Nick Krieger (@nckrieger):
Earlier this week, Governor Rick Snyder signed Senate Bill 801, the annual school aid appropriations bill that amends the School Aid Act for 2016-2017. Many observers have noted that Section 152b of the bill—now designated as 2016 PA 249—contains an unconstitutional appropriation of $2.5 million in state aid to nonpublic schools. And so it does.
But this post is about a different problem with the legislation. For the second year in a row, the Michigan Legislature has failed to correct a drafting error in Section 20(4) of the School Aid Act, which—if enforced and applied literally—would put the state on the hook for hundreds of millions of additional dollars to local school districts.
Now, before anyone starts to panic, please know that everything is proceeding as usual, as if this drafting error had never occurred. In fact, no one has noticed the mistake since it came into being in 2014. Nevertheless, the error is very real.
Here are the details:
In general, Michigan’s public school districts receive per-pupil funding through what is known as the foundation allowance. The foundation allowance is set by state statute every year, and actually consists of two separate parts: A state portion and a local portion. Broadly speaking, the local portion of the district’s foundation allowance is the per-pupil amount generated by the school district’s 18-mill operating tax on non-homestead property, less any part of that amount captured by local tax increment financing districts. Section 20 of the School Aid Act describes the manner in which the state portion is calculated. For most districts, the state portion consists of the district’s total foundation allowance minus the local portion of the district’s foundation allowance.
For several years, the formula for calculating both the state and local portions was spelled out in the body of Section 20(4). That subsection formerly provided that the state portion of the foundation allowance for most districts was equal to the district’s total foundation allowance minus [the per-pupil amount generated by the local school operating millage plus (the amount of school operating tax revenue captured by TIF districts divided by the district’s membership excluding special education pupils)].
Then, two years ago, the Legislature attempted to simplify this language with the passage of House Bill 5314 of 2014. For the first time, the annual school aid appropriations legislation separately defined the term “local portion of the district’s foundation allowance” in a different subsection of the statute, and rewrote the first sentence of Section 20(4) to provide: “[T]he state portion of a district’s foundation allowance is an amount equal to the district’s foundation allowance . . . minus the local portion of the district’s foundation allowance divided by the district’s membership excluding special education pupils.”
But someone goofed. You see, the 2014 act separately defined the term “local portion of the district’s foundation allowance” as a per-pupil amount, and the final phrase “divided by the district’s membership excluding special education pupils” therefore should have been deleted.
You remember the order of operations, right? My Dear Aunt Sally: Multiplication and division are performed before addition and subtraction. It means that under the 2014 statutory language, “the local portion of the district’s foundation allowance” must first be divided by “the district’s membership excluding special education pupils.” Then, the resulting quotient is subtracted from “the district’s foundation allowance.”
This makes no sense at all. As noted, the Legislature separately defined “local portion of the district’s foundation allowance” as a per-pupil amount—in other words, an amount that is already divided by the district’s general-education pupil membership. The statutory formula, if interpreted literally, now requires dividing “the local portion of the district’s foundation allowance” (which is already calculated as an amount per general-education pupil) by the district’s general-education pupil membership a second time. Oops.
For example, let’s say District A’s foundation allowance for 2016 is the state minimum, or $7,391. Let’s also say that the local portion of District A’s foundation allowance (the per-pupil amount generated by the 18-mill property tax) is $2,800, the total membership of general-education pupils in District A is 4,500, and none of District A’s school operating tax revenue is captured by a TIF district. In concept, and under the pre-2014 language, the state portion of District A’s foundation allowance would be the difference between $7,391 and $2,800, or $4,591 per pupil.
But given the flawed post-2014 statutory language, the state portion of District A’s foundation allowance is actually $7,390.38, or $7,391 minus $0.62. Why? Because under the plain text of Section 20(4) as it presently exists, District A’s local portion ($2,800 per pupil) would first have to be divided by “the district’s membership excluding special education pupils” (4,500 general-education pupils). And the arithmetic is simple: $2,800 divided by 4,500 is $0.62, or 62 cents. This is a clear error in Section 20(4).
Instead of $4,591 per pupil, as it would have been under the pre-2014 language, the state portion of District A’s foundation allowance is actually $7,390.38 per pupil. Multiply this difference of $2,799.38 per pupil by the number of general-education pupils in membership (4,500), and this would amount to an additional state obligation of $12.5 million for District A alone. Remember that there are about 540 school districts in Michigan.
It is a basic principle of Michigan law that statutory language must be applied and enforced as written. We do not look to the subjective intent of the individual legislators—we look to the plain text of the legislation. It is also a fundamental tenet of Michigan law that the courts do not ask whether statutory language “makes sense” or leads to an “absurd result”—those are questions for the Legislature, not the courts. In this case, the plain text of the statute (which the Legislature has failed to correct for the second year in a row) puts the state on the hook for hundreds of millions of additional dollars.
As I said earlier, all is proceeding as usual, and everyone is simply ignoring the drafting error in Section 20(4). In fact, even though the glaring mistake has been on the books for two years, I don’t think anyone in the Legislature, Treasury, or Department of Education has realized that it exists. Nor does it seem that Governor Snyder noticed the error when he signed the bill on Monday afternoon. But shouldn’t it be made right? At a minimum, it makes our Legislature look like a joke.
Michigan’s lawmakers have been so busy punishing teachers, eroding the right to collectively bargain, passing unnecessary abortion legislation, making it more difficult to vote, squabbling over how much money to loan the new Detroit community school district, and generally wasting time that they have completely failed to perceive a drafting error that could—if enforced literally—cost the state untold millions. Doesn’t anyone proofread these bills? The Republicans in the Michigan Legislature are often the first to insist that a statute must be applied according to its plain language. But sometimes, as in this case, those same lawmakers don’t even notice that the plain language makes no sense at all. How sad.
If we go by the plain, unambiguous language of Section 20(4), the State of Michigan has been substantially under-funding school districts around the state for the last two years. Of course, we all know that this was a mistake, an error, a mere oversight in the legislative drafting process. Someone simply forgot to delete the words “divided by the district’s membership excluding special education pupils” from the first sentence in Section 20(4) during the preparation of House Bill 5314 of 2014. However, it serves as an important example of the potential damage that could result from a sloppy blunder in the legislative drafting process. Our legislators really need to be more careful.