School aid and education conference committees include expanded funding for early learning and high-poverty schools

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Pat Sorenson, Senior Policy Analyst
June 2017

Budget Brief JPG USE THIS ONE

Joint House/Senate conference committees have resolved differences between the House and Senate School Aid Fund and Department of Education budgets for 2018, and the budgets contain several much-needed expansions in funding for high-poverty schools, as well as child care services for working families with low wages.

K-12 EDUCATION

BB School Aid and Ed Conf Committees Include Expanded FundPer-Pupil Spending: Two of every $3 in the School Aid budget are used to support per-pupil payments, which are the primary source of funding for school operations. For 2018, the governor recommended an additional $128  million to raise per-pupil spending by between $50 and $100, with districts currently receiving the lowest payments per pupil receiving the largest increase. The goal is to further reduce the gap in state funding between the lowest-funded districts and the highest.

The governor also proposed higher per-pupil payments for high school students, reduced payments to cyber schools, and a cap on funding for instructional programs for nonpublic and home-schooled students (cutting total funding by $55 million).

  • The Senate increased per-pupil payments to between $88 and $176—using $100 million currently provided to districts to offset teacher retirement costs under the Michigan Public School Employees Retirement System (MPSERS). The Senate rejected the governor’s proposal for higher per-pupil payments for high school students, as well as the cuts in payments to cyber schools. The Senate cut programs for nonpublic/home-schooled pupils by only $2 million.
  • The House provided an across-the-board increase for all districts in the state of $100 per pupil—rejecting the use of the formula that provides higher payments for the districts that currently receive lower per-pupil foundation allowances. The House rejected the governor’s proposals to increase payments for high school students, as well as cuts for cyber schools and nonpublic/home-schooled student programs.
  • The conference committee: 1) increased per-pupil payments by $60 to $120, with the biggest increases going to districts with the lowest funding currently (total cost of the increase is $153 million); 2) rejected the governor’s proposal to provide higher per-pupil payments for high school students; 3) rejected the governor’s proposals to reduce payments to cyber schools; and 4) reduced the governor’s recommended cut of $55 million for programs for nonpublic and home-schooled students to $2 million.

The League supported increases in school funding that help raise the quality of education and mitigate the impact of inflation and fixed costs on school operating funds. In the last decade, the minimum K-12 per-pupil foundation allowance rose 5.7%—less than half the rise in inflation at 15.1%.1

Declining Student Enrollment: Since Proposal A, the reliance on a per-pupil foundation allowance for public school operations has meant that schools with rapidly declining enrollments can face at least short-term difficulties in adjusting to large funding losses. In recognition of the impact on local schools and students, the governor included $7 million for two years of supplementary funding for districts that have experienced large enrollment declines (more than 5% over two years).

  • Both the Senate and the House rejected the governor’s proposal for supplementary funding for schools with declining enrollments.
  • The conference committee rejected the governor’s proposal to provide funding for schools with rapidly declining enrollments.

The League supported funding to ameliorate the impact of declining enrollments on local schools and their students.

Funding for Students Academically at Risk: The At-Risk School Aid program is the state’s best vehicle for addressing the educational challenges children who are exposed to the stresses of poverty bring through the schoolhouse doors. The governor recognized the need to focus on high-poverty schools by recommending an additional $150 million in At-Risk funding for 2018 and by expanding eligibility. The governor also established a new set of goals and metrics for districts, including chronic absenteeism rates; English language proficiency in third grade; math proficiency in eighth grade; and the rate of enrollments and completions in career/technical education, advanced placement and dual enrollment programs.

Currently, the At-Risk program provides state funds to schools based on the number of children receiving free school meals (130% of poverty). Under the governor’s proposal, districts could receive funding for children up to 185% of poverty. In addition, the governor would provide funding to “out-of-formula” or “hold-harmless” districts that are currently not eligible. These are districts that have combined state and local per-pupil foundation allowances that are higher than the basic amount, even though they may have a high number of children living in poverty. The governor projects that with these changes an additional 131,000 children could be served.

  • The Senate increased At-Risk spending by $100 million and agreed with the governor on changes in student eligibility. The Senate altered the allocation formula as follows: 1) $5 million of the new funding would be earmarked for English language learners; and 2) districts that are currently eligible for At-Risk funding would be guaranteed at least as much per pupil as they are receiving in the current school year (applied to the broader base of economically disadvantaged students), with the remaining new funds (estimated to be approximately $41 million) awarded to all districts, including those currently not eligible.
  • The House increased At-Risk funding by $129 million and agreed with the governor on changes in student eligibility. The House also adopted the governor’s proposal to expand eligibility to “hold-harmless” and “out-of-formula” districts but capped the per-pupil At-Risk payment to those districts at 50%. The House added budget language indicating an intent to use a portion of 2019 At-Risk funds to reimburse school districts that provide transportation to pupils enrolled in schools of choice or charters.
  • The conference committee: 1) increased At-Risk funding by $120 million to a total of $499 million; 2) included the governor’s changes in student eligibility and funding formulas for currently-eligible districts; and 3) capped payments to newly-eligible “hold harmless” and “out-of-formula” districts at 30%. Under the conference agreement, currently-eligible districts will receive an estimated $777 per eligible pupil, while newly-eligible districts would receive $233. The conference committee did not adopt the governor’s new goals and metrics for the At-Risk program.

The League supported full funding of the At-Risk program, as well as expansion of eligibility to all children who are economically disadvantaged or at risk of educational failure.

Reading by Third Grade: Michigan law now allows for grade retention if children are not reading proficiently by third grade, making the need for early literacy programs even more critical. The governor proposed doubling funding for early literacy coaches at Intermediate School Districts (ISDs) from $3 million to $6 million. The governor also eliminated funding ($1 million) for the Michigan Education Corps. The largest component of the state reading initiative—funding for additional instructional time for children who are behind in reading—was retained at $17.5 million by the governor.

  • The Senate agreed with the governor and increased funding for ISD early literacy coaches by $3 million.
  • The House slightly reduced total funding for early literacy and allocated remaining funds ($25.4 million) through grants to districts, with an estimated $245 per first-grade pupil.
  • The conference committee agreed with the governor on the $3 million increase for early literacy coaches in ISDs, but increased funding for the Michigan Education Corps, from $1 million to $2.5 million. The conference committee consolidated all other early literacy programs and required that those funds be allocated to districts based on the number of first-grade students. Funding for professional development and diagnostic tools are both capped at 5%.

The League supports increased investments in early literacy, including programs that address learning in the earliest years of life such as early intervention through the Early On program, expanded home visitation programs, and a state-funded preschool option for 3-year-olds in high-risk schools and communities.

Adult Education: Despite a high level of need, state funding for adult education has dropped 70% since the 1997-2001 budget years. The governor recommended flat funding of $25 million for adult education programs in 2018.

  • The Senate agreed with the governor on flat funding for adult education and provided $2.5 million for career and technical education pilot projects in the state’s five prosperity regions.
  • The House agreed with the governor on flat funding for adult education.
  • The conference committee provided continuation funding for adult education programs of $25 million, and provided $2 million for the Senate-proposed expansion of career and technical education pilot programs.

The League supports an increase in funding for adult education of at least $10 million for $35 million total, which would help nearly 8,000 additional students and serve as an important tool for improving educational achievement and adult literacy—part of a two-generation approach to improving the state’s economy.

CHILD CARE AND EARLY EDUCATION

Child Care Subsidies: The number of Michigan parents with low wages who received assistance with their child care costs fell by over 70% between 2003 and 2016—in part because of the state’s stringent income eligibility standards and low child care payments. In addition to forcing parents to either stay out of the workforce or find care that isn’t suitable for their children, the state’s child care policies made Michigan one of only a handful of states that had to turn away federal child care funds because of a lack of state matching dollars. In recognition of the need for high-quality child care, the governor included an increase of $6.8 million in the current budget year (2017), as well as $27.2 million ($8.4 million in state funds) in the 2018 budget to increase rates paid to child care providers.

  • The Senate provided $23.8 million ($7.1 million in state funds) for increased child care provider rates, as well as $5.8 million to increase the income eligibility threshold from 125% to 130% of poverty. Rate increases would be based on the number of stars a provider has in the state’s quality rating system, ranging from a maximum increase of 50 cents per hour for providers with no stars to $1.50 per hour for child care centers with a five-star rating. Unlicensed providers (family, friends and neighbors) who care for infants or toddlers could receive an increase of 25 cents per hour.
  • The House agreed with the governor to include $27.2 million for rate increases for child care providers.
  • The conference committee included: 1) $19.4 million total ($11 million in federal Child Care and Development Block Grant funding and $8.4 million in state General Fund money) to increase child care reimbursement rates based on the Great Start to Quality rating system; 2) $5.5 million in federal funds to increase the child care eligibility level from 125% to 130% of poverty; and 3) $1 million for TEACH scholarships for child care providers trying to increase their quality ratings.

The League supported payment increases for child care providers as well as a boost in income eligibility levels, both of which are needed to ensure that parents can secure and keep their jobs while children are in safe and supportive settings that encourage optimal learning. In addition, the League supports efforts to bolster the supply of high-quality child care businesses, including the movement away from hourly billing to biweekly or monthly payments, which make it easier for providers to care for children from families with low wages.

Great Start Readiness Preschool Program: The governor recommended level funding for the Great Start Readiness Program ($243.6 million) which provides a high-quality preschool education for 4-year-olds from families with low incomes. Currently, the program is for children from families with incomes below 250% of poverty, but districts can expand it to children with incomes of up to 300% of poverty if they can demonstrate that all children with lower incomes who want to participate have had the opportunity to do so. For 2018, the governor restricted eligibility to children in families with incomes of 250% of poverty or less, and required that 100% of children meet that income eligibility level, rather than 90% as currently required. In addition, the governor changed the allocation formula to ISDs.

  • The Senate agreed with the governor on spending levels and on the new allocation formula, but retained the option of serving children in families with incomes of up to 300% of poverty.
  • The House adopted the governor’s recommendations for the Great Start Readiness Program funding and allocations.
  • The conference committee retained current funding and income eligibility levels for the Great Start Readiness Program, allowing children living in families with incomes of up to 300% to be enrolled—if all children at 250% of poverty and below have been served. Children from families with incomes above 250% of poverty would be subject to tuition on a sliding scale basis. Districts would still be required to contract with nonprofit and for-profit community-based providers for at least 30% of the children served.

FLINT WATER EMERGENCY

Given the long-term damage lead exposure can inflict on children, the need for ameliorative services and supports for Flint is ongoing. While there are investments in other state budgets, the governor recommended that School Aid funds for the Flint School District and the Genesee ISD be reduced by $1.4 million in 2018. Total funding in the School Aid budget would be cut from $10.1 million to $8.7 million, with remaining funds allocated to expand Great Start Readiness preschool program eligibility ($3 million), school nurses and social workers ($2.6 million), ISD support to Flint residents that attend districts other than Flint ($2.5 million), and nutrition programs ($605,000).

  • The House, Senate and conference committee agreed with the governor on the $1.4 million cut in School Aid funding for the Flint water crisis.

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1. K-12 Schools Minimum Foundation Allowance History, Senate Fiscal Agency (Oct. 1, 2016).