL 21 380.1211, and retained for school operating purposes. 22 (k) "Taxable value per membership pupil" means taxable 23 value, as certified by the department of treasury, for the calen- 24 dar year ending in the current state fiscal year divided by the 25 district's membership excluding special education pupils for the 26 school year ending in the current state fiscal year. 05188'97 17 1 Sec. 51a. (1) From the appropriation in section 11, there 2 is allocated $818,786,700.00 for 1997-98 to consist of an amount 3 not to exceed $722,853,300.00 from state sources and 4 $95,933,400.00 in federal funding under sections 611 to 620 of 5 part B of the individuals with disabilities education act, title 6 VI of Public Law 91-230, 20 U.S.C. 1411 to 1420, plus any carry- 7 over federal funds from previous year appropriations, and there 8 is allocated for 1998-99 an amount not to exceed 9$771,053,300.00$778,800,000.00 from state sources and all 10 available federal funding, estimated at $120,000,000.00, plus any 11 carryover federal funds from previous year appropriations, for 12 the purpose of reimbursing districts and intermediate districts 13 for special education programs, services, and special education 14 personnel as prescribed in article 3 of the revised school code, 15 MCL 380.1701 to 380.1766; net tuition payments made by intermedi- 16 ate districts to the Michigan schools for the deaf and blind; and 17 programs for pupils with handicaps as defined by the department. 18 For meeting the costs of special education programs and services 19 not reimbursed under this article, a district or intermediate 20 district may use money in general funds or special education 21 funds, not otherwise restricted, or contributions from districts 22 to intermediate districts, tuition payments, gifts and contribu- 23 tions from individuals, or federal funds that may be available 24 for this purpose, as determined by the intermediate district plan 25 prepared pursuant to article 3 of the revised school code, MCL 26 380.1701 to 380.1766. 05188'97 18 1 (2) From the funds allocated under subsection (1), there is 2 allocated for 1997-98 and for 1998-99 the amount necessary, 3 estimated at $620,906,100.00 for 1997-98 and$672,274,000.004 $680,000,000.00 for 1998-99, for payments toward reimbursing dis- 5 tricts and intermediate districts for 28.6138% of total approved 6 costs of special education, excluding costs reimbursed under 7 section 53a, and 70.4165% of total approved costs of special edu- 8 cation transportation. Allocations under this subsection shall 9 be made as follows: 10 (a) The initial amount allocated to a district under this 11 subsection toward fulfilling the specified percentages shall be 12 calculated by multiplying the district's special education pupil 13 membership, excluding pupils described in subsection (13), times 14 the foundation allowance under section 20 of the pupil's district 15 of residence, not to exceed $6,500.00 adjusted by the dollar 16 amount of the difference between the 1997-98 and 1998-99 basic 17 foundation allowance under section 20 and $5,000.00, or, for a 18 special education pupil in membership in a district that is a 19 public school academy or university school, times an amount equal 20 to the amount per membership pupil calculated under section 21 20(6). For an intermediate district, the amount allocated under 22 this subdivision toward fulfilling the specified percentages 23 shall be an amount per special education membership pupil, 24 excluding pupils described in subsection (13), and shall be cal- 25 culated in the same manner as for a district, using the founda- 26 tion allowance under section 20 of the pupil's district of 27 residence, not to exceed $6,500.00 adjusted by the dollar amount 05188'97 19 1 of the difference between the 1997-98 and 1998-99 basic 2 foundation allowance under section 20 and $5,000.00. 3 (b) After the allocations under subdivision (a), districts 4 and intermediate districts for which the payments under 5 subdivision (a) do not fulfill the specified percentages shall be 6 paid the amount necessary to achieve the specified percentages 7 for the district or intermediate district. 8 (3) From the funds allocated under subsection (1), there is 9 allocated for 1997-98 and for 1998-99 the amount necessary, esti- 10 mated at $29,224,700.00 for 1997-98 and $26,056,800.00 for 11 1998-99, to make payments to districts and intermediate districts 12 under this subsection. If the amount allocated to a district or 13 intermediate district for 1997-98 or 1998-99 under subsection 14 (2)(b) is less than the sum of the amounts allocated to the dis- 15 trict or intermediate district for 1996-97 under sections 52 and 16 58, there is allocated to the district or intermediate district 17 for 1997-98 or for 1998-99, or both as applicable, an amount 18 equal to that difference, adjusted by applying the same proration 19 factor that was used in the distribution of funds under section 20 52 in 1996-97 as adjusted to the district's or intermediate 21 district's necessary costs of special education used in calcula- 22 tions for 1997-98 or 1998-99. This adjustment is to reflect 23 reductions in special education program operations between 24 1996-97 and 1997-98 or 1998-99, as applicable. 25 (4) If the department determines that the sum of the amounts 26 allocated for a fiscal year to a district or intermediate 27 district under subsection (2)(a) and (b) is not sufficient to 05188'97 20 1 fulfill the specified percentages in subsection (2), then the 2 shortfall shall be paid to the district or intermediate district 3 during the fiscal year beginning on the October 1 following the 4 determination and payments under subsection (3) shall be adjusted 5 as necessary. If the department determines that the sum of the 6 amounts allocated for a fiscal year to a district or intermediate 7 district under subsection (2)(a) and (b) exceeds the sum of the 8 amount necessary to fulfill the specified percentages in subsec- 9 tion (2), then the department shall deduct the amount of the 10 excess from the district's or intermediate district's payments 11 under this act for the fiscal year beginning on the October 1 12 following the determination and payments under subsection (3) 13 shall be adjusted as necessary. However, if the amount allocated 14 under subsection (2)(a) in itself exceeds the amount necessary to 15 fulfill the specified percentages in subsection (2), there shall 16 be no deduction under this subsection. 17 (5) State funds shall be allocated on a total approved cost 18 basis. Federal funds shall be allocated under applicable federal 19 requirements, except that an amount not to exceed $3,100,000.00 20 may be allocated by the department for 1997-98, and an amount not 21 to exceed $3,500,000.00 may be allocated by the department for 22 1998-99, to districts or intermediate districts on a competitive 23 grant basis for programs, equipment, and services that the 24 department determines to be designed to benefit or improve spe- 25 cial education on a statewide scale. 26 (6) From the amount allocated in subsection (1), there is 27 allocated an amount not to exceed $1,700,000.00 for 1997-98 and 05188'97 21 1 an amount not to exceed $2,200,000.00 for 1998-99 to reimburse 2 100% of the net increase in necessary costs incurred by a dis- 3 trict or intermediate district in implementing the revisions in 4 the administrative rules for special education that became effec- 5 tive on July 1, 1987. As used in this subsection, "net increase 6 in necessary costs" means the necessary additional costs incurred 7 solely because of new or revised requirements in the administra- 8 tive rules minus cost savings permitted in implementing the 9 revised rules. Net increase in necessary costs shall be deter- 10 mined in a manner specified by the department. 11 (7) For purposes of this article, all of the following 12 apply: 13 (a) "Total approved costs of special education" shall be 14 determined in a manner specified by the department and may 15 include indirect costs, but shall not exceed 115% of approved 16 direct costs for section 52 and section 53a programs. The total 17 approved costs include salary and other compensation for all 18 approved special education personnel for the program, including 19 payments for social security and medicare and public school 20 employee retirement system contributions. The total approved 21 costs do not include salaries or other compensation paid to 22 administrative personnel who are not special education personnel 23 as defined in section 6 of the revised school code, MCL 380.6. 24 Costs reimbursed by federal funds, other than those federal funds 25 included in the allocation made under this article, are not 26 included. Special education approved personnel not utilized full 27 time in the evaluation of students or in the delivery of special 05188'97 22 1 education programs, ancillary, and other related services shall 2 be reimbursed under this section only for that portion of time 3 actually spent providing these programs and services, with the 4 exception of special education programs and services provided to 5 youth placed in child caring institutions or juvenile detention 6 programs approved by the department to provide an on-grounds edu- 7 cation program. 8 (b) Reimbursement for ancillary and other related services, 9 as defined by R 340.1701 of the Michigan administrative code, 10 shall not be provided when those services are covered by and 11 available through private group health insurance carriers or fed- 12 eral reimbursed program sources unless the department and dis- 13 trict or intermediate district agree otherwise and that agreement 14 is approved by the department of management and budget. 15 Expenses, other than the incidental expense of filing, shall not 16 be borne by the parent. In addition, the filing of claims shall 17 not delay the education of a pupil. A district or intermediate 18 district shall be responsible for payment of a deductible amount 19 and for an advance payment required until the time a claim is 20 paid. 21 (8) From the allocation in subsection (1), there is allo- 22 cated for 1997-98 and for 1998-99 an amount not to exceed 23 $15,313,900.00 each fiscal year to intermediate districts. The 24 payment under this subsection to each intermediate district shall 25 be equal to the amount of the 1996-97 allocation to the interme- 26 diate district under this subsection. 05188'97 23 1 (9) A pupil who is enrolled in a full-time special education 2 program conducted or administered by an intermediate district or 3 a pupil who is enrolled in the Michigan schools for the deaf and 4 blind shall not be included in the membership count of a dis- 5 trict, but shall be counted in membership in the intermediate 6 district of residence. 7 (10) Notwithstanding section 6(4), for 1997-98 only, for 8 pupils enrolled in a center program pursuant to an intermediate 9 district plan the department shall use for the February 1997 sup- 10 plemental count the definition of membership used for the 1997-98 11 pupil membership count day. 12 (11) Special education personnel transferred from 1 district 13 to another to implement the revised school code shall be entitled 14 to the rights, benefits, and tenure to which the person would 15 otherwise be entitled had that person been employed by the 16 receiving district originally. 17 (12) If a district or intermediate district uses money 18 received under this section for a purpose other than the purpose 19 or purposes for which the money is allocated, the department may 20 require the district or intermediate district to refund the 21 amount of money received. Money that is refunded shall be depos- 22 ited in the state treasury to the credit of the state school aid 23 fund. 24 (13) From the funds allocated in subsection (1), there is 25 allocated each fiscal year for 1997-98 and for 1998-99 the amount 26 necessary, estimated at $8,370,600.00 for 1997-98 and for 27 1998-99, to pay the foundation allowances for pupils described in 05188'97 24 1 this subsection. The allocation to a district under this 2 subsection shall be calculated by multiplying the number of 3 pupils described in this subsection who are counted in membership 4 in the district times the foundation allowance under section 20 5 of the pupil's district of residence, not to exceed $6,500.00 6 adjusted by the dollar amount of the difference between the 7 1997-98 and 1998-99 basic foundation allowance under section 20 8 and $5,000.00, or, for a pupil described in this subsection who 9 is counted in membership in a district that is a public school 10 academy or university school, times an amount equal to the amount 11 per membership pupil under section 20(6). The allocation to an 12 intermediate district under this subsection shall be calculated 13 in the same manner as for a district, using the foundation allow- 14 ance under section 20 of the pupil's district of residence, not 15 to exceed $6,500.00 adjusted by the dollar amount of the differ- 16 ence between the 1997-98 and 1998-99 basic foundation allowance 17 under section 20 and $5,000.00. This subsection applies to all 18 of the following pupils: 19 (a) Pupils described in section 53a. 20 (b) Pupils counted in membership in an intermediate district 21 who are not special education pupils and are served by the inter- 22 mediate district in a juvenile detention or child caring 23 facility. 24 (c) Emotionally impaired pupils counted in membership by an 25 intermediate district and provided educational services by the 26 department of community health. 05188'97 25 1 (14) After payments under subsections (2) and (13), the 2 remaining expenditures from the allocation in subsection (1) 3 shall be made in the following order: 4 (a) 100% of the reimbursement required under section 53a. 5 (b) 100% of the reimbursement required under subsection 6 (6). 7 (c) 100% of the payment required under section 54. 8 (d) 100% of the payment required under subsection (3). 9 (e) 100% of the payment required under subsection (8). 10 (f) 100% of the payments under section 56. 05188'97 Final page. TAV