Budget talks drag on while Michigan school funding is disputed
LANSING – Strong opposition to a new and unusual proposal to fund Michigan schools in 2025 has dragged out budget negotiations throughout Wednesday afternoon and could delay votes until late Wednesday night or Thursday morning.
In another development, the school aid budget that lawmakers will vote on Wednesday or Thursday doesn’t quite meet Gov. Gretchen Whitmer’s call for universal, publicly funded preschool, but it comes close.
In the wake of Wednesday’s major controversy, school officials briefed on a budget plan agreed upon by Whitmer and Democratic leaders in the Senate and House of Representatives said it would not increase per-pupil funding for school districts for the first time in more than a decade.
Instead, school districts would enjoy a windfall — and likely have more money to spend in 2025 — because the amount they must pay into the school employee pension fund will be cut by more than $500 million in a one-time measure. But some school officials said the plan would ultimately cost them money and lead to layoffs.
The final budget plan, which is expected to total nearly $81 billion for all of state government and schools, had not been released as of Wednesday afternoon. Lawmakers were working to finalize it by Thursday before they head into summer recess. Although the state’s 2025 fiscal year does not begin until Oct. 1, finalizing the school aid budget is especially urgent because most Michigan school districts’ fiscal year begins July 1.
The budget bill is to be finalized by a mediation committee of House and Senate members of both parties, after the House and Senate each previously passed their own versions of the budget that differed significantly. Once the mediation report is approved, the bills must pass or reject each chamber, with no further amendments allowed. Democrats hold the narrowest of majorities in both the House and Senate, so each budget bill must either have unanimous support from Democrats or some Republican support. Additionally, to take effect immediately, the budget bills will need some GOP votes in the state Senate.
Maintaining the base school grant at $9,608 per student would contradict Whitmer’s recommendation in her budget proposal submitted in February and the versions of the school grant budget passed by the House and Senate, all of which had proposed increases in the range of 2 to 3 percent, at a cost of about $300 million.
But Whitmer and legislative leaders revised funding plans while also working on major economic development funds amid potential shortfalls in the School Aid Fund. The idea of cutting payments to the Michigan Public School Employees’ Retirement System is not new. Whitmer said in her February budget plan that significant progress in reducing the pension plan’s unfunded liabilities would allow the state to reduce its annual contributions to the fund by about $670 million. What’s new about the latest plan is that school districts, rather than the state, would cut their contributions to the plan, leaving them more money to spend. Also, teachers hired before 2013 who participate in the MPSERS plan would no longer have to pay the usual 3% of their salary into the plan in 2025, which would effectively give them a raise.
Robert McCann, executive director of the K-12 Alliance of Michigan, said he has not seen all the details of the school funding plan but knows it includes at least one other significant cut that will hurt schools and lead to layoffs. Funding for certain mental health services, which had been planned at $300 million, will be cut to $25 million, he said.
More importantly, school districts face significant inflation-related cost increases, and a flat per-pupil grant will hurt them not just in 2025 but in all subsequent years because future increases would be based on a smaller base, he said.
The Michigan Association of Superintendents and Administrators issued a “call to action” on Wednesday, urging its members to lobby against the plan. In its message to members, the association said that charter schools that do not participate in the MPSERS program would receive a $50 million increase in their per-pupil grants under the plan. This would be the first time that students at charter schools would receive more money per pupil than traditional public schools.
“The proposed budget for the coming fiscal year does not provide long-term financial relief and will result in layoffs this fall and in the future as funding for our schools will not be sufficient to keep pace with inflation, rising health care costs and the expiration of federal aid funds,” the message to members said.
But Whitmer’s spokesman Bobby Leddy hit back, suggesting the administration might be prepared to stubbornly defend the plan.
“It is shocking that a group of lobbyists who falsely claim to be on the side of students and educators are now calling for defunding Michigan’s K-12 schools just days before the July 1 deadline,” Leddy said.
“The fact is, this budget represents the largest investment in schools in our state’s history (and the sixth year in a row),” he said. “It will provide districts with more money than inflation requires and give schools the flexibility to use the funds to meet the needs of individual students in their area by investing in school safety, mental health, before and after school programs and more.”
In another area related to schools, the budget is expected to represent significant progress toward Whitmer’s goal of providing free preschool to all four-year-olds in Michigan.
In her State of the State address in January, Whitmer called on lawmakers to remove all income requirements for enrollment in 4-year schools with public funds. Her proposal accelerated implementation of her previously announced plans for the Great Start Readiness Program by two years.
The latest budget increases eligibility to 400 percent of the federal poverty level from the current 250 percent. But that creates a new difficulty, said Lauren Leeds, a spokeswoman for the State Budget Office. Every 4-year-old child, regardless of family income, would be eligible to attend public preschool, she said. But if there are too few seats in preschool classes, lower-income families would get priority, she said.
The budget allocates $54 million to provide preschool slots for an additional 5,300 children, Leeds said. It also includes $31 million to increase per-child allotments to $10,185, $25 million to open new classrooms in underserved areas, $18 million to improve student transportation and $2 million for marketing and outreach to ensure parents are aware of preschool options in their area, Leeds said.
Preschool enrollment exceeded 38,000 in 2023 and is expected to exceed 50,000 in 2024, the state said.
Contact Paul Egan: 517-372-8660 or [email protected]. Follow him on X, @paulegan4.
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