The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN MIKE COX, ATTORNEY GENERAL CHARTER SCHOOLS: PUBLIC SCHOOL ACADEMIES: REVISED SCHOOL CODE: STATE SCHOOL AID ACT: State school aid "per pupil funding" paid to
charter schools upon expiration of authorizing contract A public school academy may continue to receive its current
fiscal year allotment of state school aid "per-pupil funding" after the contract
issued by the authorizing body expires if the public school academy has provided
the required minimum hours of pupil instruction prior to the expiration of the
contract. Eligibility to receive funding is to be determined in accordance with
the facts existing at the time the contract expires and consistent with section
101 of the State School Aid Act, MCL 388.1701. Opinion No. 7218 August 12, 2008 Honorable Lisa Wojno You have asked whether a public school academy may continue to
receive state school aid "per-pupil funding" after the contract issued by its
authorizing body expires. The Revised School Code, 1976 PA 451, MCL 380.1 et seq,
provides for the organization, regulation, and maintenance of schools, school
districts, public school academies, and intermediate school districts. In 1993
PA 362, the Legislature enacted Part 6A of the Revised School Code, MCL 380.501
� 380.507, governing public school academies. Public school academies are
commonly referred to as "charter schools." Section 501(1) of the Revised School
Code, MCL 380.501(1), defines a public school academy as a "public school" and a
"school district" for purposes of state school aid. In order to organize and
operate a public school academy, section 502(3) of the Revised School Code, MCL
380.502(3), requires a person or entity to obtain a contract from an authorizing
body.1 Section 501(2)(d) of the Revised School Code, MCL
380.501(2)(d), defines "contract" to mean "the executive act taken by an
authorizing body that evidences the authorization of a public school academy"
and that "confirm[s] the status of a public school academy as a public school in
this state." This contract is often referred to as a "charter."2 The State School Aid Act, 1979 PA 94, MCL 388.1601 et seq,
governs the appropriation, allocation, and distribution of state funds to local
school districts and public school academies. Each year, the Legislature and the
Governor approve the school aid budget for the next state fiscal year. Section
3(6) of the State School Aid Act, MCL 388.1603(6), includes public school
academies in the definition of "district." Under section 20(6) of the State
School Aid Act, MCL 388.1620(6), a public school academy is eligible to receive
state education money such as the foundation allowance that is calculated on a
per-pupil basis. You ask whether a public school academy may continue to receive
state school aid "per-pupil funding" after the contract issued by the
authorizing body expires. Public school academy contracts or charters that are
not renewed often expire on June 30, the end of the "school fiscal year."
Reading all the above provisions together, if a public school academy's charter
expires, it would not be entitled to receive state school aid money for the next
state fiscal year because it would no longer be a public school or school
district under the Act or the Revised School Code. Whether a public school academy may continue to receive state
school aid attributable to the fiscal year in which its contract expires
presents a different question. Appropriations under the State School Aid Act are
made on a "fiscal year" basis. Section 4(3) of the State School Aid Act, MCL
388.1604(3), defines "fiscal year" to mean "the state fiscal year that commences
October 1 and continues through September 30." But public schools operate on a
"school fiscal year." Section 6(11) of the State School Aid Act, MCL
388.1606(11), defines the "school fiscal year" as "a fiscal year that commences
July 1 and continues through June 30." In accordance with section 17b of the
State School Aid Act, MCL 388.1617b, a public school academy's total allotment
of the fiscal year school aid payments are distributed in 11 installments on the
20th of each month commencing in October and ending in August. Although the
school fiscal year ends June 30, section 17b(1) of the State School Aid Act, MCL
388.1617b(1), directs that payments received in July and August are for the
preceding school fiscal year ending June 30. The total amount of a public school academy's foundation
allowance for a given year is based on the number of pupils in "membership."
Section 6(4) of the State School Aid Act, MCL 388.1606(4), defines membership
for a public school academy as 75% of the full-time students in regular
attendance on the membership count day for the current school year plus 25% of
the count from the previous supplemental count day. Section 101(3)(a) of the
State School Aid Act, MCL 388.1701(3)(a), requires that each district provide at
least 1,098 hours of pupil instruction to be entitled to its total state aid
allocation. Section 101(6) of the State School Aid Act, MCL 388.1701(6),
provides that the district forfeits from its remaining installments in the
current fiscal year a proportion of the funds due to the district if it fails to
comply with the required minimum hours of pupil instruction. The language used by the Legislature in all these statutes is
plain and unambiguous. Accordingly, construction is neither necessary nor
permitted, and the provisions must be enforced as written. Lash v Traverse
City, 479 Mich 180, 187; 735 NW2d 628 (2007). Thus, a public school academy's eligibility to continue to
receive current fiscal year state school aid "per-pupil funding" after the
contract issued by the authorizing body expires is to be determined in
accordance with the facts existing at the time the contract expires and
consistent with section 101 of the State School Aid Act, MCL 388.1701. A public
school academy that has provided the required minimum hours of pupil instruction
prior to expiration of the contract is entitled to receive its total state aid
allocation for the fiscal year under MCL 388.1701(3). This includes any
installments distributed after the expiration of the contract. A public school
academy that has not provided the required minimum hours of pupil instruction
prior to expiration of the contract is not entitled to receive its total state
aid allocation. It may still be eligible to receive state school aid payments,
however, if the amount it has received when the contract expires is less than
its current fiscal year state aid allocation as adjusted for the amount
forfeited under section 101(6) of the State School Aid Act, MCL 388.1701(6). As a charter school winds down its operations, it is instructive
to note that any school aid payments received after the public school academy's
contract expires must be applied to pay the reasonable debts incurred in the
operation of the public school academy. Section 18(1) of the State School Aid
Act, MCL 388.1618(1), requires money received under the act to be applied to
salaries and other compensation of teachers and other employees, supplies, and
school operating expenditures. The Michigan Department of Education may also
withhold funds in accordance with sections 7 and 18(1) of the State School Aid
Act, MCL 388.1607 and MCL 388.1618(1), if it determines expenditures are not
reasonable. Finally, under section 18b(1) of the State School Aid Act, MCL
388.1618b(1), the public school academy is required to transfer the remaining
funds and property "acquired substantially" with school aid funds to the State.
MCL 388.1816b directs the State Treasurer to deposit in the State School Aid
Fund the money transferred to the State and the net proceeds from the sale of
any property transferred to the State. It is my opinion, therefore, that a public school academy may
continue to receive its current fiscal year allotment of state school aid
"per-pupil funding" after the contract issued by the authorizing body expires if
the public school academy has provided the required minimum hours of pupil
instruction prior to the expiration of the contract. Eligibility to receive
funding is to be determined in accordance with the facts existing at the time
the contract expires and consistent with section 101 of the State School Aid
Act, MCL 388.1701. MIKE COX An authorizing body shall not charge a fee, or require
reimbursement of expenses, for considering an application for a contract,
for
State Representative
The Capitol
Lansing, MI
Attorney General
1 The term "authorizing body" means any of the
following that issues a contract as provided in Part 6A: (i) the board of a
school district that operates grades K to 12; (ii) an intermediate school board;
(iii) the board of a community college; and (iv) the governing board of a state
public university. MCL 380.501(2)(a).
2 MCL 380.502(6) provides:
issuing a contract, or for providing oversight of a contract for a public
school academy in an amount that exceeds a combined total
of 3% of the total state school aid received by the public school academy in
the school year in which the fees or expenses are charged.
An authorizing body may provide other services for a public school academy
and charge a fee for those services, but shall not require
such an arrangement as a condition to issuing the contract authorizing the
public school academy.