Concerns Over Bottom-Line Funding in Governor’s Proposed Budget

The Governor announced his 2015-2016 School Aid Budget proposal last Wednesday, including a $75 increase in the per-pupil foundation amount and numerous other changes in both categorical funding and programs. The proposal includes an additional $240 million for school district retirement costs to comply with the current retirement rate cap that is in statute.

While MASB sees some real positives in this budget, we are very concerned that some districts may actually see a decrease in total funding from last year.

Three major categoricals that schools watch closely are seeing significant changes. Section 31a (at-risk funding) is recommended to receive a $100 million increase in funding. This is one of the first increases in this categorical in nearly a decade.

The performance funding categorical that has been in the budget for the last four years has been completely eliminated and for those districts that received funding from this categorical at the high school and elementary level last year, this budget as proposed may result in less total funding.

Lastly, the best practice categorical is reduced to $30 million or $20 per pupil, but with significant changes to the qualifications. To qualify for best practices next year, schools will need to meet best practices in both financial and academic areas. In the financial area, schools must meet at least two of the following items:

  1. A dashboard of school information
  2. Maintain a fund balance greater than 5 percent
  3. Receive board training in certain areas if fund balance is 5 percent or below. The six areas are:
    1. Roles and responsibilities of a board member
    2. Open Meetings Act
    3. Conflicts of interest
    4. School finance and budgeting
    5. Contracts and negotiations
    6. The process of data-driven decisionmaking and policy development

In the academic area, schools must also meet at least two of the following best practices:

  1. Administer a kindergarten entrance exam that assesses both English language arts and mathematics.
  2. District administers reading diagnostic tools in grades K-3 and provides professional development for implementing a multitiered system of support to improve third grade reading.
  3. Assessment of a district’s college and career advising programs and a plan to address any deficiencies according to recommendations from the Michigan College Access Network.

A number of other categoricals are seeing changes that MASB will watch closely throughout the budget process. Those that impact the most districts are:

  • Section 11R—$75 million for distressed districts
  • Section 22i—$25 million for technology readiness grants
  • Section 35—$25 million for PreK-3rd grade reading readiness
  • Section 61B—$18 million for career and technical education middle college programs
  • Section 81—No increase for ISD funding

The Governor’s recommendation is likely to see many changes as it moves through the House and Senate. Clearly, the Legislature needs to take a close look at the categoricals and prioritize funding into the foundation grant.

Hearings will start in the House and Senate this week. It is expected that they will continue up until the spring break recess with the goal of having budget work done by the end of May. MASB will continue to update you as the bill moves through the process.