388.1896. Excess funds; proration.
Sec. 296.
(1) If the maximum amount appropriated under this act from the state school aid fund for a fiscal year exceeds the amount necessary to fully fund allocations under this act from the state school aid fund, that excess amount must not be expended in that state fiscal year and does not lapse to the general fund, but instead is deposited into the school aid stabilization fund created in section 11a.
(2) If the total maximum amount appropriated under all articles of this act from the state school aid fund and the school aid stabilization fund exceeds the amount available for expenditure from the state school aid fund for that fiscal year, payments under sections 11j, 11m, 22a, 26a, 26b, 26c, 31d, 31f, 51a(2), 51a(11), 51c, 53a, 56, 147c, 147e(2)(a), and 152a must be made in full. In addition, for districts beginning operations after 1994-95 that qualify for payments under section 22b, payments under section 22b must be made so that the qualifying districts receive the lesser of an amount equal to the 1994-95 foundation allowance of the district in which the district beginning operations after 1994-95 is located or $5,500.00. The amount of the payment to be made under section 22b for these qualifying districts must be as calculated under section 22a, with the balance of the payment under section 22b being subject to the proration otherwise provided under this subsection and subsection (3). If proration is necessary, state payments under each of the other sections of article I from all state funding sources, and state appropriations to community colleges and public universities under articles II and III from the state school aid fund, must be prorated in the manner prescribed in subsection (3) as necessary to reflect the amount available for expenditure from the state school aid fund for the affected fiscal year. However, if the department of treasury determines that proration will be required under this subsection, or if the department of treasury determines that further proration is required under this subsection after an initial proration has already been made for a fiscal year, the department of treasury shall notify the state budget director, and the state budget director shall notify the legislature at least 30 calendar days or 6 legislative session days, whichever is more, before the department reduces any payments under this act because of the proration. During the 30-calendar-day or 6-legislative-session-day period after that notification by the state budget director, the department shall not reduce any payments under this act because of proration under this subsection. The legislature may prevent proration from occurring by, within the 30-calendar-day or 6-legislative-session-day period after that notification by the state budget director, enacting legislation appropriating additional funds from the general fund, countercyclical budget and economic stabilization fund, state school aid fund balance, or another source to fund the amount of the projected shortfall.
(3) If proration is necessary under subsection (2), the department shall calculate the proration in district and intermediate district payments under article I that is required under subsection (2), and the department of treasury shall calculate the proration in community college and public university payments under articles II and III that is required under subsection (2), as follows:
(a) The department and the department of treasury shall calculate the percentage of total state school aid fund money that is appropriated and allocated under this act for the affected fiscal year for each of the following:
(i) Districts.
(ii) Intermediate districts.
(iii) Entities receiving funding from the state school aid fund under article I other than districts or intermediate districts.
(iv) Community colleges and public universities that receive funding from the state school aid fund.
(b) Subject to subsection (4), the department shall recover a percentage of the proration amount required under subsection (2) that is equal to the percentage calculated under subdivision (a)(i) for districts by reducing payments to districts. This reduction must be made by calculating an equal dollar amount per pupil as necessary to recover this percentage of the proration amount and reducing each district's total state school aid from state sources, other than payments under sections 11j, 11m, 22a, 26a, 26b, 26c, 31d, 31f, 51a(2), 51a(11), 51c, 53a, 147c, 147e(2)(a), and 152a, by that amount.
(c) Subject to subsection (4), the department shall recover a percentage of the proration amount required under subsection (2) that is equal to the percentage calculated under subdivision (a)(ii) for intermediate districts by reducing payments to intermediate districts. This reduction must be made by reducing the payments to each intermediate district, other than payments under sections 26a, 26b, 26c, 51a(2), 51a(11), 53a, 56, 147c, 147e(2)(a), and 152a, on an equal percentage basis.
(d) Subject to subsection (4), the department shall recover a percentage of the proration amount required under subsection (2) that is equal to the percentage calculated under subdivision (a)(iii) for entities receiving funding from the state school aid fund under article I other than districts and intermediate districts by reducing payments to these entities. This reduction must be made by reducing the payments to each of these entities, other than payments under sections 11j, 11m, 26a, 26b, and 26c on an equal percentage basis.
(e) The department of treasury shall recover a percentage of the proration amount required under subsection (2) that is equal to the percentage calculated under subdivision (a)(iv) for community colleges and public universities that receive funding from the state school aid fund by reducing that portion of the payments under articles II and III to these community colleges and public universities, other than payments under sections 201(5) and 236(4), that is from the state school aid fund on an equal percentage basis.
(4) If a deposit from the school aid countercyclical budget and foundation stabilization fund is made into the state school aid fund for the purposes of eliminating or reducing proration, as provided in section 11z, the amount deposited into the state school aid fund must be used to reduce or eliminate the amount recovered from districts under subsection (3)(b), intermediate districts under subsection (3)(c), and entities receiving funding from the state school aid fund under article I other than districts and intermediate districts under subsection (3)(d). For the purposes of calculations under this subsection, the department shall do all of the following:
(a) Calculate the percentage of total state school aid fund money that is appropriated and allocated under this act for the affected fiscal year for each of the following:
(i) Districts.
(ii) Intermediate districts.
(iii) Entities receiving funding from the state school aid fund under article I other than districts or intermediate districts.
(b) Multiply the resulting percentages calculated under subdivision (a) by the amount deposited from the school aid countercyclical budget and foundation stabilization fund into the state school aid fund to determine how much proration has been reduced or eliminated for districts, intermediate districts, and entities receiving funding from the state school aid fund under article I other than districts or intermediate districts.
(c) Credit the resulting amounts calculated under subdivision (b) toward the total dollar amount necessary for recovery described in subsections (3)(b), (3)(c), and (3)(d), as applicable.
Add. 2011, Act 62, Eff. Oct. 1, 2011; Am. 2020, Act 165, Eff. Oct. 1, 2020; Am. 2023, Act 103, Eff. Oct. 1, 2023
