CR 21-046 Rule Text

Clearinghouse Rule 21-046

ORDER OF THE

STATE SUPERINTENDENT OF PUBLIC INSTRUCTION

ADOPTING PERMANENT RULES

The scope statement for this rule, SS 007-21, was published in Register No. 781A3, on January 19, 2021, and approved by State Superintendent Carolyn Stanford Taylor on February 3, 2021.

The State Superintendent of Public Instruction hereby adopts an order to amend ss. PI 49.07 (4) (a) and 49.13 (7) (a); and to create ss. PI 35.10 (3m), 48.10 (3m), and 49.09 (3m), relating to Parental Choice and Special Needs Scholarship Programs offsetting revenue, statements of actual cost, and affecting small business.

ANALYSIS BY THE DEPARTMENT OF PUBLIC INSTRUCTION

Statute interpreted: ss. 115.7915, 118.60, and 119.23, Stats.

Statutory authority: ss. 115.7915 (10), 118.60 (11) (a), and 119.23 (11) (a), Stats.

Explanation of agency authority:

Under s. 115.7915 (10), Stats., the Department is given statutory authority to promulgate rules to implement and administer the Special Needs Scholarship Program, including rules relating to: (a) eligibility and participation of eligible schools; (b) calculation and distribution of scholarships; and (c) application and approval procedures for students and eligible schools.

Further, the Department is given statutory authority to promulgate rules under s. 118.60 (11) (a), Stats., with respect to the Racine and statewide parental choice programs:

118.60 Parental choice program for eligible school districts and other school districts.

(11) The department shall do all of the following:

(a) Promulgate rules to implement and administer this section. The department may not by rule establish standards under sub. (7) (am) that exceed the standards established by the American Institute of Certified Public Accountants.

Finally, the Department is given statutory authority to promulgate rules under s. 119.23 (11) (a), Stats., with respect to the Milwaukee parental choice program:

119.23 Milwaukee parental choice program.

(11) The department shall do all of the following:

(a) Promulgate rules to implement and administer this section. The department may not by rule establish standards under sub. (7) (am) that exceed the standards established by the American Institute of Certified Public Accountants.

Related statute or rule:

N/A

Plain language analysis:

This rule will amend chs. PI 35, 48, and 49 of the Wisconsin Administrative Code to provide that loans under the Paycheck Protection Program (PPP), which are forgiven by the federal government, are not offsetting revenue in the financial audit supplemental schedule for any of the state’s Parental Choice Programs or the Special Needs Scholarship Program.

Schools participating in the Special Needs Scholarship Program have the option to submit a statement of actual costs that specifies the special education expenses the school incurred for educating a Special Needs Scholarship Program pupil in the prior school year. If a school submits a statement of actual costs for a pupil, the payment amount for that pupil in the subsequent school year is based on the actual costs for the pupil in the statement. The proposed rule specifies that if an amount included in a Special Needs Scholarship Program statement of actual costs is part of a forgiven PPP loan, and the amount is forgiven on or before October 15th following the school year, the costs in the statement of actual costs must be reduced by the forgiven amount. The proposed rule also specifies that any adjustments due to forgiven PPP loans will be paid back through the Enrollment Audit certification process under s. PI 49.07 (4). Finally, it indicates that the payment amount for an actual cost pupil will not be below the Special Needs Scholarship Program payment rate for a pupil that did not submit a statement of actual costs.

Summary of, and comparison with, existing or proposed federal regulations:

The PPP is a loan administered by the Small Business Administration designed to provide a direct incentive for small businesses to keep their workers on payroll. Borrowers may be eligible for PPP loan forgiveness. More information on the PPP may be found here: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program.

Summary of any public comments and feedback on the statement of scope for the proposed rule that the agency received at a preliminary public hearing and comment period held and a description of how and to what extent the agency took those comments into account and drafting the proposed rule:

The Department held a preliminary public hearing and comment period on February 1, 2021, and received comments on the statement of scope for the proposed rule. A brief summary of comments and the Department’s response to those comments are as follows:

One respondent indicated support for the proposed changes described in the statement of scope. The respondent noted that the change is necessary for private schools participating in any of the state’s Parental Choice Programs or the Special Needs Scholarship Program that have received PPP loans. By exempting PPP loans from being categorized as offsetting revenue in any of the state’s Parental Choice Programs and the Special Needs Scholarship Program, the respondent argues these schools will be able to get the funds promised by Congress to supplement their balance sheets rather than to replace state aid. Because the respondent notes that the private school accounting is so in flux as a result of the COVID-19 pandemic, the respondent argues state rules should not count the PPP as offsetting revenue, and the changes should apply to any and all PPP loans granted in 2020 and going forward for future years.

Agency Response: These comments were forwarded to program staff for consideration during the rulemaking process.

The respondent also noted a possible technical error in the scope statement, which references the Racine Parental Choice Program in some sections but omitted references to the Racine Parental Choice Program in other sections. The respondent requested clarification to ensure there are no technical problems with what is being proposed.

Agency Response: The proposed changes described in the scope statement are intended to include private schools participating in the Racine Parental Choice Program as well as the Wisconsin and Milwaukee Parental Choice Programs and the Special Needs Scholarship Program.

Another respondent indicated opposition to the proposed rule under the statement of scope, arguing that private schools participating in any of the state’s Parental Choice Programs or the Special Needs Scholarship Program should be required to decrease the school’s eligible education expenses amounts by money received from the PPP. They note the PPP provides these loans to small businesses, including private schools, which are forgiven by the federal government and amounts to money that private schools receive and do not need to pay back. They also note that public schools are not eligible for loans under the PPP. They argue that while the department’s waiver authority at the start of the COVID-19 pandemic permitted these schools to exclude the PPP payments in the 2019-20 school year from offsetting revenue, this is not an argument for allowing private schools to do so in subsequent years.