Target foundation allowance; calculations; allocations; pupil membership factor, revenue adjustment factor, and index; reduced foundation allowance or per-pupil payment calculation; definitions.
MCL 388.1620.amended
proposed388.1620.amended. Target foundation allowance; calculations; allocations; pupil membership factor, revenue adjustment factor, and index; reduced foundation allowance or per-pupil payment calculation; definitions.
Sec. 20.
(1) For 2026-2027, the target foundation allowance is $10,300.00.
(2) The department shall calculate the amount of each district's foundation allowance as provided in this section, using a target foundation allowance in the amount specified in subsection (1).
(3) Except as otherwise provided in this section, the department shall calculate the amount of a district's foundation allowance as follows, using in all calculations the total amount of the district's foundation allowance as calculated before any proration:
(a) For a district that had a foundation allowance for the immediately preceding fiscal year that was equal to the target foundation allowance for the immediately preceding fiscal year, the district receives a foundation allowance in an amount equal to the target foundation allowance described in subsection (1) for the current fiscal year.
(b) For a district that had a foundation allowance for the immediately preceding fiscal year that was greater than the target foundation allowance for the immediately preceding fiscal year, the district's foundation allowance is an amount equal to the lesser of (the sum of the district's foundation allowance for the immediately preceding fiscal year plus any per pupil amount calculated under section 20m(2) in the immediately preceding fiscal year plus the increase in the target foundation allowance for the current fiscal year, as compared to the immediately preceding fiscal year) or (the product of the district's foundation allowance for the immediately preceding fiscal year times the percentage increase in the United States Consumer Price Index in the calendar year ending in the immediately preceding fiscal year as reported by the May revenue estimating conference conducted under section 367b of the management and budget act, 1984 PA 431, MCL 18.1367b).
(c) For a district that had a foundation allowance in the immediately preceding fiscal year that was less than the target foundation allowance in effect for that fiscal year, the district's foundation allowance is an amount equal to the lesser of (the sum of district's foundation allowance for the immediately preceding fiscal year plus any per pupil amount calculated under section 20m(2) in the immediately preceding fiscal year plus the increase in the target foundation allowance for the current fiscal year, as compared to the immediately preceding fiscal year) or (the product of the district's foundation allowance for the immediately preceding fiscal year times the percentage increase in the United States Consumer Price Index in the calendar year ending in the immediately preceding fiscal year as reported by the May revenue estimating conference conducted under section 367b of the management and budget act, 1984 PA 431, MCL 18.1367b).
(d) For a district that has a foundation allowance that is not a whole dollar amount, the department shall round the district's foundation allowance up to the nearest whole dollar.
(4) Except as otherwise provided in this subsection, the state portion of a district's foundation allowance is an amount equal to the district's foundation allowance or the target foundation allowance for the current fiscal year, whichever is less, minus the local portion of the district's foundation allowance. Except as otherwise provided in this subsection, for a district described in subsection (3)(b) and (c), the state portion of the district's foundation allowance is an amount equal to the target foundation allowance minus the district's foundation allowance supplemental payment per pupil calculated under section 20m and minus the local portion of the district's foundation allowance. For a district that has a millage reduction required under section 31 of article IX of the state constitution of 1963, the department shall calculate the state portion of the district's foundation allowance as if that reduction did not occur. For a receiving district, if school operating taxes continue to be levied on behalf of a dissolved district that has been attached in whole or in part to the receiving district to satisfy debt obligations of the dissolved district under section 12 of the revised school code, MCL 380.12, the taxable value per membership pupil of property in the receiving district used for the purposes of this subsection does not include the taxable value of property within the geographic area of the dissolved district. Before the fiscal year ending September 30, 2027, for a community district, if school operating taxes continue to be levied by a qualifying school district under section 12b of the revised school code, MCL 380.12b, with the same geographic area as the community district, the taxable value per membership pupil of property in the community district to be used for the purposes of this subsection does not include the taxable value of property within the geographic area of the community district. Beginning with the fiscal year ending September 30, 2027, it is the intent of the legislature that the previous sentence no longer applies and the taxable value per membership pupil of property in the community district used for the purposes of this subsection includes the taxable value of property within the geographic area of the community district on or after July 1, 2026 and thereafter.
(5) The allocation calculated under this section for a pupil is based on the foundation allowance of the pupil's district of residence. For a pupil enrolled under section 105 or 105c in a district other than the pupil's district of residence, the allocation calculated under this section is based on the lesser of the foundation allowance of the pupil's district of residence or the foundation allowance of the educating district. For a pupil in membership in a K-5, K-6, or K-8 district who is enrolled in another district in a grade not offered by the pupil's district of residence, the allocation calculated under this section is based on the foundation allowance of the educating district if the educating district's foundation allowance is greater than the foundation allowance of the pupil's district of residence. The calculation under this subsection must take into account a district's per-pupil allocation under section 20m.
(6) Except as otherwise provided in this subsection, for pupils in membership, other than special education pupils, in a public school academy, the allocation calculated under this section is an amount per membership pupil other than special education pupils in the public school academy equal to the target foundation allowance specified in subsection (1), or, for a public school academy that was issued a contract under section 552 of the revised school code, MCL 380.552, to operate as a school of excellence that is a cyber school, $10,300.00. Notwithstanding section 101, for a public school academy that begins operations after the pupil membership count day, the amount per membership pupil calculated under this subsection must be adjusted by multiplying that amount per membership pupil by the number of hours of pupil instruction provided by the public school academy after it begins operations, as determined by the department, divided by the minimum number of hours of pupil instruction required under section 101(3). The result of this calculation must not exceed the amount per membership pupil otherwise calculated under this subsection.
(7) For pupils in membership, other than special education pupils, in a community district, the allocation calculated under this section is an amount per membership pupil other than special education pupils in the community district equal to the foundation allowance of the qualifying school district, as described in section 12b of the revised school code, MCL 380.12b, that is located within the same geographic area as the community district.
(8) Subject to subsection (4), for a district that is formed or reconfigured after June 1, 2002 by consolidation of 2 or more districts or by annexation, the resulting district's foundation allowance under this section beginning after the effective date of the consolidation or annexation is the lesser of the sum of the average of the foundation allowances of each of the original or affected districts, calculated as provided in this section, weighted as to the percentage of pupils in total membership in the resulting district who reside in the geographic area of each of the original or affected districts plus $100.00 or the highest foundation allowance among the original or affected districts. This subsection does not apply to a receiving district unless there is a subsequent consolidation or annexation that affects the district. The calculation under this subsection must take into account a district's per-pupil allocation under section 20m.
(9) The department shall round each fraction used in making calculations under this section to the fourth decimal place and shall round the dollar amount of an increase in the target foundation allowance to the nearest whole dollar.
(10) State payments related to payment of the foundation allowance for a special education pupil are not calculated under this section but are instead calculated under section 51e.
(11) To assist the legislature in determining the target foundation allowance for the subsequent fiscal year, each revenue estimating conference conducted under section 367b of the management and budget act, 1984 PA 431, MCL 18.1367b, must calculate a pupil membership factor, a revenue adjustment factor, and an index as follows:
(a) The pupil membership factor is computed by dividing the estimated membership in the school year ending in the current fiscal year, excluding intermediate district membership, by the estimated membership for the school year ending in the subsequent fiscal year, excluding intermediate district membership. If a consensus membership factor is not determined at the revenue estimating conference, the principals of the revenue estimating conference shall report their estimates to the house and senate subcommittees responsible for school aid appropriations not later than 7 days after the conclusion of the revenue conference.
(b) The revenue adjustment factor is computed by dividing the sum of the estimated total state school aid fund revenue for the subsequent fiscal year plus the estimated total state school aid fund revenue for the current fiscal year, adjusted for any change in the rate or base of a tax the proceeds of which are deposited in that fund and excluding money transferred into that fund from the countercyclical budget and economic stabilization fund under the management and budget act, 1984 PA 431, MCL 18.1101 to 18.1594, by the sum of the estimated total school aid fund revenue for the current fiscal year plus the estimated total state school aid fund revenue for the immediately preceding fiscal year, adjusted for any change in the rate or base of a tax the proceeds of which are deposited in that fund. If a consensus revenue factor is not determined at the revenue estimating conference, the principals of the revenue estimating conference shall report their estimates to the house and senate subcommittees responsible for school aid appropriations not later than 7 days after the conclusion of the revenue conference.
(c) The index is calculated by multiplying the pupil membership factor by the revenue adjustment factor. If a consensus index is not determined at the revenue estimating conference, the principals of the revenue estimating conference shall report their estimates to the house and senate subcommittees responsible for state school aid appropriations not later than 7 days after the conclusion of the revenue conference.
(12) Payments to districts and public school academies are not made under this section. Rather, the calculations under this section are used to determine the amount of state payments under section 22b.
(13) If an amendment to section 2 of article VIII of the state constitution of 1963 allowing state aid to some or all nonpublic schools is approved by the voters of this state, each foundation allowance or per-pupil payment calculation under this section may be reduced.
(14) As used in this section:
(a) "Certified mills" means the lesser of 18 mills or the number of mills of school operating taxes levied by the district in 1993-94.
(b) "Current fiscal year" means the fiscal year for which a particular calculation is made.
(c) "Dissolved district" means a district that loses its organization, has its territory attached to 1 or more other districts, and is dissolved as provided under section 12 of the revised school code, MCL 380.12.
(d) "Immediately preceding fiscal year" means the fiscal year immediately preceding the current fiscal year.
(e) "Local portion of the district's foundation allowance" means an amount that is equal to the difference between (the sum of the product of the taxable value per membership pupil of all property in the district that is nonexempt property times the district's certified mills and, for a district with certified mills exceeding 12, the product of the taxable value per membership pupil of property in the district that is commercial personal property times the certified mills minus 12 mills) and (the quotient of the product of the captured assessed valuation under tax increment financing acts times the district's certified mills divided by the district's membership excluding special education pupils).
(f) "Membership" means the definition of that term under section 6 as in effect for the particular fiscal year for which a particular calculation is made.
(g) "Nonexempt property" means property that is not a principal residence, qualified agricultural property, qualified forest property, supportive housing property, industrial personal property, commercial personal property, or property occupied by a public school academy.
(h) "Principal residence", "qualified agricultural property", "qualified forest property", "supportive housing property", "industrial personal property", and "commercial personal property" mean those terms as defined in section 1211 of the revised school code, MCL 380.1211.
(i) "Receiving district" means a district to which all or part of the territory of a dissolved district is attached under section 12 of the revised school code, MCL 380.12.
(j) "School operating purposes" means the purposes included in the operation costs of the district as prescribed in sections 7 and 18 and purposes authorized under section 1211 of the revised school code, MCL 380.1211.
(k) "School operating taxes" means local ad valorem property taxes levied under section 1211 of the revised school code, MCL 380.1211, and retained for school operating purposes.
(l) "Tax increment financing acts" means parts 2, 3, 4, and 6 of the recodified tax increment financing act, 2018 PA 57, MCL 125.4201 to 125.4420 and 125.4602 to 125.4629, or the brownfield redevelopment financing act, 1996 PA 381, MCL 125.2651 to 125.2670.
(m) "Taxable value per membership pupil" means taxable value, as certified by the county treasurer and reported to the department, for the calendar year ending in the current state fiscal year divided by the district's membership excluding special education pupils for the school year ending in the current state fiscal year.
Add. 1993, Act 336, Eff. Mar. 15, 1994; Am. 1994, Act 172, Imd. Eff. June 17, 1994; Am. 1994, Act 283, Imd. Eff. July 12, 1994; Am. 1994, Act 360, Imd. Eff. Dec. 22, 1994; Am. 1995, Act 130, Eff. Oct. 1, 1995; Am. 1996, Act 180, Imd. Eff. Apr. 19, 1996; Am. 1996, Act 300, Eff. Oct. 1, 1996; Am. 1997, Act 24, Imd. Eff. June 16, 1997; Am. 1997, Act 93, Eff. Oct. 1, 1997; Am. 1997, Act 142, Imd. Eff. Nov. 19, 1997; Am. 1998, Act 339, Imd. Eff. Oct. 13, 1998; Am. 1998, Act 553, Imd. Eff. Jan. 27, 1999; Am. 1999, Act 119, Imd. Eff. July 20, 1999; Am. 2000, Act 297, Imd. Eff. July 26, 2000; Am. 2001, Act 121, Imd. Eff. Sept. 28, 2001; Am. 2002, Act 191, Imd. Eff. Apr. 26, 2002; Am. 2002, Act 521, Imd. Eff. July 25, 2002; Am. 2003, Act 141, Eff. Jan. 1, 2004; Am. 2003, Act 158, Imd. Eff. Aug. 11, 2003; Am. 2004, Act 351, Imd. Eff. Sept. 30, 2004; Am. 2005, Act 155, Eff. Oct. 1, 2005; Am. 2006, Act 120, Imd. Eff. Apr. 14, 2006; Am. 2006, Act 342, Eff. Oct. 1, 2006; Am. 2007, Act 137, Imd. Eff. Nov. 8, 2007; Am. 2008, Act 268, Eff. Oct. 1, 2008; Am. 2008, Act 561, Imd. Eff. Jan. 16, 2009; Am. 2009, Act 73, Imd. Eff. July 9, 2009; Am. 2009, Act 121, Imd. Eff. Oct. 19, 2009; Am. 2010, Act 110, Imd. Eff. July 8, 2010; Am. 2011, Act 62, Eff. Oct. 1, 2011; Am. 2012, Act 201, Eff. Oct. 1, 2012; Am. 2013, Act 60, Eff. Oct. 1, 2013; Am. 2013, Act 97, Eff. Oct. 1, 2013; Am. 2013, Act 130, Imd. Eff. Oct. 9, 2013; Am. 2014, Act 196, Eff. Oct. 1, 2014; Am. 2015, Act 85, Eff. Oct. 1, 2015; Am. 2016, Act 249, Eff. Oct. 1, 2016; Am. 2016, Act 313, Eff. Oct. 6, 2016; Am. 2017, Act 108, Eff. Oct. 1, 2017; Am. 2018, Act 265, Eff. Oct. 1, 2018; Am. 2019, Act 58, Eff. Oct. 1, 2019; Am. 2019, Act 162, Imd. Eff. Dec. 20, 2019; Am. 2020, Act 146, Imd. Eff. July 31, 2020; Am. 2020, Act 165, Eff. Oct. 1, 2020; Am. 2021, Act 48, Eff. Oct. 1, 2021; Am. 2022, Act 144, Imd. Eff. July 14, 2022; Am. 2023, Act 103, Imd. Eff. July 21, 2023; Am. 2023, Act 320, Eff. Feb. 13, 2024; Am. 2024, Act 120, Eff. Oct. 1, 2024; Am. 2025, Act 15, Imd. Eff. Oct. 7, 2025; Am. 2026, Act 25, Eff. Oct. 1, 2026
[Compiler] The words “1/3 of” in subsection (20)(a)(i)(Q), as amended by Act 283 of 1994, were vetoed by the governor on July 9, 1994.
[Compiler] The last sentence of subsection (9), and subsections (18) and (19), as amended by Act 360 of 1994, were vetoed by the governor on December 22, 1994.
[Compiler] Subsection (11), as amended by Act 130 of 1995, was vetoed by the governor on June 30, 1995.
[Compiler] Enacting section 3 of Act 521 of 2002 provides:
[Compiler] “Enacting section 3. This amendatory act does not take effect unless the tax on cigarettes under the tobacco products tax act, 1993 PA 327, MCL 205.421 to 205.436, is increased by 50 cents or more per pack of cigarettes (25 mills per cigarette) effective on or before September 30, 2002 and the revenue from not less than 20 cents per pack of cigarettes (10 mills per cigarette) of that increase is dedicated by law for deposit into the state school aid fund established by section 11 of article IX of the state constitution of 1963.”
[Compiler] For legislation increasing tax on cigarettes and dedicating a portion of increased revenue to state school aid fund, see 2002 PA 503, Imd. Eff. July 18, 2002.
[Compiler] Subsection (20), as amended by Act 158 of 2003, was vetoed by the governor on August 11, 2003. The text of subsection (20) set forth above in this section (MCL 388.1620) derives from Act 141 of 2003. In the veto message accompanying her veto of certain items in Enrolled House Bill 4401 (Act 158 of 2003), the governor stated, “I have vetoed amendatory language in Section 20(20) that stops the annual $15 million supplemental payment to Detroit Public Schools at the end of fiscal year 2003. Existing language clearly indicates that this supplemental funding is intended to continue as long as the reform board remains in place. I intend to honor that commitment.”
[Compiler] Enacting section 1 of Act 351 of 2004 provides:
[Compiler] “Enacting section 1. In accordance with section 30 of article IX of the state constitution of 1963, total state spending in this amendatory act from state sources for fiscal year 2004-2005 is estimated at $11,173,900,000.00 and state appropriations to be paid to local units of government for fiscal year 2004-2005 are estimated at $11,113,650,400.00.”
[Compiler] Enacting section 1 of 2005 PA 155 provides:
[Compiler] "Enacting section 1. In accordance with section 30 of article I of the state constitution of 1963, total state spending in this amendatory act and in House Bill No. 4831 of the 93rd Legislature from state sources for fiscal year 2005-2006 is estimated at $11,364,814,000.00 and state appropriations to be paid to local units of government for fiscal year 2005-2006 are estimated at $11,341,913,100.00."
[Compiler] Enacting section 1 of Act 342 of 2006 provides:
[Compiler] "Enacting section 1. (1) In accordance with section 30 of article I of the state constitution of 1963, total state spending in this amendatory act from state sources for fiscal year 2006-2007 is estimated at $11,682,508,200.00 and state appropriations to be paid to local units of government for fiscal year 2006-2007 are estimated at $11,536,597,200.00.
[Compiler] (2) In accordance with section 30 of article I of the state constitution of 1963, total state spending from state sources for fiscal year 2005-2006 in this amendatory act and 2005 PA 155 is estimated at $11,308,027,200.00 and state appropriations to be paid to local units of government for fiscal year 2004-2005 are estimated at $11,285,376,300.00."
[Compiler] Enacting section 1 of Act 137 of 2007 provides:
[Compiler] "Enacting section 1. In accordance with section 30 of article I of the state constitution of 1963, total state spending in this amendatory act from state sources for fiscal year 2007-2008 is estimated at $11,527,973,800.00 and state appropriations to be paid to local units of government for fiscal year 2007-2008 are estimated at $11,458,493,300.00."
[Compiler] Enacting section 1 of Act 268 of 2008 provides:
[Compiler] "Enacting section 1. In accordance with section 30 of article I of the state constitution of 1963, total state spending in this amendatory act from state sources for fiscal year 2008-2009 is estimated at $11,816,898,200.00 and state appropriations to be paid to local units of government for fiscal year 2008-2009 are estimated at $11,602,465,900.00."
[Compiler] Enacting section 1 of Act 73 of 2009 provides:
[Compiler] "Enacting section 1. In accordance with section 30 of article IX of the state constitution of 1963, total state spending in this amendatory act and in 2008 PA 268 from state sources for fiscal year 2008-2009 is estimated at $11,097,798,200.00 and state appropriations to be paid to local units of government for fiscal year 2008-2009 are estimated at $10,890,765,900.00."
[Compiler] Enacting section 1 of Act 121 of 2009 provides:
[Compiler] "Enacting section 1. In accordance with section 30 of article I of the state constitution of 1963, total state spending in this amendatory act from state sources for fiscal year 2009-2010 is estimated at $10,825,754,100.00 and state appropriations to be paid to local units of government for fiscal year 2009-2010 are estimated at $10,718,801,700.00."
[Compiler] Subsection (25), as amended by Act 110 of 2010, was vetoed by the governor on July 7, 2010.
[Compiler] Enacting section 1 of Act 130 of 2013 provides:
[Compiler] "Enacting section 1. This amendatory act takes effect October 1, 2013."
[Compiler] In subsection (15)(j), as amended by Act 58 of 2019, the following phrases "as calculated by adding the highest per-pupil allocation" and "plus the difference between twice the amount of the difference between the target foundation allowance for the current fiscal year and the target foundation allowance for the immediately preceding fiscal year and [(the amount of the difference between the target foundation allowance for the current fiscal year and the target foundation allowance for the immediately preceding fiscal year minus $40.00) times (the difference between the highest per-pupil allocation among all public school academies for the immediately preceding fiscal year and the minimum foundation allowance for the immediately preceding fiscal year) divided by the difference between the target foundation allowance for the current fiscal year and the minimum foundation allowance for the immediately preceding fiscal year.] For the purposes of this subdivision, for 2019-2020, the maximum public school academy allocation is $8,111.00." were vetoed by the governor on September 30, 2019.
[Prospective] ***** 388.1620.amended THIS AMENDED SECTION IS EFFECTIVE OCTOBER 1, 2026 *****
Source: Michigan Legislature (legislature.mi.gov)URL: https://legislature.mi.gov/Laws/MCL?objectName=mcl-388-1620-amendedFetched: 10/20/2026