Distressed District, At-Risk, and Retirement Funding Among Items of Debate in the Upcoming State Budget Conferences

Written by: Rachel White

Primary Source: Green & Write

While Governor Snyder’s release of his Executive Budget Recommendations in early 2015 received significant attention, very little notice was paid to the release of the Senate and House of Representative’s budget proposals. Although the two houses in the legislative branch concurred with the Governor on many aspects of the proposed 2015-16 School Aid Fund appropriations, there are some major distinctions in appropriations in key areas such as distressed district funding, at-risk funding, early literacy initiatives, and retirement system and school loan fund payments, among others. These distinctions and an overview of what is in store for school aid budget deliberations are outlined below.

School Aid Fund Appropriations Items of Debate

Photo Courtesy of Dondu Small

Photo Courtesy of Dondu Small

In general, the state executive and legislative branches estimate total state spending on the School Aid Budget to increase somewhere between 2.1 and 2.6 percent. Where this money is and is not going varies considerably among the Governor, Senate, and House budget proposals; however, there is consensus around a few items.

Consensus Items

  • A 13 percent increase in appropriations for debt service payments on the school bond loan redemption fund (SBLRF) obligations (from $126 million to $143 million). The school bond loan redemption fund makes loans to school districts to assist with making debt service payment son state qualified bonds. This appropriation is for payments to the SBLRF on behalf of districts.
  • A 60 percent decrease in funding for best practices (from $75 million, or $50 per pupil, to $30 million, or $20 per pupil) and a change in the qualifying criteria for best practices, as outlined in a previous Green & Write blog.
  • Complete repeal of district performance grants that previously awarded districts for student academic performance.

Contentious Items

  • Distressed districts emergency grant fund. The Governor is proposing an 18 percent increase the amount of money deposited into a fund from which the State Treasurer is given the authority to determine grant amounts, after consultation with the State Superintendent, for fiscally distressed districts. However, the Senate proposed budget increases this fund by just one percent and the House proposed budget does not propose any appropriations for a fiscally distressed district fund.
  • At-risk funding. The Governor is proposing a 32 percent ($100 million) increase in at-risk funding. The Senate concurs with the Governor’s appropriation but adds language that at least fifty percent of the increase a district receives must be spend on third grade reading, in addition to existing spending on third grade reading. In contrast, the House does not increase at-risk funding.
  • Early literacy. While the Governor and Senate are significantly aligned in their appropriations in this area, the House proposed budget does not include any funding for any new early literacy initiatives.The Governor proposes approximately $18 million and the Senate approximately $28 million for targeted early literacy (grades pre-K through 3) initiatives such as:
    • Pilot parent education programs ($1 million).
    • Literacy coaches ($3 million).
    • Development of new certification tests to ensure newly certified teachers have the skills to deliver evidence-based literacy instruction ($500,000).
    • Professional development for educators related to current State literacy standards and data interpretation (approximately 2 million).
    • Administration of diagnostic tools to monitor the development of early literacy and reading skills in pupils in grades K-3 ($1.45 million).
    • Additional instructional time to support pupils in K-3 that have been identified as needing additional supports and interventions to read at grade level by the end of third grade (Governor proposes $10 million; Senate proposes $20 million).
    • Establishment of a best practices clearinghouse for districts to use to improve reading proficiency for pupils in K-3 (Governor proposes $500 million; Senate doesn’t include this but adds language to the Michigan Department of Education budget bill requiring the Department to establish a best practices clearinghouse).
  • Michigan Public School Employees Retirement System. The Governor and Senate propose to continue to appropriate $100 million towards providing districts with funding to make MPSERS payments. The House proposed budget, however, proposes to decrease this appropriation by 50 percent.

Michigan’s Budget Development Process

Next month, Michigan’s state government will begin the second Revenue Estimating Conference with the goal of providing an updated consensus forecast of anticipated revenues. Upon completion of the revised consensus revenue estimate, leaders in the House and Senate will meet with the Governor and the State Budget Director in an attempt to come to an agreement on budget issues. Subsequently, differences between the House and Senate appropriations bills are resolved during conference committee meeting. If both houses approve the conference committee reports, they are enrolled and printed and presented to the Governor.

Explaining the budget process is much simpler than carrying it out. A great deal of political bargaining will take place over the next couple of months around how much and for what schools will receive funding. At the same time, Michigan voters will be going to the ballot box on May 5th to vote on Proposal 1, which, among other things, is estimated to generate more than $300 million additional dollars that would go specifically into the School Aid Fund. It is anticipated that an agreement on the budget will not materialize until after the May 5th election. Depending on the results of the May 5th election, school aid budget discussions may look very different. Green & Write will continue to follow these developments, providing you with insight into the process and how the decisions made may impact students and schools across the state.

Contact Rachel White – whitera3@msu.edu

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Rachel White
Rachel is a doctoral student in Educational Policy. She is interested in how political processes impact the ability of school districts — especially those serving traditionally underserved and disadvantaged students — to ensure equitable outcomes for all students. Rachel’s current work focuses on the ways in which states have responded to federal education policy requirements through legislative, bureaucratic, and administrative actions, as well as how local districts understand, interpret, and implement state mandates. Rachel holds a BA in public policy from the University of Michigan Ford School of Public Policy and an MA in education policy and leadership from The Ohio State University.