Conference Committee Approves FY 14 School Aid

 Full report in PDF

On Thursday, May 23, the joint House/Senate Conference Committee for K-12 School Aid voted to approve a budget for Fiscal Year 2014, and is expected to reconvene on Tuesday, May 28, to sign the final conference report. The Conference Committee budget included $140 million in additional funding based on more favorable revenue estimates adopted by legislators  following the May 15 Revenue Estimating Conference.

The new revenue consensus by state fiscal experts is that Michigan will have an additional $702 million in combined revenues above earlier estimates for fiscal years 2013 and 2014—including a total of $579 million in state General Funds and $123 million in the School Aid Fund. While encouraging, these increases follow years of steep revenue declines and related budget cuts, including cuts in per-pupil allocations for public schools, and reductions in assistance for low-income children and families.

Earlier this week, Gov. Snyder and Republican leaders in the Legislature agreed to split those unexpected funds between transportation and road improvements ($350 million), K-12 education ($140 million), and the Budget Stabilization or “Rainy Day” Fund ($75 million).

Included in the School Aid Conference Committee agreement is $65 million for an expansion of the Great Start Readiness preschool program, an increase in the per-pupil allowance received by public schools and academies, a one-time equity payment for districts with foundation allowances below $7,076, and additional funding for school districts that can meet certain performance requirements in reading and math.

*FY 2014 budget includes $156 million for the MPSERS retirement reserve fund. Sources: School Aid Background Briefing, House Fiscal Agency, January 2013 and School Aid Section-by-Section Highlights, Fiscal Years 2012-14.

 

PER-PUPIL FOUNDATION ALLOWANCE AND SPECIAL GRANTS

Per-pupil foundation allowance:

  • Governor: The governor’s budget did not increase the per-pupil foundation allowance over 2012-2013 levels. The basic foundation allowance is currently $8,019, while the minimum foundation allowance is $6,966.
  • Conference Committee: The Conference Committee increased the maximum (basic) foundation allowance by $30 to $8,049, and the minimum foundation by $60 to $7,026. The committee also appropriated $6 million to districts to ensure that all districts receive a minimum increase of $5 per pupil.

Equity payments:

  • Governor: The governor recommended a total of $24 million for equity payments to further close the foundation funding gap between districts by raising the per-pupil payment for the lowest-funded districts receiving the minimum grant from $6,966 to $7,000 per-pupil—an increase of $34 per pupil. Because the governor did not recommend an across-the-board increase in per-pupil allocations, districts that were not eligible for equity grants were facing possible cuts in their per-pupil allocations because of the governor’s proposed changes in payments contingent on best practices (see below).
  • Conference Committee: The Conference Committee approved $36 million for equity payments to districts with foundation allowances of less than $7,076. The payment would be the lesser of $50 per pupil or the difference between the districts Fiscal Year 2014 foundation allowance and $7,076.

Best practices grants:

  • Governor: The governor reduced funding for “best practices” grants from $80 million in the current year to $25 million, a nearly 70% decrease, with the award amount falling from $52 per pupil to $16. Grants are available for school districts that meet seven of eight best practices defined by the Legislature, including participation in schools of choice, student academic growth, online learning opportunities, provision of dual enrollment and other opportunities for postsecondary coursework, employee healthcare benefit practices,  competitive bids for non-instructional services, the availability of a dashboard for parents to help evaluate performance, and the inclusion of physical and health education in the curriculum.
  • Conference Committee: The Conference Committee retained best practices grants at the current year funding level of $80 million, with districts eligible for $52 per pupil if they meet seven out of eight best practices.

District performance funding:

  • Governor: The governor included continuation funding of $30 million for districts meeting specified performance standards in reading and math. Districts can receive a total of $100 per pupil in additional funding, with $30 for student academic growth in math for grades 3-8, $30 for growth in reading in grades 3-8, and $40 for growth in all high school tested subjects.
  • Conference Committee: The Conference Committee increased district performance funding by $16.4 million, for total funding of $46.4 million, to reflect the actual costs of fully funding all eligible districts.

Competitive “student-centric” grants:

  • Governor: The governor included $8 million in new, one-time funding for competitive grants to districts that work to align instruction with individual student learning styles and paces, allow for school site-based autonomy, and advance students based on their mastery of the material. These funds are related to the new Education Achievement Authority, which is currently operating in 15 Detroit schools, and is being debated by the Legislature for expansion to the lowest performing 5% of all Michigan schools.
  • Conference Committee: The Conference Committee agreed with the governor’s recommendation.

AT-RISK PROGRAMS

  • Governor: The governor included continuation funding of $309 million for students at risk of academic failure. These dollars can be used flexibly by local school districts for a range of services, including tutoring, mentoring, reading programs, class size reductions, credit recovery programs, alternative and adult education, K-3 early interventions and early childhood programs, and medical and counseling services.

The governor also included continuation funding for Child and Adolescent Health Centers ($3.6 million), and hearing and vision screenings ($5.2 million).

  • Conference Committee: The Conference Committee adopted the governor’s budget recommendations and provided continuation funding for at-risk programs, as well as Child and Adolescent Health Centers and hearing and vision screenings.

EARLY CHILDHOOD PROGRAMS

Great Start Readiness Program:

  • Governor: The governor increased funding for the Great Start Readiness preschool program (GSRP) by $65 million, from $109.3 million in the current year to $174.3 million in Fiscal Year 2014. This increase would open up approximately 16,000 new half-day slots for four-year-olds living in families with incomes below 300% of poverty. In addition, the governor made the following changes to GSRP:
    • Increased the payment for a half-day preschool slot from $3,400 to $3,625.
    • Eliminated the current competitive GSRP program that provides funds to private sector providers, and instead required Intermediate School Districts (ISDs) to ensure that at least 20% of their slots are contracted to public or non-profit community-based organizations, as well as for-profit businesses.
    • Required ISDs to ensure that at least 90% of the children they serve are from families with incomes of 300% of poverty or less (up from 75%).
    • Requires GSRP providers to participate in the state’s quality improvement program—Great Start to Quality—with a quality rating of at least three out of five stars.
    • Requires GSRP providers to use a sliding fee tuition scale for children who do not meet the income eligibility requirements.
  • Conference Committee: The Conference Committee also expanded the GSRP by $65 million in Fiscal Year 2014, but reserved $25 million of the increase in a newly created GSRP Reserve fund that could only be tapped through legislative action if there is sufficient need for the preschool slots. The Conference Committee also:
    • Accepted the governor’s recommendation to raise the payment for a half-day slot to $3,625.
    • Agreed with the governor to eliminate the current competitive GSRP program that provides funds to private sector providers, and instead required ISDs to establish a local process to contract out at least 30% of their slots to public or non-profit community-based organizations, as well as for-profit businesses. The Conference Committee adopted House language ensuring that ISDs that can demonstrate that they are unable to contract out at least 30% of their slots to private sector providers are able to keep their full GSRP allocation.
    • Lowered the income eligibility cap for the GSRP program. ISDs would be required to ensure that at least 90% of children served are from families with incomes below 250% of poverty. In addition, Senate language is adopted that requires ISDs to rank children based on income from the lowest to the highest quintiles, and enroll all eligible children in the lowest quintile first before moving to the next quintile until slots are filled.
    • Agreed with the governor’s recommendation that all providers have quality ratings of at least three out of five stars through Great Start to Quality. The Conference Committee also adopted Senate language requiring that grantees that enroll children in blended programs of both GSRP and Head Start meet both GSRP and Head Start regulations and policies, with adherence to the highest standard in either program.
    • Agreed with the governor and requires GSRP providers to use a sliding fee tuition scale for children who do not meet the income eligibility requirements, lowering that income eligibility scale from 300% to 250% of poverty.

Early childhood block grant:

  • Governor: The governor recommends continuation funding of $10.9 million for the early childhood block grant to ISDs for parent education and support, allocating to each ISD 100% of its current allocation. Block grant funds are used in part to convene local Great Start Collaboratives and Parent Coalitions. Budget language requires the collaboratives and parent coalitions to convene work groups to serve as school readiness advisory committees to ensure local supports for children birth to age 8.
  • Conference Committee: The Conference Committee also provided continuation funding for the early childhood block grant, but included language requiring the Office of Great Start to determine a new distribution formula for the funds to ensure more equitable funding statewide.

BILINGUAL EDUCATION

  • Governor: The Governor included no new funding for bilingual education.
  • Conference Committee: The Conference Committee included $1.2 million for districts and ISDs for instructional programs for pupils with limited English-speaking ability. ISDs or school districts that allow students who do not legally resident in the U.S. to participate are not eligible for funding.

ADULT EDUCATION

  • Governor: The governor maintained funding for adult education at $22 million. State funding for adult education fell from $80 million in 2001 to $22 million in the current fiscal year. At the same time, deep cuts were made in federal funding, making adult education less accessible for many.
  • Conference Committee: The Conference Committee agreed with the governor’s recommendation for continuation funding at $22 million, and added budget language requiring a study of the impact of allocating adult education funds on a competitive basis beginning in Fiscal Year 2015.