Governor Presents School Aid Budget With Per-Pupil Increase

Jennifer Smith

By Jennifer Smith, MASB Director of Government Relations

DashBoard, Feb. 14, 2018

Last week, Gov. Rick Snyder released his 2018-2019 budget recommendations to the Legislature. We were pleased to see that he included a $120-240 per-pupil increase to the foundation allowance. However, we also have concerns with some of his proposals. Full details about the School Aid Fund budget and overall state budget are available on the budget office website.

Specific highlights of the Governor’s proposed School Aid Fund line items include:

  • $120-240 per-pupil increase to the foundation allowance though the 2x formula
  • It maintains the additional $50 per pupil for students in grades 9-12
  • At-risk was maintained at last year’s funding level, but changes were made in how the funds are used and the benchmarks for districts to meet
  • Shared-time agreements are funded at a total of $64.1 million and limits the number of pupils for whom a district can be reimbursed to 5% of the total pupil population
  • Creates a $25 per-pupil appropriation for pupils enrolled in CTE programs, with an additional $25 per pupil for those in “critical skills” programs
  • Reduces the per-pupil foundation for cyber schools by 25%
  • Establishes competitive grants for ISDs for Early On ($5 million)
  • Increases funding for assistance for districts in the partnership model by $2 million
  • Community colleges are fully funded with School Aid dollars bringing the total to $405 million; funding for universities increased by approximately $150 million to $385.6 million

While the Governor has once again proposed reducing the foundation grant for charter schools, we do not expect that to remain as the chairs of the appropriations subcommittees do not support it. The Governor’s proposal also strikes the appropriation for private schools (Sec. 152b) and the language specifying what can be included in a collective bargaining agreement (Sec. 164h). It adjusts the requirements for a waiver to start school before Labor Day to say that a district must hold a public meeting, but MDE does not have to be involved.

There are many good investments in this particular budget, especially the large increase in per-pupil funding, however we have concerns with the Governor’s overall proposal. During his presentation to the Legislature, he stated that he would like to change the disbursement of income tax revenue to the School Aid Fund. As you may remember, in December 2016, he proposed the same thing—shift revenues to the School Aid Fund from the gross revenue from the income tax to the net revenue. This would mean that all credits and refunds would be paid out of the total revenues, and then the approximately 23% dedicated to the SAF would be distributed. Based on the 2016 fiscal year, the shift from gross to net revenues would cost the SAF $430 million, or almost $300 per pupil.

Thanks to your effort and advocacy on this issue, we stopped this plan in 2016. But now we are hearing the same argument—it makes good accounting sense. We know this is not a simple accounting change; it is a fundamental change in how the School Aid Fund is funded. The current law is stable, and a move to net revenues would cause disruption and take money out of the classroom. Further, as income tax credits and refunds change year to year, it would become increasingly difficult to budget on this moving target.

We are disappointed to hear this is part of the Governor’s overall budget presentation. With the increase in higher education funding and this potential shift, the School Aid Fund is once again becoming the way to prop up our state’s General Fund. We will continue to advocate for the increased funding for our classrooms, but also to maintain the integrity of the SAF.

Hearings outlining the budget to the members of the House and Senate Appropriations Committees begin this week. The Legislature has once again established a goal of completing its budget by the end of May. As always, MASB will keep you updated as the budget process moves forward.

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