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Community‑college funding tied almost entirely to school‑aid fund; performance formula guides new dollars
Summary
House Fiscal Agency senior analyst Perry Zilak told the subcommittee that Michigan’s 28 public community colleges receive nearly all state appropriations from the School Aid Fund, with a FY25 gross appropriation of about $642.2 million and new funding allocated through a multi‑metric performance formula
The House Appropriations Subcommittee on Higher Education and Community Colleges received a presentation on the state’s community‑college budget and the performance formula that allocates new funding to the 28 public community colleges.
Perry Zilak, senior fiscal analyst with the House Fiscal Agency, said the fiscal‑year‑25 community‑college gross appropriation is about $642.2 million and is almost entirely state restricted revenue from the School Aid Fund; the budget includes $500,000 in state general fund. Zilak said that the combined use of the school aid fund between higher education and community colleges in FY25 totals about $923.4 million.
Why it matters: Zilak described the common financing model for community colleges as a “three‑legged stool” — state appropriations (operation grants), tuition and fees, and local property tax millages. State operation grants account for roughly 80% of the community‑college budget he described, and the performance formula determines most new funding.
Zilak summarized the formula’s components and weights: 30% across‑the‑board adjustments; 30% based on contact‑hour equated students (with additional weighting for health and technical fields); 10% for completion improvement; 10% for completion number; 10% for completion rate; 5% administrative costs; and 5% local strategic value (community engagement and services). He said completion is defined as earning an associate degree, a skills certificate, or transferring to a four‑year institution.
The presentation also covered retirement costs tied to the Michigan Public School Employee Retirement System (MPSERS). Zilak said rising UAAL (unfunded actuarial accrued liability) payments have driven recent increases in community‑college appropriations for pension‑related costs; the state has made large one‑time MPSERS payments in recent years and continues to provide normal‑cost offsets.
Zilak noted that tuition restraint policies were first applied to community colleges in FY23; the transcript captured the restraint as a ceiling of 4.5% or a specified dollar amount, whichever is greater (committee documents list the dollar threshold for community colleges). He said all community colleges certified compliance with institutional best practices around transfer and tuition restraint.
Zilak emphasized geographic coverage differences: southeastern Michigan is nearly uniformly covered by community‑college districts, while many parts of western and northern Michigan, including much of the Upper Peninsula, have less coverage. The subcommittee asked clarifying questions; Zilak said he would supply additional details about formula results, college‑level allocations and any institution‑specific funding floors.
No votes were taken; committee staff will circulate follow‑up material on formula performance, district coverage maps and MPSERS assumptions.
