Bill Text: MI HB5007 | 2015-2016 | 98th Legislature | Introduced
Bill Title: School aid; other; effective date of audits and reviews conducted by department of education; modify. Amends secs. 15, 18 & 168 of 1979 PA 94 (MCL 388.1615 et seq.).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2015-10-22 - Printed Bill Filed 10/22/2015 [HB5007 Detail]
Download: Michigan-2015-HB5007-Introduced.html
HOUSE BILL No. 5007
October 21, 2015, Introduced by Rep. Callton and referred to the Committee on Appropriations.
A bill to amend 1979 PA 94, entitled
"The state school aid act of 1979,"
by amending sections 15, 18, and 168 (MCL 388.1615, 388.1618, and
388.1768), section 15 as amended by 2015 PA 85, section 18 as
amended by 2015 PA 114, and section 168 as amended by 2014 PA 196.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 15. (1) If a district or intermediate district fails to
receive its proper apportionment, the department, upon satisfactory
proof that the district or intermediate district was entitled
justly, shall apportion the deficiency in the next apportionment.
Subject to subsections (2) and (3), if a district or intermediate
district has received more than its proper apportionment, the
department, upon satisfactory proof, shall deduct the excess in the
next apportionment. Notwithstanding any other provision in this
article, state aid overpayments to a district, other than
overpayments in payments for special education or special education
transportation, may be recovered from any payment made under this
article other than a special education or special education
transportation payment, from the proceeds of a loan to the district
under the emergency municipal loan act, 1980 PA 243, MCL 141.931 to
141.942, or from the proceeds of millage levied or pledged under
section 1211 of the revised school code, MCL 380.1211. State aid
overpayments made in special education or special education
transportation payments may be recovered from subsequent special
education or special education transportation payments, from the
proceeds of a loan to the district under the emergency municipal
loan act, 1980 PA 243, MCL 141.931 to 141.942, or from the proceeds
of millage levied or pledged under section 1211 of the revised
school code, MCL 380.1211.
(2) If the result of an audit conducted by or for the
department affects the current fiscal year membership, affected
payments shall be adjusted in the current fiscal year. A deduction
due to an adjustment made as a result of an audit conducted by or
for the department, or as a result of information obtained by the
department from the district, an intermediate district, the
department of treasury, or the office of auditor general, shall be
deducted from the district's apportionments when the adjustment is
finalized. At the request of the district and upon the district
presenting evidence satisfactory to the department of the hardship,
the department may grant up to an additional 4 years for the
adjustment and may advance payments to the district otherwise
authorized under this article if the district would otherwise
experience a significant hardship in satisfying its financial
obligations. For a district that is a strict discipline academy
established under sections 1311b to 1311m of the revised school
code, MCL 380.1311b to 380.1311m, and that claimed a hardship in
2014-2015 because of an overpayment caused by a miscalculation of
its pupil membership for 2013-2014, the department shall consider
the amount of repayment made by the district as of the effective
date of the amendatory act that added this sentence to constitute
full repayment and the district is not required to continue making
repayment for the overpayment that occurred in 2013-2014.
(3) If, based on an audit by the department or the
department's designee or because of new or updated information
received by the department, the department determines that the
amount paid to a district or intermediate district under this
article for the current fiscal year or a prior fiscal year that
began on or after October 1, 2014 was incorrect, the department
shall make the appropriate deduction or payment in the district's
or intermediate district's allocation in the next apportionment
after the adjustment is finalized. The deduction or payment shall
be calculated according to the law in effect in the fiscal year in
which the incorrect amount was paid. If the district does not
receive an allocation for the fiscal year or if the allocation is
not sufficient to pay the amount of any deduction, the amount of
any deduction otherwise applicable shall be satisfied from the
proceeds of a loan to the district under the emergency municipal
loan act, 1980 PA 243, MCL 141.931 to 141.942, or from the proceeds
of millage levied or pledged under section 1211 of the revised
school code, MCL 380.1211, as determined by the department.
(4)
The For a fiscal year
beginning on or after October 1,
2014, the department may conduct audits, or may direct audits by
designee of the department, for the current fiscal year and the
immediately preceding 3 fiscal years that begin on or after October
1, 2014 of all records related to a program for which a district or
intermediate district has received funds under this article.
(5) Expenditures made by the department under this article
that are caused by the write-off of prior year accruals may be
funded by revenue from the write-off of prior year accruals.
(6) In addition to funds appropriated in section 11 for all
programs and services, there is appropriated for 2014-2015 and for
2015-2016 for obligations in excess of applicable appropriations an
amount equal to the collection of overpayments, but not to exceed
amounts available from overpayments.
Sec. 18. (1) Except as provided in another section of this
article, each district or other entity shall apply the money
received by the district or entity under this article to salaries
and other compensation of teachers and other employees, tuition,
transportation, lighting, heating, ventilation, water service, the
purchase of textbooks, other supplies, and any other school
operating expenditures defined in section 7. However, not more than
20% of the total amount received by a district under sections 22a
and 22b or received by an intermediate district under section 81
may be transferred by the board to either the capital projects fund
or to the debt retirement fund for debt service. The money shall
not be applied or taken for a purpose other than as provided in
this section. The department shall determine the reasonableness of
expenditures and may withhold from a recipient of funds under this
article the apportionment otherwise due upon a violation by the
recipient.
(2) A district or intermediate district shall adopt an annual
budget in a manner that complies with the uniform budgeting and
accounting act, 1968 PA 2, MCL 141.421 to 141.440a. Within 15 days
after a district board adopts its annual operating budget for the
following school fiscal year, or after a district board adopts a
subsequent revision to that budget, the district shall make all of
the following available through a link on its website homepage, or
may make the information available through a link on its
intermediate district's website homepage, in a form and manner
prescribed by the department:
(a) The annual operating budget and subsequent budget
revisions.
(b) Using data that have already been collected and submitted
to the department, a summary of district expenditures for the most
recent fiscal year for which they are available, expressed in the
following 2 pie charts:
(i) A chart of personnel expenditures, broken into the
following subcategories:
(A) Salaries and wages.
(B) Employee benefit costs, including, but not limited to,
medical, dental, vision, life, disability, and long-term care
benefits.
(C) Retirement benefit costs.
(D) All other personnel costs.
(ii) A chart of all district expenditures, broken into the
following subcategories:
(A) Instruction.
(B) Support services.
(C) Business and administration.
(D) Operations and maintenance.
(c) Links to all of the following:
(i) The current collective bargaining agreement for each
bargaining unit.
(ii) Each health care benefits plan, including, but not
limited to, medical, dental, vision, disability, long-term care, or
any other type of benefits that would constitute health care
services, offered to any bargaining unit or employee in the
district.
(iii) The audit report of the audit conducted under subsection
(4) for the most recent fiscal year for which it is available.
(iv) The bids required under section 5 of the public employees
health benefits act, 2007 PA 106, MCL 124.75.
(v) The district's written policy governing procurement of
supplies, materials, and equipment.
(vi) The district's written policy establishing specific
categories of reimbursable expenses, as described in section
1254(2) of the revised school code, MCL 380.1254.
(vii) Either the district's accounts payable check register
for the most recent school fiscal year or a statement of the total
amount of expenses incurred by board members or employees of the
district that were reimbursed by the district for the most recent
school fiscal year.
(d) The total salary and a description and cost of each fringe
benefit included in the compensation package for the superintendent
of the district and for each employee of the district whose salary
exceeds $100,000.00.
(e) The annual amount spent on dues paid to associations.
(f) The annual amount spent on lobbying or lobbying services.
As used in this subdivision, "lobbying" means that term as defined
in section 5 of 1978 PA 472, MCL 4.415.
(g) Any deficit elimination plan or enhanced deficit
elimination plan the district was required to submit under the
revised school code.
(h) Identification of all credit cards maintained by the
district as district credit cards, the identity of all individuals
authorized to use each of those credit cards, the credit limit on
each credit card, and the dollar limit, if any, for each
individual's authorized use of the credit card.
(i) Costs incurred for each instance of out-of-state travel by
the school administrator of the district that is fully or partially
paid for by the district and the details of each of those instances
of out-of-state travel, including at least identification of each
individual on the trip, destination, and purpose.
(3) For the information required under subsection (2)(a),
(2)(b)(i), and (2)(c), an intermediate district shall provide the
same information in the same manner as required for a district
under subsection (2).
(4) For the purposes of determining the reasonableness of
expenditures, whether a district or intermediate district has
received the proper amount of funds under this article, and whether
a violation of this article has occurred, all of the following
apply:
(a) The department shall require that each district and
intermediate district have an audit of the district's or
intermediate district's financial and pupil accounting records
conducted at least annually, and at such other times as determined
by the department, at the expense of the district or intermediate
district, as applicable. The audits must be performed by a
certified public accountant or by the intermediate district
superintendent, as may be required by the department, or in the
case of a district of the first class by a certified public
accountant, the intermediate superintendent, or the auditor general
of the city. A district or intermediate district shall retain these
records for the current fiscal year and from at least the 3
immediately preceding fiscal years that begin on or after October
1, 2014.
(b) If a district operates in a single building with fewer
than 700 full-time equated pupils, if the district has stable
membership, and if the error rate of the immediately preceding 2
pupil accounting field audits of the district is less than 2%, the
district may have a pupil accounting field audit conducted
biennially but must continue to have desk audits for each pupil
count. The auditor must document compliance with the audit cycle in
the pupil auditing manual. As used in this subdivision, "stable
membership" means that the district's membership for the current
fiscal year varies from the district's membership for the
immediately preceding fiscal year by less than 5%.
(c) A district's or intermediate district's annual financial
audit shall include an analysis of the financial and pupil
accounting data used as the basis for distribution of state school
aid.
(d) The pupil and financial accounting records and reports,
audits, and management letters are subject to requirements
established in the auditing and accounting manuals approved and
published by the department.
(e) All of the following shall be done not later than November
1 each year for reporting the prior fiscal year data:
(i) A district shall file the annual financial audit reports
with the intermediate district and the department.
(ii) The intermediate district shall file the annual financial
audit reports for the intermediate district with the department.
(iii) The intermediate district shall enter the pupil
membership audit reports for its constituent districts and for the
intermediate district, for the pupil membership count day and
supplemental count day, in the Michigan student data system.
(f) The annual financial audit reports and pupil accounting
procedures reports shall be available to the public in compliance
with the freedom of information act, 1976 PA 442, MCL 15.231 to
15.246.
(g) Not later than January 31 of each year, the department
shall notify the state budget director and the legislative
appropriations subcommittees responsible for review of the school
aid budget of districts and intermediate districts that have not
filed an annual financial audit and pupil accounting procedures
report required under this section for the school year ending in
the immediately preceding fiscal year.
(5) By November 1 each fiscal year, each district and
intermediate district shall submit to the center, in a manner
prescribed by the center, annual comprehensive financial data
consistent with accounting manuals and charts of accounts approved
and published by the department. For an intermediate district, the
report shall also contain the website address where the department
can access the report required under section 620 of the revised
school code, MCL 380.620. The department shall ensure that the
prescribed Michigan public school accounting manual chart of
accounts includes standard conventions to distinguish expenditures
by allowable fund function and object. The functions shall include
at minimum categories for instruction, pupil support, instructional
staff support, general administration, school administration,
business administration, transportation, facilities operation and
maintenance, facilities acquisition, and debt service; and shall
include object classifications of salary, benefits, including
categories for active employee health expenditures, purchased
services, supplies, capital outlay, and other. Districts shall
report the required level of detail consistent with the manual as
part of the comprehensive annual financial report.
(6) By September 30 of each year, each district and
intermediate district shall file with the department the special
education actual cost report, known as "SE-4096", on a form and in
the manner prescribed by the department.
(7) By October 7 of each year, each district and intermediate
district shall file with the center the transportation expenditure
report, known as "SE-4094", on a form and in the manner prescribed
by the center.
(8) The department shall review its pupil accounting and pupil
auditing manuals at least annually and shall periodically update
those manuals to reflect changes in this article.
(9) If a district that is a public school academy purchases
property using money received under this article, the public school
academy shall retain ownership of the property unless the public
school academy sells the property at fair market value.
(10) If a district or intermediate district does not comply
with subsections (4), (5), (6), and (7), the department shall
withhold all state school aid due to the district or intermediate
district under this article, beginning with the next payment due to
the district or intermediate district, until the district or
intermediate district complies with subsections (4), (5), (6), and
(7). If the district or intermediate district does not comply with
subsections (4), (5), (6), and (7) by the end of the fiscal year,
the district or intermediate district forfeits the amount withheld.
(11) If a district or intermediate district does not comply
with subsection (2), the department may withhold up to 10% of the
total state school aid due to the district or intermediate district
under this article, beginning with the next payment due to the
district or intermediate district, until the district or
intermediate district complies with subsection (2). If the district
or intermediate district does not comply with subsection (2) by the
end of the fiscal year, the district or intermediate district
forfeits the amount withheld.
(12) Not later than November 1, 2015, if a district or
intermediate district offers online learning under section 21f, the
district or intermediate district shall submit to the department a
report that details the per-pupil costs of operating the online
learning by vendor type. The report shall include at least all of
the following information concerning the operation of online
learning for the school fiscal year ending June 30, 2015:
(a) The name of the district operating the online learning and
of each district that enrolled students in the online learning.
(b) The total number of students enrolled in the online
learning and the total number of membership pupils enrolled in the
online learning.
(c) For each pupil who is enrolled in a district other than
the district offering online learning, the name of that district.
(d) The district in which the pupil was enrolled before
enrolling in the district offering online learning.
(e) The number of participating students who had previously
dropped out of school.
(f) The number of participating students who had previously
been expelled from school.
(g) The total cost to enroll a student in the program. This
cost shall be reported on a per-pupil, per-course, per-semester or
trimester basis by vendor type. The total shall include costs
broken down by cost for content development, content licensing,
training, online instruction and instructional support, personnel,
hardware and software, payment to each online learning provider,
and other costs associated with operating online learning.
(h) The name of each online education provider contracted by
the district and the state in which each online education provider
is headquartered.
(13) Not later than March 31, 2016, the department shall
submit to the house and senate appropriations subcommittees on
state school aid, the state budget director, and the house and
senate fiscal agencies a report summarizing the per-pupil costs by
vendor type of online courses available under section 21f.
(14) As used in subsections (12) and (13), "vendor type" means
the following:
(a) Online courses provided by the Michigan Virtual
University.
(b) Online courses provided by a school of excellence that is
a cyber school, as defined in section 551 of the revised school
code, MCL 380.551.
(c) Online courses provided by third party vendors not
affiliated with a Michigan public school.
(d) Online courses created and offered by a district or
intermediate district.
(15) An allocation to a district or another entity under this
article is contingent upon the district's or entity's compliance
with this section.
Sec. 168. In order to receive funds under this article, a
district, intermediate district, grant recipient, contractor, or
other entity that directly or indirectly receives funds under this
article shall allow access for the department or the department's
designee to audit all records related to a program for which it
receives funds under this article or has received funds under this
article for any of the 3 immediately preceding fiscal years that
begin on or after October 1, 2014. The district, intermediate
district, grant recipient, contractor, or other entity shall
reimburse the state for all disallowances found in any audit
conducted under this article.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
