state of michigan
102nd Legislature
Regular session of 2023
Introduced by Senator Anthony
ENROLLED SENATE BILL No. 8
AN ACT to amend 1979 PA 94, entitled “An act to make appropriations to aid in the support of the public schools, the intermediate school districts, community colleges, and public universities of the state; to make appropriations for certain other purposes relating to education; to provide for the disbursement of the appropriations; to authorize the issuance of certain bonds and provide for the security of those bonds; to prescribe the powers and duties of certain state departments, the state board of education, and certain other boards and officials; to create certain funds and provide for their expenditure; to prescribe penalties; and to repeal acts and parts of acts,” by amending sections 11, 22b, 31f, 39a, 51a, 51c, 53a, 54, and 147c (MCL 388.1611, 388.1622b, 388.1631f, 388.1639a, 388.1651a, 388.1651c, 388.1653a, 388.1654, and 388.1747c), sections 11 and 51a as amended by 2022 PA 212 and sections 22b, 31f, 39a, 51c, 53a, 54, and 147c as amended by 2022 PA 144.
The People of the State of Michigan enact:
(2) The appropriations under this section are allocated as provided in this article. Money appropriated under this section from the general fund must 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 fiscal year are transferred to the school aid stabilization fund created under section 11a.
Sec. 22b. (1) For discretionary nonmandated payments to districts under this section, there is allocated for 2021-2022 an amount not to exceed $5,094,000,000.00 from the state school aid fund and general fund appropriations in section 11 and an amount not to exceed $72,000,000.00 from the community district education trust fund appropriation in section 11, and there is allocated for 2022-2023 an amount not to exceed $5,686,000,000.00 from the state school aid fund and general fund appropriations in section 11 and an amount not to exceed $72,000,000.00 from the community district education trust fund appropriation in section 11. For 2021-2022, an amount not to exceed $14,500,000.00 must be deposited from the general fund into the state school aid fund to reimburse the state school aid fund for community district education trust fund costs in excess of $72,000,000.00, as required under section 12 of the Michigan trust fund act, 2000 PA 489, MCL 12.262. For 2022-2023, $19,500,000.00 must be deposited from the general fund into the state school aid fund to reimburse the state school aid fund for community district education trust fund costs in excess of $72,000,000.00, as required under section 12 of the Michigan trust fund act, 2000 PA 489, MCL 12.262. If the amount allocated under this subsection from the community district education trust fund appropriation under section 11 is insufficient to pay for an increase under this section, any amount exceeding that allocation may be paid from other allocations under this subsection. Except for money allocated under this section from the community district education trust fund appropriation in section 11, funds allocated under this section that are not expended in the fiscal year for which they were allocated, as determined by the department, may be used to supplement the allocations under sections 22a and 51c to fully fund those allocations for the same fiscal year. For each fund transfer as described in the immediately preceding sentence that occurs, the state budget director shall send notification of the transfer to the house and senate appropriations subcommittees on school aid and the house and senate fiscal agencies by not later than 14 calendar days after the transfer occurs.
(2) Subject to subsection (3) and section 296, the allocation to a district under this section is an amount equal to the sum of the amounts calculated under sections 20, 20m, 51a(2), 51a(3), and 51a(11), minus the sum of the allocations to the district under sections 22a and 51c. For a community district, the allocation as otherwise calculated under this section is increased by an amount equal to the amount of local school operating tax revenue that would otherwise be due to the community district if not for the operation of section 386 of the revised school code, MCL 380.386, and this increase must be paid from the community district education trust fund allocation in subsection (1) in order to offset the absence of local school operating revenue in a community district in the funding of the state portion of the foundation allowance under section 20(4).
(3) In order to receive an allocation under subsection (1), each district must do all of the following:
(a) Comply with section 1280b of the revised school code, MCL 380.1280b.
(b) Comply with sections 1278a and 1278b of the revised school code, MCL 380.1278a and 380.1278b.
(c) Furnish data and other information required by state and 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.
(e) Comply with section 21f.
(f) For a district that has entered into a partnership agreement with the department, comply with section 22p.
(4) 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.
(5) 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.
(6) 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 must be made in full before any proration of remaining payments under this section.
(7) It is the intent of the legislature that all constitutional obligations of this state have been fully funded under sections 22a, 31d, 51a, 51c, 51e, 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 (2). 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 is completed upon resolution of the litigation.
(8) 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 (7) 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 (2).
(9) 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 has and shall exercise jurisdiction over the claim.
(10) 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.
(11) 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 is 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 1396w-6.
(12) As used in this section:
(a) “Dissolved district” means that term as defined in section 20.
(b) “Local school operating revenue” means school operating taxes levied under section 1211 of the revised school code, MCL 380.1211. For a receiving district, if school operating taxes are to be levied on behalf of a dissolved district that has been attached in whole or in part to the receiving district to satisfy debt obligations of the dissolved district under section 12 of the revised school code, MCL 380.12, local school operating revenue does not include school operating taxes levied within the geographic area of the dissolved district.
(c) “Receiving district” and “school operating taxes” mean those terms as defined in section 20.
Sec. 31f. (1) From the state school aid fund money appropriated in section 11, there is allocated an amount not to exceed $12,400,000.00 for 2021-2022 and $11,900,000.00 for 2022-2023 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 are 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 210, 220, 225, 226, 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 meal served, as determined and approved by the department, less federal reimbursement, participant payments, and other state reimbursement. The department shall determine the statewide average cost using costs as reported in a manner approved by the department for the preceding school year.
(4) Notwithstanding section 17b, the department may make payments under this section pursuant to an agreement with the department.
(5) In purchasing food for a
school breakfast program funded under this section, a district shall give preference
to food that is grown or produced by Michigan businesses if it is competitively
priced and of comparable quality.
Sec. 39a. (1) From the federal funds appropriated in section 11, there is allocated for 2022-2023 to districts, intermediate districts, and other eligible entities all available federal funding, estimated at $780,200,000.00, for the federal programs under the no child left behind act of 2001, Public Law 107-110, or the every student succeeds act, Public Law 114-95. These funds are allocated as follows:
(a) An amount estimated at $1,200,000.00 for 2022-2023 to provide students with drug- and violence-prevention programs and to implement strategies to improve school safety, funded from DED-OESE, drug-free schools and communities funds.
(b) An amount estimated at $100,000,000.00 for 2022-2023 for the purpose of preparing, training, and recruiting high-quality teachers and class size reduction, funded from DED-OESE, improving teacher quality funds.
(c) An amount estimated at $13,000,000.00 for 2022-2023 for programs to teach English to limited English proficient (LEP) children, funded from DED-OESE, language acquisition state grant funds.
(d) An amount estimated at $2,800,000.00 for 2022-2023 for rural and low-income schools, funded from DED‑OESE, rural and low income school funds.
(e) An amount estimated at $535,000,000.00 for 2022-2023 to provide supplemental programs to enable educationally disadvantaged children to meet challenging academic standards, funded from DED-OESE, title I, disadvantaged children funds.
(f) An amount estimated at $9,200,000.00 for 2022-2023 for the purpose of identifying and serving migrant children, funded from DED-OESE, title I, migrant education funds.
(g) An amount estimated at $39,000,000.00 for 2022-2023 for the purpose of providing high-quality extended learning opportunities, after school and during the summer, for children in low-performing schools, funded from DED-OESE, twenty-first century community learning center funds.
(h) An amount estimated at $14,000,000.00 for 2022-2023 to help support local school improvement efforts, funded from DED-OESE, title I, local school improvement grants.
(i) An amount estimated at $35,000,000.00 for 2022-2023 to improve the academic achievement of students, funded from DED-OESE, title IV, student support and academic enrichment grants.
(j) An amount estimated at $3,100,000.00 for 2022-2023 for literacy programs that advance literacy skills for students from birth through grade 12, including, but not limited to, English-proficient students and students with disabilities, funded from DED-OESE, striving readers comprehensive literacy program.
(k) An amount estimated at $27,900,000.00 for 2022-2023 to establish safer and healthier learning environments, and to prevent and respond to acts of bullying, violence, and hate that impact school communities at individual and systemic levels, funded from DED-OESE, stronger connections grant program.
(2) From the federal funds appropriated in section 11, there is allocated to districts, intermediate districts, and other eligible entities all available federal funding, estimated at $56,500,000.00 for 2022-2023 for the following programs that are funded by federal grants:
(a) An amount estimated at $3,000,000.00 for 2022-2023 to provide services to homeless children and youth, funded from DED-OVAE, homeless children and youth funds.
(b) An amount estimated at $24,000,000.00 for 2022-2023 for providing career and technical education services to pupils, funded from DED-OVAE, basic grants to states.
(c) An amount estimated at $14,000,000.00 for 2022-2023 for the Michigan charter school subgrant program, funded from DED-OII, public charter schools program funds.
(d) An amount estimated at $14,000,000.00 for 2022-2023 for the purpose of promoting and expanding high-quality preschool services, funded from HHS-OCC, preschool development funds.
(e) An amount estimated at $1,500,000.00 for 2022-2023 for the purpose of addressing priority substance abuse treatment, prevention, and mental health needs, funded from HHS-SAMHSA.
(3) The department shall distribute all federal funds allocated under this section in accordance with federal law and with flexibility provisions outlined in Public Law 107-116, and in the education flexibility partnership act of 1999, Public Law 106-25. Notwithstanding section 17b, the department shall make payments of federal funds to districts, intermediate districts, and other eligible entities under this section on a schedule determined by the department.
(4) For the purposes of
applying for federal grants appropriated under this article, the department
shall allow an intermediate district to submit a consortium application on
behalf of 2 or more districts with the agreement of those districts as
appropriate according to federal rules and guidelines.
(5) For the purposes of funding federal title I grants under this article, in addition to any other federal grants for which the strict discipline academy is eligible, the department shall allocate to a strict discipline academy out of title I, part A an amount equal to what the strict discipline academy would have received if included and calculated under title I, part D, or what it would receive under the formula allocation under title I, part A, whichever is greater.
(6) As used in this section:
(a) “DED” means the United States Department of Education.
(b) “DED-OESE” means the DED Office of Elementary and Secondary Education.
(c) “DED-OII” means the DED Office of Innovation and Improvement.
(d) “DED-OVAE” means the DED Office of Vocational and Adult Education.
(e) “HHS” means the United States Department of Health and Human Services.
(f) “HHS-OCC” means the HHS Office of Child Care.
(g) “HHS-SAMHSA” means the HHS Substance Abuse and Mental Health Services Project.
Sec. 51a. (1) From the state school aid fund money in section 11, there is allocated an amount not to exceed $1,134,196,100.00 for 2021-2022 and there is allocated an amount not to exceed $1,460,503,100.00 for 2022-2023 from state sources and all available federal funding under sections 1411 to 1419 of part B of the individuals with disabilities education act, 20 USC 1411 to 1419, estimated at $380,000,000.00 for 2021-2022 and $390,000,000.00 for 2022-2023, 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 380.1761; 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 other entities, or federal funds that may be available for this purpose, as determined by the intermediate district plan prepared under article 3 of the revised school code, MCL 380.1701 to 380.1761. Notwithstanding section 17b, the department shall make payments of federal funds to districts, intermediate districts, and other eligible entities under this section on a schedule determined by the department.
(2) From the funds allocated under subsection (1), there is allocated the amount necessary, estimated at $324,000,000.00 for 2021-2022 and estimated at $323,300,000.00 for 2022-2023, 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 are made as follows:
(a) For 2021-2022, the department shall calculate the initial amount allocated to a district under this subsection toward fulfilling the specified percentages by multiplying the district’s special education pupil membership, excluding pupils described in subsection (11), times the foundation allowance under section 20 of the pupil’s district of residence, plus the amount of the district’s per-pupil allocation under section 20m, not to exceed the target foundation allowance for the current fiscal year, or, for a special education pupil in membership in a district that is a public school academy, 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 is an amount per special education membership pupil, excluding pupils described in subsection (11), and is 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 target foundation allowance for the current fiscal year, and that district’s per-pupil allocation under section 20m.
(b) For 2022-2023, the
department shall calculate the initial amount allocated to a district under
this subsection toward fulfilling the specified percentages by multiplying the
district’s special education pupil membership, excluding pupils described in
subsection (11), times 25% of the foundation allowance under section 20 of
the pupil’s district of residence, plus 25% of the amount of the district’s
per-pupil allocation under section 20m, not to exceed 25% of the target
foundation allowance for the current fiscal year, or, for a special education
pupil in membership in a district that is a public school academy, times an
amount equal to 25% of 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 is an amount per
special education membership pupil, excluding pupils described in subsection
(11), and is calculated in the same manner as for a district, using 25% of the
foundation allowance under section 20 of the pupil’s district of residence, not
to exceed 25% of the target foundation allowance for the current fiscal year,
and that district’s per-pupil allocation under section 20m.
(c) After the allocations under subdivision (a) or (b), as applicable, the department shall pay a district or intermediate district for which the payments calculated under subdivision (a) or (b), as applicable, do not fulfill the specified percentages 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 2021-2022 an amount not to exceed $1,000,000.00 and there is allocated for 2022-2023 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 the fiscal year under subsection (2)(c) 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. The department shall make adjustments for reductions in special education program operations or services 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) is not sufficient to fulfill the specified percentages in subsection (2), then the department shall pay the shortfall to the district or intermediate district during the fiscal year beginning on the October 1 following the determination and shall adjust payments under subsection (3) 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) 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 article for the fiscal year beginning on the October 1 following the determination and shall adjust payments under subsection (3) as necessary. However, for 2021-2022 only, if the amount allocated under subsection (2)(a) in itself exceeds the amount necessary to fulfill the specified percentages in subsection (2), there is no deduction under this subsection. Beginning in 2022-2023, if the amount allocated under subsection (2)(b) in itself exceeds the amount necessary to fulfill the specified percentages in subsection (2), there is no deduction under this subsection.
(5) State funds are allocated on a total approved cost basis. Federal funds are allocated under applicable federal requirements.
(6) From the amount allocated in subsection (1), there is allocated an amount not to exceed $2,200,000.00 for 2021-2022 and there is allocated an amount not to exceed $2,200,000.00 for 2022-2023 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. The department shall determine net increase in necessary costs in a manner specified by the department.
(7) For purposes of this section and sections 51b to 58, all of the following apply:
(a) “Total approved costs of special education” are determined in a manner specified by the department and may include indirect costs, but must 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 that term is 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 are 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) 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.
(c) If the department determines before bookclosing for a fiscal year that the amounts allocated for that fiscal year under subsections (2), (3), (6), and (11) and sections 53a, 54, and 56 will exceed expenditures for that fiscal year under subsections (2), (3), (6), and (11) 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 the department shall calculate reimbursement for that district or intermediate district in the same manner as it was for 2003-2004. If the amount of the excess allocations under subsections (2), (3), (6), and (11) 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 department shall prorate calculations and resulting reimbursement under this subdivision on an equal percentage basis. The amount of reimbursement under this subdivision for a fiscal year must not exceed $2,000,000.00 for any district or intermediate district.
(d) Reimbursement for ancillary and other related services, as that term is defined by R 340.1701c of the Michigan Administrative Code, is not 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, must not be borne by the parent. In addition, the filing of claims must not delay the education of a pupil. A district or intermediate district is responsible for payment of a deductible amount and for an advance payment required until the time a claim is paid.
(e) 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) 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 is not included in the membership count of a district, but is counted in membership in the intermediate district of residence.
(9) Special education personnel transferred from 1 district to another to implement the revised school code are entitled to the rights, benefits, and tenure to which the individual would otherwise be entitled had that individual been employed by the receiving district originally.
(10) 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. The department shall deposit money that is refunded in the state treasury to the credit of the state school aid fund.
(11) From the funds allocated in subsection (1), there is allocated the amount necessary, estimated at $1,600,000.00 for 2021-2022 and estimated at $1,500,000.00 for 2022-2023, to pay the foundation allowances for pupils described in this subsection. The department shall calculate the allocation to a district under this subsection by multiplying the number of pupils described in this subsection who are counted in membership in the district times the sum of the foundation allowance under section 20 of the pupil’s district of residence, plus the amount of the district’s per-pupil allocation under section 20m, not to exceed the target foundation allowance 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, times an amount equal to the amount per membership pupil under section 20(6). The department shall calculate the allocation to an intermediate district under this subsection 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 target foundation allowance for the current fiscal year and that district’s per-pupil allocation under section 20m. 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.
(c) Pupils with an emotional impairment counted in membership by an intermediate district and provided educational services by the department of health and human services.
(12) If it is determined that funds allocated under subsection (2) or (11) 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 (11) or under section 51c in order to fully fund those allocations. After payments under subsections (2) and (11) and section 51c, the department shall expend the remaining funds from the allocation in subsection (1) in the following order:
(a) One hundred percent of the reimbursement required under section 53a.
(b) One hundred percent of the reimbursement required under subsection (6).
(c) One hundred percent of the payment required under section 54.
(d) One hundred percent of the payment required under subsection (3).
(e) One hundred percent of the payments under section 56.
(13) The allocations under subsections (2), (3), and (11) are allocations to intermediate districts only and are not allocations to districts, but instead are calculations used only to determine the state payments under section 22b.
(14) If a public school academy that is not a cyber school, as that term is defined in section 551 of the revised school code, MCL 380.551, enrolls under 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 a disability, as that term is defined under the individuals with disabilities education act, Public Law 108-446, the intermediate district in which the public school academy is located and the public school academy shall enter into a written agreement with the intermediate district in which the pupil resides for the purpose of providing the pupil with a free appropriate public education, and the written agreement must include at least an agreement on the responsibility for the payment of the added costs of special education programs and services for the pupil. If the public school academy that enrolls the pupil does not enter into an agreement under this subsection, the public school academy shall not charge the pupil’s resident intermediate district or the intermediate district in which the public school academy is located the added costs of special education programs and services for the pupil, and the public school academy is not eligible for any payouts based on the funding formula outlined in the resident or nonresident intermediate district’s plan. If a pupil is not enrolled in a public school academy under this subsection, the provision of special education programs and services and the payment of the added costs of special education programs and services for a pupil described in this subsection are the responsibility of the district and intermediate district in which the pupil resides.
(15) For the purpose of receiving its federal allocation under part B of the individuals with disabilities education act, Public Law 108-446, a public school academy that is a cyber school, as that term is defined in section 551 of the revised school code, MCL 380.551, and is in compliance with section 553a of the revised school code, MCL 380.553a, directly receives the federal allocation under part B of the individuals with disabilities education act, Public Law 108-446, from the intermediate district in which the cyber school is located, as the subrecipient. If the intermediate district does not distribute the funds described in this subsection to the cyber school by the part B application due date of July 1, the department may distribute the funds described in this subsection directly to the cyber school according to the formula prescribed in 34 CFR 300.705 and 34 CFR 300.816. Beginning July 1, 2021, this subsection is subject to section 8c. It is the intent of the legislature that the immediately preceding sentence apply retroactively and is effective July 1, 2021.
(16) For a public school academy that is a cyber school, as that term is defined in section 551 of the revised school code, MCL 380.551, and is in compliance with section 553a of the revised school code, MCL 380.553a, that enrolls a pupil under this section, the intermediate district in which the cyber school is located shall ensure that the cyber school complies with sections 1701a, 1703, 1704, 1751, 1752, 1756, and 1757 of the revised school code, MCL 380.1701a, 380.1703, 380.1704, 380.1751, 380.1752, 380.1756, and 380.1757; applicable rules; and the individuals with disabilities education act, Public Law 108-446. Beginning July 1, 2021, this subsection is subject to section 8c. It is the intent of the legislature that the immediately preceding sentence apply retroactively and is effective July 1, 2021.
(17) For the purposes of this section, the department or the center shall only require a district or intermediate district to report information that is not already available from the financial information database maintained by the center.
Sec. 51c. As required by the court in the consolidated cases known as Durant v State of Michigan, 456 Mich 175 (1997), from the allocation under section 51a(1), there is allocated for 2021-2022 and for 2022-2023, the amount necessary, estimated at $719,000,000.00 for 2021-2022 and $709,900,000.00 for 2022-2023, 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 fiscal year for which they were allocated, as determined by the department, may be used to supplement the allocations under sections 22a and 22b to fully fund those allocations for the same fiscal year. For each fund transfer as described in the immediately preceding sentence that occurs, the state budget director shall send notification of the transfer to the house and senate appropriations subcommittees on state school aid and the house and senate fiscal agencies by not later than 14 calendar days after the transfer occurs.
Sec. 53a. (1) For districts, reimbursement for pupils described in subsection (2) is 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 under article 3 of the revised school code, MCL 380.1701 to 380.1761, minus the district’s foundation allowance calculated under section 20 and minus the district’s per-pupil allocation under section 20m. For intermediate districts, the department shall calculate reimbursement for pupils described in subsection (2) 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 target foundation allowance under section 20 for the current fiscal year plus the amount of the district’s per-pupil allocation under section 20m.
(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 health and human services.
(c) Pupils who are former residents of department of community 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 are funded under this section and are not reimbursed under section 58.
(5) The department shall not allocate more than $10,500,000.00 of the allocation for 2021-2022 in section 51a(1) under this section. The department shall not allocate more than $10,500,000.00 of the allocation for 2022-2023 in section 51a(1) under this section.
Sec. 54. Each intermediate district receives an amount per pupil for each pupil in attendance at the Michigan Schools for the Deaf and Blind. The amount is proportionate to the total instructional cost at each school. The department shall not allocate more than $1,688,000.00 of the allocation for 2021-2022 in section 51a(1) under this section. The department shall not allocate more than $1,688,000.00 of the allocation for 2022-2023 in section 51a(1) under this section.
Sec. 147c. (1) From the state school aid fund money appropriated in section 11, there is allocated for 2022-2023 an amount not to exceed $1,478,000,000.00, and from the MPSERS retirement obligation reform reserve fund money appropriated in section 11, there is allocated for 2022-2023 only an amount needed, estimated at $140,400,000.00, for payments to districts and intermediate districts that are participating entities of the Michigan public school employees’ retirement system. In addition, from the general fund money appropriated in section 11, there is allocated for 2022-2023 an amount not to exceed $500,000.00 for payments to district libraries that are participating entities of the Michigan public school employees’ retirement system. It is the intent of the legislature that money allocated from the MPSERS retirement obligation reform reserve fund under this subsection for 2022-2023 represents the amount necessary to reduce the payroll growth assumption to 1.75%. All of the following apply to funding under this subsection:
(a) Except as otherwise provided in this subdivision, for 2022-2023, the amounts allocated under this subsection are estimated to provide an average MPSERS rate cap per pupil amount of $1,042.00 and are estimated to provide a rate cap per pupil for districts ranging between $5.00 and $3,700.00. For 2022-2023, if the retirement system determines the average MPSERS rate cap per pupil amount and rate cap per pupil for districts estimated in the immediately preceding sentence need to be adjusted, the estimated average MPSERS rate cap per pupil amount and estimated rate cap per pupil for districts under this subdivision are the estimations determined by the retirement system. If the retirement system makes a determination as described in the immediately preceding sentence, it shall issue its estimations publicly and describe the need for the adjustment described in the immediately preceding sentence.
(b) Payments made under this subsection are equal to the difference between the unfunded actuarial accrued liability contribution rate as calculated under section 41 of the public school employees retirement act of 1979, 1980 PA 300, MCL 38.1341, as calculated without taking into account the maximum employer rate of 20.96% included in section 41 of the public school employees retirement act of 1979, 1980 PA 300, MCL 38.1341, and the maximum employer rate of 20.96% included in section 41 of the public school employees retirement act of 1979, 1980 PA 300, MCL 38.1341.
(c) The amount allocated to each participating entity under this subsection is based on each participating entity’s proportion of the total covered payroll for the immediately preceding fiscal year for the same type of participating entities. A participating entity that receives funds under this subsection shall use the funds solely for the purpose of retirement contributions as specified in subdivision (d).
(d) Each participating entity receiving funds under this subsection shall forward an amount equal to the amount allocated under subdivision (c) to the retirement system in a form, manner, and time frame determined by the retirement system.
(e) Funds allocated under this subsection should be considered when comparing a district’s growth in total state aid funding from 1 fiscal year to the next.
(f) Not later than December 20 of each fiscal year for which funding is allocated under this subsection, the department shall publish and post on its website an estimated MPSERS rate cap per pupil for each district.
(g) The office of retirement services shall first apply funds allocated under this subsection to pension contributions and, if any funds remain after that payment, shall apply those remaining funds to other postemployment benefit contributions.
(2) In addition to the funds allocated under subsection (1), from the state school aid fund money appropriated in section 11, there is allocated for 2022-2023 only $1,000,000,000.00 for payments to participating entities of the Michigan public school employees’ retirement system. The amount allocated to each participating entity under this subsection must be based on each participating entity’s proportion of the total covered payroll for the immediately preceding fiscal year. A participating entity that receives funds under this subsection shall use the funds solely for purposes of this subsection. Each participating entity receiving funds under this subsection shall forward an amount equal to the amount allocated under this subsection to the retirement system in a form, manner, and time frame determined by the retirement system. The retirement system shall recognize funds received under this subsection as additional assets being contributed to the system and shall not categorize them as unfunded actuarial liability contributions or normal cost contributions.
(3) As used in this section:
(a) “Community college” means a community college created under the community college act of 1966, 1966 PA 331, MCL 389.1 to 389.195.
(b) “District library” means a district library established under the district library establishment act, 1989 PA 24, MCL 397.171 to 397.196.
(c) “MPSERS rate cap per pupil” means an amount equal to the quotient of the district’s payment under this section divided by the district’s pupils in membership.
(d) “Participating entity” means:
(i) As used in subsection (1) only, a district, intermediate district, or district library that is a reporting unit of the Michigan public school employees’ retirement system under the public school employees retirement act of 1979, 1980 PA 300, MCL 38.1301 to 38.1437, and that reports employees to the Michigan public school employees’ retirement system for the applicable fiscal year.
(ii) As used in subsection (2) only, a district, intermediate district, community college, or district library that is a reporting unit of the Michigan public school employees’ retirement system under the public school employees retirement act of 1979, 1980 PA 300, MCL 38.1301 to 38.1437, and that reports employees to the Michigan public school employees’ retirement system for the applicable fiscal year.
(e)
“Retirement system” means the Michigan public school employees’
retirement system under the public school employees retirement act of 1979,
1980 PA 300, MCL 38.1301 to 38.1437.
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, as amended by 2021 PA 48, 2022 PA 93, 2022 PA 144, 2022 PA 212, and this amendatory act, from state sources for fiscal year 2021-2022 is estimated at $14,681,134,200.00 and state appropriations for school aid to be paid to local units of government for fiscal year 2021-2022 are estimated at $13,494,339,600.00. 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, as amended by 2022 PA 144, 2022 PA 212, and this amendatory act, from state sources for fiscal year 2022-2023 is estimated at $17,090,672,900.00 and state appropriations for school aid to be paid to local units of government for fiscal year 2022-2023 are estimated at $15,764,187,600.00.
This act
is ordered to take immediate effect.
Secretary of the Senate
Clerk of the House of Representatives
Approved___________________________________________
____________________________________________________
Governor