The House and Senate K-12 Appropriations Subcommittees both reported out their versions of the 2021-22 School Aid budget on Thursday. With these two bills, we now have budget proposals from all three major players in the budget process (the Governor released her proposal back in February). Each these budgets takes a different approach to allocating the same amount of funding with the result that some districts would do better under one proposal and others would do better under another. But none of them clearly stand out as being the superior proposal for every district in the state.

Senate Budget Highlights

  • A $125-$250 per pupil increase using the 2X formula including enough money to provide Muskegon Heights and Highland Park with the foundation allowances they would have received had they not converted to public school academies.
  • An increase in the per pupil payment for the Great Start Readiness Program (GSRP) to make it equal to the minimum foundation allowance.
  • A $20 million increase in School Mental Health (sec 31n) funding. 
  • A new deadline of March 31 for MDE to make any changes to the Pupil Accounting Manual in order for them to be in effect for the next school year.
  • Lots of categoricals (i.e. carve outs for specific vendors or programs)...about 30 different line items in total. Roughly two thirds of these are are holdovers from previous budgets (e.g. Algebra Nation, Fitness Foundation, Imagine Learning). The remaining third are new in this budget (e.g. CTE programming at COOR ISD, TRAILS, Kids Kicking Cancer).

Bottom line is that there really isn't much in the Senate budget that affects most districts beyond a foundation increase. The challenge with this approach is that the January revenue conference showed that most of the money available in the School Aid Fund was going to be one-time funding, not ongoing. So will the state be able to afford a large foundation increase if the May Consensus Revenue Estimating Conference doesn't show an increase in ongoing revenue.

House Budget Highlights

  • A $50-$100 per pupil increase in the foundation allowance using the 2x formula.
  • $172.5 million for an additional one-time flat per pupil payment to all districts that we estimate at $120 per pupil.
  • $152 million for remediation services for the 2021-22 school year. Basically, the House is proposing to continue funding the same summer school, credit recovery, and before- and after-school program grants that the state put in place for this summer for another school year.
  • $50 million for rural transportation reimbursement payment using a formula that is based on the number of students per square mile in your district.
  • $25 million for year round school incentive grants for districts that agree to provide a balanced calendar schedule for at least five years.
  • Continued funding of $11.5 million or about $12.50 per pupil for districts to purchase benchmark assessments for pupils in grade K-8.
  • A massive increase in funding flowing to the MPSERS system that will, ironically, end up costing districts more money. Without getting into the details, the bottom line is that the House is proposing a series of MPSERS changes that won't affect employee benefits, but will result in higher MPSERS rates for districts now in exchange for long-term saving for the state.
  • Where the Senate invested in lots of vendor carve outs, the House opted for a number of special projects. In addition to the items listed above, the House proposed: a supplemental special education payment for ISDs that have a special education millage ($20 million), competitive school safety grants ($10 million), stipends and a conference for a new statewide Teacher Network ($5.5 million), and grants for innovative community libraries ($1 million) among others.

High foundation districts may do better under the House proposal since it includes a large flat per pupil payment to all districts. Because that payment is presumably one-time, it avoids the problems that the Senate budget might run into with giving a larger foundation increase. The focus on larger, targeted line items rather than per pupil increases means the House budget creates a different set of winners and losers than the Senate version.

The Governor's Budget and Next Steps

The Senate and House budgets not only diverge from one another, but also from the Governor's budget. See MASSP's earlier article on the Governor's budget for details on that, but consider the following two key differences:

  • The Governor's proposed foundation increase was basically half way between where the Senate and House went.
  • The Governor proposed $200 in money to offset declining enrollment. This was basically her alternative proposing one-time per pupil funding (like the House) or taking her chances giving a foundation increase with one-time money (like the Senate).

In a traditional year, we would now have pretty good idea of where the budget would go moving forward and work with the House, Senate, and Governor's office to develop a compromise proposal over the next 2-3 months. But in a years with billions of dollars of federal funding flowing to the state and a near total breakdown in communications between the Legislature and the Governor's office over pandemic response, this is not a normal year.

This is another step forward and an important one, but stay tuned to see how things develop from here.