Michigan Department of Education






In the matter of:         Appeal by Shelby Public Schools of the

Fall 2016 Pupil Membership Count

Docket No. MA 17-2


West Shore Educational Services District conducted an audit of the fall 2016 pupil membership count of Shelby Public Schools (Shelby).  As a result of the audit, 24.03 FTEs were deducted from Shelby’s fall 2016 pupil membership count

On April 13, 2017, Shelby filed a first level appeal with Naomi Casher, assistant director of the Office of Financial Management of the Michigan Department of Education (Department).  On June 15, 2017, Ms. Casher denied the appeal.  In a letter dated June 30, 2017, and received on July 3, 2017, Shelby requested final agency review by the Superintendent of Public Instruction.

Shelby chose to present its appeal at a review conference rather than entirely in writing.  A review conference was convened at the Department on September 28, 2017.  Present at the review conference were Robert Taylor, designee of the Superintendent of Public Instruction; Ms. Casher; Travis Comstock, assistant attorney general representing Ms. Casher; Dan Bauer, Shelby superintendent; Laura Jacobs, Shelby business manager; Jennifer Starlin of Thrun Law Firm, P.C., representing Shelby; and Mary Fielding, a Department administrative law specialist.




Consideration of this appeal is guided by several well-established principles.  First, it is the Department’s responsibility to administer the distribution of state school aid funds in full compliance with all applicable statutes and administrative rules and to ensure that statutes and rules are applied uniformly to all school districts.  Ithaca Public Schools (MA 16-1); Delton Kellogg Schools (MA 12-4); Galien Township School District (MA 12-1); McBain Rural Agricultural School (MA 11-1); Port Huron Area School District (MA 10-1); Parchment School District (MA 08-1).  In addition, the Legislature has expressly mandated that districts comply with the requirements established in the pupil accounting manual approved by the Department and that, if a district fails to do so, the Department must withhold state school aid.  MCL 388.1618(4)(d) and (10).  Thus, the Department’s responsibilities include the uniform application of the pupil accounting manual and the administration of state school aid funds in full compliance with it.  Ithaca, supra; Galien Township, supra; McBain, supra.

A district claiming eligibility for state school aid is obligated to demonstrate satisfaction of all legal requirements to establish such eligibility.  Ithaca, supra; Delton Kellogg, supra; Life Skills Center of Pontiac (MA 12-2); Galien Township, supra; McBain, supra; Port Huron, supra; Parchment, supra; L’Anse Creuse Schools (MA 00-1); Hamtramck Public Schools (MA 94-1); Bendle Schools (MA 93-2); Coopersville Area Public Schools (MA 92-10).  Applicable legal requirements are determined based on the law in effect when the pupil membership count at issue occurred.  See MCL 388.1615(3) (deductions shall be calculated according to law in effect in fiscal year in which incorrect amount was paid).  Absent statutory authority, the Department, which is subject to monitoring by the Auditor General, has no equitable authority to deviate from those legal requirements.[1]  Ithaca, supra; McBain, supra; Port Huron, supra; Westwood Community School District (MA 01-3); Beacon International Academy (MA 01-1); Lansing School District (MA 91-9); Orchard View Schools (MA 90-2).

In general, the State School Aid Act allows a school district to count in its membership pupils who are in attendance and receiving instruction in classes for which they are enrolled on the count day.  MCL 388.1606(8).  For purposes of MCL 388.1606(8), a “class” is a period when pupils and a certificated teacher or legally qualified substitute teacher are together and instruction is taking place.  Id.   See also sections 2 and 3 of the 2016-2017 Pupil Accounting Manual, which reiterated these statutory requirements. 

The deduction of FTEs from Shelby’s fall 2016 pupil membership count was based on the district’s employment of Alexis Peterson, who was neither certificated nor working under a substitute permit on the fall 2016 count day.[2]  The disputed 24.03 FTEs were claimed by Shelby for the time 149 pupils were taught by Ms. Peterson on the count day.

Citing MCL 380.1233(6),[3] Shelby argues that, because Ms. Peterson had earned 90 semester credit hours before the count day, she was a “legally qualified substitute teacher” for purposes of MCL 388.1606(8) and that the district was therefore authorized to count her pupils in membership.  I rejected this argument in Tekonsha Community Schools (MA 15-1), where I upheld an FTE adjustment based on the district’s employment of a teacher who was neither certificated nor working under a valid substitute permit on the count day.

As discussed in Tekonsha, administrative rules have the force and effect of law.  Administrative rules that are relevant to the employment of substitute teachers include Mich Admin Code, R 390.1105(1) (individual employed as teacher with instructional responsibilities shall hold valid certificate, permit, or authorization) and Mich Admin Code, R 390.1141 et seq. (permit requirements and procedures).  See also MCL 380.1538(a)(vi-viii) (permit fees).  Further, in the fall of 2016, Mich Admin Code, R 390.1111(5) provided that conviction of a crime described in section 1535a of the Revised School Code, MCL 380.1535a, was considered to be reasonably and adversely related to the ability to serve in an elementary or secondary school and was sufficient grounds to deny a permit.[4]  Thus, permit requirements play an important role in the Department’s screening of school instructional employees for criminal convictions, a vital function of the Department in its efforts to safeguard students’ safety. 

The Legislature has set forth the general requirement that teachers hold valid teaching certificates.  MCL 380.1231(3); MCL 380.1233(1); MCL 388.1763(1).  Absent a statutory exception to this requirement, employment of a noncertificated individual as a teacher is prohibited.  No such exception supported Shelby’s employment of Ms. Peterson on the count day. 

For these reasons, I find that Shelby did not comply with legal requirements as they related to the employment of Ms. Peterson on the count day.  Contrary to Shelby’s argument, she was not a “legally qualified substitute teacher” on that day for the purposes of MCL 388.1606(8).

Shelby argues that a Department memorandum dated February 6, 2014 (Memo #2014-012), requires proration of the state school aid adjustment in this case so that it reflects only the period of the district’s illegal employment of Ms. Peterson.  I find that that memorandum, which addresses both MCL 388.1606(8) and MCL 388.1763(2), does not support the argument that Shelby is entitled to proration in this case.

Shelby cites MCL 388.1625e in further support of its argument that, even if an FTE deduction is appropriate in this case, the adjustment should be prorated.  Asserting that it “actually educated the students with a certificated teacher from November 1, 2016 through the February count day” (June 30, 2017 appeal letter, p 5),[5] Shelby argues that only 5.34 FTEs should be deducted. 

MCL 388.1625e was added to the State School Aid Act in 2013.  It provides for the adjustment of state school aid in the event a pupil transfers from one school district to another between the fall count day and the supplemental count day.  As Ms. Casher found, the proration allowed under MCL 388.1625e is limited to the circumstances described in that statute.

At the review conference, Ms. Casher acknowledged that, in addition to the deduction at issue in this case, 0.15 FTE was deducted from Shelby’s fall 2016 pupil membership count under MCL 388.1625e for one of Ms. Peterson’s pupils who transferred to another school district after the count day.  To avoid a double deduction for the same pupil, Ms. Casher agreed that Shelby was entitled to restoration of 0.15 FTE.  With this exception, MCL 388.1625e is not applicable to the facts presented in this case.  The statute does not support Shelby’s request for proration of the state school aid adjustment.

For these reasons, I find that Ms. Casher correctly denied Shelby’s appeal and I affirm a state school aid deduction in the amount of 23.88 FTEs, which includes restoration of 0.15 FTE as described above.










Based on my review of this matter and for the above reasons, I grant in part and deny in part Shelby Public Schools’ appeal of the first level agency decision and I order that the fall 2016 pupil membership count reported by Shelby Public Schools shall be reduced by 23.88 FTEs.

This final report and decision is being transmitted to the Department of Education’s Office of Financial Management – State Aid and School Finance for implementation.




Brian J. Whiston

Superintendent of Public Instruction

Dated: March 23, 2018


[1] In section 15(2) of the State School Aid Act, MCL 388.1615(2), as amended by 2017 PA 108, effective July 14, 2017, the Legislature granted authority to the Department to waive all or part of state aid adjustments.  Shelby has filed a request for waiver under this subsection.  The request has been forwarded to the Office of Financial Management – State Aid and School Finance.


[2] Pursuant to 388.1763(2), the Department’s Office of Professional Preparation Services (OPPS) assessed a state aid penalty against Shelby on March 16, 2017, in the amount of $5,486.21 based on its employment of Ms. Peterson.  As required by MCL 388.1763(2), the assessment represented the salary paid to Ms. Peterson during the period when she was neither certificated nor working under a substitute permit.  Shelby did not appeal OPPS’s March 16, 2017 assessment.


[3] MCL 380.1233(6) provides as follows.


The board of a school district or intermediate school district may employ an individual without a teaching certificate as a substitute teacher if the individual has at least 90 semester hours of college credit from a college or university.


[4] Rule 390.1111 was revised effective November 15, 2017.  The relevant provision is now Rule 390.1141(6)(b) (superintendent of public instruction may deny a permit based on conviction of a crime described in MCL 380.1535a).

[5]Shelby presented no documentation to support this factual assertion.