SENATE BILL NO. 512

A bill to amend 1979 PA 94, entitled

"The state school aid act of 1979,"

by amending sections 15 and 163 (MCL 388.1615 and 388.1763), section 15 as amended by 2022 PA 144 and section 163 as amended by 2021 PA 15.

the people of the state of michigan enact:

Sec. 15. (1) If a district or intermediate district fails to receive its proper apportionment, the department, upon satisfactory proof that the district or intermediate district was entitled justly, shall apportion the deficiency in the next apportionment. Subject to subsections (2) and (3), if a district or intermediate district has received more than its proper apportionment, the department, upon satisfactory proof, shall deduct the excess in the next apportionment. Notwithstanding any other provision in this article, state aid overpayments to a district, other than overpayments in payments for special education or special education transportation, may be recovered from any payment made under this article other than a special education or special education transportation payment, from the proceeds of a loan to the district under the emergency municipal loan act, 1980 PA 243, MCL 141.931 to 141.942, or from the proceeds of millage levied or pledged under section 1211 of the revised school code, MCL 380.1211. State aid overpayments made in special education or special education transportation payments may be recovered from subsequent special education or special education transportation payments, from the proceeds of a loan to the district under the emergency municipal loan act, 1980 PA 243, MCL 141.931 to 141.942, or from the proceeds of millage levied or pledged under section 1211 of the revised school code, MCL 380.1211.

(2) If the result of an audit conducted by or for the department affects the current fiscal year membership, the department shall adjust affected payments in the current fiscal year. A deduction due to an adjustment made as a result of an audit conducted by or for the department, or as a result of information obtained by the department from the district, an intermediate district, the department of treasury, or the office of auditor general, must be deducted from the district's apportionments when the adjustment is finalized. At the request of the district and upon the district presenting evidence satisfactory to the department of the hardship, the department may grant up to an additional 4 years for the adjustment and may advance payments to the district otherwise authorized under this article if the district would otherwise experience a significant hardship in satisfying its financial obligations. However, a district that presented satisfactory evidence of hardship and was undergoing an extended adjustment during 2018-2019 may continue to use the period of extended adjustment as originally granted by the department.

(3) If, based on an audit by the department or the department's designee or because of new or updated information received by the department, the department determines that the amount paid to a district or intermediate district under this article for the current fiscal year or a prior fiscal year was incorrect, the department shall make the appropriate deduction or payment in the district's or intermediate district's allocation in the next apportionment after the adjustment is finalized. The department shall calculate the deduction or payment according to the law in effect in the fiscal year in which the incorrect amount was paid. If the district does not receive an allocation for the fiscal year or if the allocation is not sufficient to pay the amount of any deduction, the amount of any deduction otherwise applicable must be satisfied from the proceeds of a loan to the district under the emergency municipal loan act, 1980 PA 243, MCL 141.931 to 141.942, or from the proceeds of millage levied or pledged under section 1211 of the revised school code, MCL 380.1211, as determined by the department.

(4) If the Before the effective date of the 2023 amendatory act that amended this section, if the department makes an adjustment under this section based in whole or in part on a membership audit finding that a district or intermediate district employed an educator in violation of certification requirements under the revised school code, and rules promulgated by the department, the department shall prorate the adjustment according to the period of noncompliance with the certification requirements. On or after the effective date of the amendatory act that added this sentence, the department shall not make an adjustment under this section based in whole or in part on a membership audit finding that a district or intermediate district employed an educator in violation of this act, certification requirements under the revised school code, or rules promulgated by the department. The department shall credit a district or intermediate district under section 163(6) for any adjustments made before the effective date of the amendatory act that added this sentence under this section based in whole or in part on a membership audit finding that the district or intermediate district employed an educator in violation of this act, certification requirements under the revised school code, or rules promulgated by the department from July 1, 2020 through June 30, 2023 or the effective date of the amendatory act that added this sentence, whichever occurs first.

(5) The department may conduct audits, or may direct audits by designee of the department, for the current fiscal year and the immediately preceding fiscal year of all records related to a program for which a district or intermediate district has received funds under this article.

(6) Expenditures made by the department under this article that are caused by the write-off of prior year accruals may be funded by revenue from the write-off of prior year accruals.

(7) In addition to funds appropriated in section 11 for all programs and services, there is appropriated for 2022-2023 for obligations in excess of applicable appropriations an amount equal to the collection of overpayments, but not to exceed amounts available from overpayments.

Sec. 163. (1) Except as otherwise provided in the revised school code, the board of a district or intermediate district shall not permit any of the following:

(a) An individual who is not appropriately placed under a valid certificate, valid substitute permit, authorization, or approval issued under rules promulgated by the department to teach in an elementary or secondary school.

(b) An individual who does not satisfy the requirements of section 1233 of the revised school code, MCL 380.1233, and rules promulgated by the department to provide school counselor services to pupils in an elementary or secondary school.

(c) An individual who does not satisfy the requirements of section 1246 of the revised school code, MCL 380.1246, or who is not working under a valid substitute permit issued under rules promulgated by the department, to be employed as a superintendent, principal, or assistant principal, or as an individual whose primary responsibility is to administer instructional programs in an elementary or secondary school or in a district or intermediate district.

(2) Except as otherwise provided in the revised school code, this subsection, or subsection (4) or (7), a district or intermediate district employing an individual in violation of this section before July 1, 2021 must have deducted an amount equal to the amount paid to the individual for the period of employment that is in violation of this section. Except as otherwise provided under subsection (4) or (7), a district or intermediate district employing an individual in violation of this section on or after July 1, 2021 must have deducted an amount equal to 50% of the amount paid to the individual for the period of employment that is in violation of this section. Except as otherwise provided under subsection (4) or (6), beginning July 1, 2021, if a district or intermediate district is notified by the department that it is employing employs an individual in violation of this section, and it continues to employ the individual in violation of this section 10 business days after receiving the notification, both of the following apply:all of the following apply:

(a) The district or intermediate district must have deducted an amount equal to 50% of the amount paid to the individual for the period of employment that is in violation of this section that occurs before the expiration of the 10-day period described in this subsection.

(b) The district or intermediate district must have deducted an amount equal to 100% of the amount paid to the individual for the period of employment that is in violation of this section that occurs after the 10-day period described in this subsection.

(a) The district or intermediate district shall discontinue its violation of this section not later than 10 school days after discovering that the individual is employed in violation of this section or not later than 10 school days after the department informs the district or intermediate district that the individual is employed in violation of this section, whichever occurs first.

(b) The district or intermediate district shall submit a corrective action plan to the department, not later than 60 days after discovering that the individual is employed in violation of this section or not later than 60 days after the department notifies the district or intermediate district that the individual is employed in violation of this section, whichever occurs first, outlining steps the district or intermediate district is going to take to ensure that individuals are not employed in violation of this section.

(c) The district or intermediate district must have deducted an amount equal to 100% of the amount paid to the individual for the period of employment that is in violation of this section if the superintendent of public instruction finds any of the following:

(i) The district or intermediate district submitted a corrective action plan to the department as described in subdivision (b) within the last 3 years and subsequently employed an individual in violation of this section.

(ii) The board or board of directors of the district or the intermediate district board knowingly employed an individual in violation of this section.

(iii) The district or intermediate district continued to employ an individual in violation of this section for more than 10 school days after discovering that the individual was employed in violation of this section or being told by the department that the individual was employed in violation of this section, whichever occurs first.

(3) For purposes of subsection (2), if a district or intermediate district on behalf of an individual or an individual successfully completes the credential application process through the department, including the submission of an appropriate application, required fees, and all required supporting documentation, the individual's employment with the district or intermediate district after this completion is not considered a period of employment that is in violation of this section.

(4) A Subject to subsection (6), a deduction under subsection (2) for employment in violation of this section that occurs on or after July 1, 2021, may be less than the amount required under that subsection if the superintendent of public instruction finds that the district or intermediate district was hindered in its ability to obtain a substitute credential to enable the district or intermediate district to employ the individual in compliance with this section due to because of unusual and extenuating circumstances resulting from conditions not within the control of school authorities, including, but not limited to, a natural disaster, death or serious illness of the individual or another employee, an emergency school closure, fraud or other intentional wrongdoing of the individual or another employee, or an emergency health condition as defined by city, county, or state health authorities.

(5) For employment of an individual in violation of this section that occurs on or after July 1, 2021, upon request by a district or intermediate district, the department shall credit the amount of an adjustment in payments under section 15 that is based on the employment of the individual that gave rise to the deduction under subsection (2) or (4) against the amount of the deduction under subsection (2) or (4). The amount of the credit under this subsection must not be in an amount that is greater than the deduction assessed under subsection (2) or (4).

(5) (6) If a school official is notified by the department that he or she the school official is employing an individual in violation of this section and knowingly continues to employ that individual, the school official is guilty of a misdemeanor punishable by a fine of $1,500.00 for each incidence. This penalty is in addition to all other financial penalties otherwise specified in this article.

(6) (7) There must be no deduction under subsection (2) or (4) or any adjustment in payments under section 15 that is based on the employment of the individual that gave rise to the deduction under subsection (2) or (4) for a period of employment in violation of this section that occurs between occurred after July 1, 2020 and before June 30, 2021.2023 or the effective date of the amendatory act that added subsection (2)(c), whichever occurs first. The department shall credit a district or intermediate district for any deductions under this section or adjustments under section 15 that occurred before the effective date of the amendatory act that added subsection (2)(c) and that are inconsistent with this subsection.