November 30, 2017, Introduced by Senator WARREN and referred to the Committee on Education.
A bill to amend 1979 PA 94, entitled
"The state school aid act of 1979,"
by amending section 18 (MCL 388.1618), as amended by 2017 PA 108.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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 benefit 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.
(j) If applicable, audited financial statements provided by an
educational management organization that has a management agreement
with the district under section 503c, 523c, 553c, or 1311h of the
revised school code, MCL 380.503c, 380.523c, 380.553c, and
380.1311h. The audited financial statements shall disclose the
specific financial expenditures of the money received by the
educational management organization under the management agreement.
(k) If applicable, a detailed accounting provided to the
district by the authorizing body of all fees, reimbursements, or
other charges collected or retained by, and all expenditures made
by, the district's authorizing body for the current fiscal year,
including an itemized list of use and purpose.
(l) If applicable, the information provided by an educational
management organization under section 503c, 523c, 553c, or 1311h of
the revised school code, MCL 380.503c, 380.523c, 380.553c, and
380.1311h.
(m) Copies of any letters or other notices received by the
district indicating noncompliance with a standard, guideline, or
rule of the state board, superintendent of public instruction,
department, or, if applicable, authorizing body.
(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.
(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 the district's or intermediate district's audited
financial statements and 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), (1) to (7) and subsection
(9), or if the department determines that the financial data
required under subsection (5) are not consistent with audited
financial statements, 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). (1) to (7) and
subsection (9). If the district or intermediate district does not
comply
with subsections (4), (5), (6), and (7) (1) to (7) and
subsection (9) 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.
(11) (12)
By November 1 of each year, if a
district or
intermediate district offers virtual 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 virtual learning by vendor type. The report shall include at
least all of the following information concerning the operation of
virtual learning for the immediately preceding school fiscal year:
(a) The name of the district operating the virtual learning
and of each district that enrolled students in the virtual
learning.
(b) The total number of students enrolled in the virtual
learning and the total number of membership pupils enrolled in the
virtual learning.
(c) For each pupil who is enrolled in a district other than
the district offering virtual learning, the name of that district.
(d) The district in which the pupil was enrolled before
enrolling in the district offering virtual 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, virtual instruction and instructional support, personnel,
hardware and software, payment to each virtual learning provider,
and other costs associated with operating virtual learning.
(h) The name of each virtual education provider contracted by
the district and the state in which each virtual education provider
is headquartered.
(12) (13)
By March 31 of each year, 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 virtual courses available under section 21f.
(13) (14)
As used in subsections (12) and
(13), (11) and (12),
"vendor type" means the following:
(a) Virtual courses provided by the Michigan Virtual
University.
(b) Virtual 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) Virtual courses provided by third party vendors not
affiliated with a Michigan public school.
(d) Virtual courses created and offered by a district or
intermediate district.
(14) (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.
(15) (16)
Beginning October 1, 2017, and not
less than once
every 3 months after that date, the department shall submit to the
senate and house subcommittees on school aid and to the senate and
house standing committees on education an itemized list of
allocations under this article to any association or consortium
consisting of associations. The report shall detail the recipient
or recipients, the amount allocated, and the purpose for which the
funds were distributed.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No. 674
of the 99th Legislature is enacted into law.