Mich. Comp. Laws § 388.1622b — MI Code / Chapter 388 / Act Act-94-of-1979 / Section 388.1622b
Allocation from community district education trust fund; discretionary nonmandated payments; duties of district; purchase and support of business function software; payments for litigation costs; claim of inadequate funding or unfunded constitutional requirement; escrowed funds as work project; purpose; final determination; expedited review of claim by local claims review board; removal to court of appeals; violation of state constitution; lawsuit challenging payments relating to costs reimbursed by federal title XIX Medicaid funds; definitions.
Status: in_force

Sec. 22b.

(1) Except as otherwise provided in this section, for discretionary nonmandated payments to districts under this section, there is allocated for 2024-2025 an amount not to exceed $6,220,000,000.00 from the state school aid fund and general fund appropriations in section 11 and an amount not to exceed $41,000,000.00 from the community district education trust fund appropriation in section 11, and there is allocated for 2025-2026 an amount not to exceed $6,696,500,000.00 from the state school aid fund and general fund appropriations in section 11. In addition, there is allocated for 2025-2026 only an amount not to exceed $124,000,000.00 from the state school aid fund appropriation in section 11. For 2024-2025, the amount necessary, estimated at $77,700,000.00, must be deposited from the general fund into the state school aid fund to reimburse the state school aid fund for community district education trust fund costs in excess of $41,000,000.00, as required under section 12 of the Michigan trust fund act, 2000 PA 489, MCL 12.262. For 2024-2025 only, if the amount allocated under this subsection from the community district education trust fund appropriation under section 11 is insufficient to pay for an increase under this section, any amount exceeding that allocation may be paid from other allocations under this subsection. Except for money allocated under this section from the community district education trust fund appropriation in section 11, funds allocated under this section that are not expended in the fiscal year for which they were allocated, as determined by the department, may be used to supplement the allocations under sections 22a and 51c to fully fund those allocations for the same fiscal year.

(2) Subject to subsection (3) and section 296, the allocation to a district under this section is an amount equal to the sum of the amounts calculated under sections 20, 20m, 51a(2), 51a(3), 51a(11), and 51e, minus the sum of the allocations to the district under sections 22a and 51c. For a community district, the allocation as otherwise calculated under this section is increased by an amount equal to the amount of local school operating tax revenue that would otherwise be due to the community district if not for the operation of section 386 of the revised school code, MCL 380.386, to offset the absence of local school operating revenue in a community district in the funding of the state portion of the foundation allowance under section 20(4), and, for 2024-2025 only, this increase must be paid from the community district education trust fund allocation in subsection (1).

(3) To receive an allocation under subsection (1), each district must do all of the following:

(a) Comply with section 1280b of the revised school code, MCL 380.1280b.

(b) Comply with sections 1278a and 1278b of the revised school code, MCL 380.1278a and 380.1278b.

(c) Furnish data and other information required by state and federal law to the center and the department in the form and manner specified by the center or the department, as applicable.

(d) Comply with section 1230g of the revised school code, MCL 380.1230g.

(e) Comply with section 21f.

(f) For a district that has entered into a partnership district agreement with the department, comply with section 22p.

(4) Districts are encouraged to use funds allocated under this section for the purchase and support of payroll, human resources, and other business function software that is compatible with that of the intermediate district in which the district is located and with other districts located within that intermediate district.

(5) From the allocation in subsection (1), the department shall pay up to $1,000,000.00 in litigation costs incurred by this state related to commercial or industrial property tax appeals, including, but not limited to, appeals of classification, that impact revenues dedicated to the state school aid fund.

(6) From the allocation in subsection (1), the department shall pay up to $1,000,000.00 in litigation costs incurred by this state associated with lawsuits filed by 1 or more districts or intermediate districts against this state. If the allocation under this section is insufficient to fully fund all payments required under this section, the payments under this subsection must be made in full before any proration of remaining payments under this section.

(7) It is the intent of the legislature that all constitutional obligations of this state have been fully funded under sections 22a, 31d, 51a, 51c, 51e, and 152a. If a claim is made by an entity receiving funds under this article that challenges the legislative determination of the adequacy of this funding or alleges that there exists an unfunded constitutional requirement, the state budget director may escrow or allocate from the discretionary funds for nonmandated payments under this section the amount as may be necessary to satisfy the claim before making any payments to districts under subsection (2). If funds are escrowed, the escrowed funds are a work project appropriation and the funds are carried forward into the following fiscal year. The purpose of the work project is to provide for any payments that may be awarded to districts as a result of litigation. The work project is completed upon resolution of the litigation.

(8) If the local claims review board or a court of competent jurisdiction makes a final determination that this state is in violation of section 29 of article IX of the state constitution of 1963 regarding state payments to districts, the state budget director shall use work project funds under subsection (7) or allocate from the discretionary funds for nonmandated payments under this section the amount as may be necessary to satisfy the amount owed to districts before making any payments to districts under subsection (2).

(9) If a claim is made in court that challenges the legislative determination of the adequacy of funding for this state's constitutional obligations or alleges that there exists an unfunded constitutional requirement, any interested party may seek an expedited review of the claim by the local claims review board. If the claim exceeds $10,000,000.00, this state may remove the action to the court of appeals, and the court of appeals has and shall exercise jurisdiction over the claim.

(10) If payments resulting from a final determination by the local claims review board or a court of competent jurisdiction that there has been a violation of section 29 of article IX of the state constitution of 1963 exceed the amount allocated for discretionary nonmandated payments under this section, the legislature shall provide for adequate funding for this state's constitutional obligations at its next legislative session.

(11) If a lawsuit challenging payments made to districts related to costs reimbursed by federal title XIX Medicaid funds is filed against this state, then, for the purpose of addressing potential liability under such a lawsuit, the state budget director may place funds allocated under this section in escrow or allocate money from the funds otherwise allocated under this section, up to a maximum of 50% of the amount allocated in subsection (1). If funds are placed in escrow under this subsection, those funds are a work project appropriation and the funds are carried forward into the following fiscal year. The purpose of the work project is to provide for any payments that may be awarded to districts as a result of the litigation. The work project is completed upon resolution of the litigation. In addition, this state reserves the right to terminate future federal title XIX Medicaid reimbursement payments to districts if the amount or allocation of reimbursed funds is challenged in the lawsuit. As used in this subsection, "title XIX" means title XIX of the social security act, 42 USC 1396 to 1396w-6.

(12) As used in this section:

(a) "Dissolved district" means that term as defined in section 20.

(b) "Local school operating revenue" means school operating taxes levied under section 1211 of the revised school code, MCL 380.1211. For a receiving district, if school operating taxes are 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, local school operating revenue does not include school operating taxes levied within the geographic area of the dissolved district.

(c) "Receiving district" and "school operating taxes" mean those terms as defined in section 20.

History: Add. 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 158, Eff. Oct. 1, 2003; Am. 2004, Act 351, Eff. Oct. 1, 2004; Am. 2005, Act 98, Imd. Eff. July 22, 2005; Am. 2005, Act 155, Eff. Oct. 1, 2005; Am. 2006, Act 342, Imd. Eff. Aug. 15, 2006; Am. 2007, Act 6, Imd. Eff. Apr. 30, 2007; Am. 2007, Act 137, Imd. Eff. Nov. 8, 2007; Am. 2008, Act 112, Imd. Eff. Apr. 29, 2008; Am. 2008, Act 268, Eff. Oct. 1, 2008; 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, Imd. Eff. June 21, 2011; Am. 2011, Act 299, Imd. Eff. Dec. 22, 2011; Am. 2012, Act 29, Imd. Eff. Feb. 24, 2012; Am. 2012, Act 201, Eff. Oct. 1, 2012; Am. 2013, Act 60, Imd. Eff. June 13, 2013; Am. 2014, Act 116, Imd. Eff. Apr. 11, 2014; Am. 2014, Act 196, Eff. Oct. 1, 2014; Am. 2015, Act 5, Imd. Eff. Mar. 10, 2015; Am. 2015, Act 85, Imd. Eff. June 17, 2015; Am. 2016, Act 249, Imd. Eff. June 27, 2016; Am. 2017, Act 108, Imd. Eff. July 14, 2017; Am. 2018, Act 265, Imd. Eff. June 28, 2018; Am. 2019, Act 58, Imd. Eff. Sept. 30, 2019; Am. 2019, Act 162, Imd. Eff. Dec. 20, 2019; Am. 2020, Act 146, Imd. Eff. July 31, 2020; Am. 2020, Act 165, Imd. Eff. Sept. 30, 2020; Am. 2021, Act 48, Imd. Eff. July 13, 2021; Am. 2022, Act 144, Imd. Eff. July 14, 2022; Am. 2023, Act 3, Imd. Eff. Feb. 14, 2023; Am. 2023, Act 103, Imd. Eff. July 21, 2023; Am. 2024, Act 120, Imd. Eff. July 23, 2024; Am. 2025, Act 15, Imd. Eff. Oct. 7, 2025