House subcommittee advances school-aid plan raising foundation allowance to $10,025 and rolling many categorical funds into per-pupil payments

The House Appropriations Subcommittee on School Aid and Department of Education advanced a school-aid budget that would raise the per-pupil foundation allowance to $10,025 and roll dozens of categorical programs into a single per-pupil payment, members and fiscal analysts said.

The measure before the panel is the House substitute for HB 45 77 (H-1). Jacqueline Mullen, senior fiscal analyst for the House Fiscal Agency, told the committee the chair’s recommendation proposes total school-aid appropriations of about $21.9 billion, a $1.1 billion (5.5%) increase from the year-to-date level, and that the House proposes a $417 (4.3%) per-pupil increase to lift the foundation allowance from $9,608 to $10,025 per pupil.

Why it matters: The proposal shifts funding away from many existing categorical line items and into a larger foundation allowance intended to give districts more flexible per-pupil funding. Fiscal staff said the proposal rolls that previously categorical money into a new section 22f payment that is split among districts, intermediate school districts (ISDs) and nonpublic schools and that the rollup will alter how specific, targeted programs are funded.

Key provisions and figures - Foundation allowance: Raises the foundation allowance to $10,025 per pupil (a $417 / 4.3% increase from $9,608). Jacqueline Mullen presented this as the house proposal’s central per-pupil increase. - Section 22f rollup: The bill consolidates many categorical appropriations into a new per-pupil payment (section 22f). Fiscal staff described a table showing how year-to-date categorical appropriations were rolled into the single payment and how the rollup is allocated across districts, ISDs and nonpublic schools. - School safety and mental health funding: The proposal moves $370 million in school-safety and mental-health funding (including a $345 million supplemental addition on top of ongoing funding) into the district per-pupil bucket and a smaller amount to nonpublic schools; committee discussion tied that rollup to a requirement in section 22f that districts support at least one school resource officer (SRO) and one mental-health support staff member to receive the funding. - Hold-harmless (section 22h): The plan creates section 22h, a hold-harmless payment intended to prevent districts and ISDs from taking reductions from the rollup; Mullen said the bulk of that $138.8 million total would go to ISDs. - Reserve fund transfers and closings: The House plan deposits balances from multiple reserve funds into the school-aid fund and, in some cases, closes those funds. Mullen listed specific deposits: $147.4 million (estimated) from the MPSERS reserve fund; $120.3 million from the school transportation fund; $235.2 million from the educator fellowship public provider fund; $50.8 million from the educator fellowship private provider fund; $193.6 million from the enrollment stabilization fund; $138.6 million from the school meals reserve fund; and $265.8 million from the school-aid rainy day fund (leaving about $209 million remaining in that rainy day fund, the analyst said). - One-time uses of the school consolidation and infrastructure fund: The bill would spend remaining FY26 balances from that fund on four priorities: competitive infrastructure grants prioritizing roofing and HVAC; competitive consolidation grants for physical or service consolidation; a per-pupil incentive for reducing class sizes; and a per-pupil incentive for implementing a Read-By-Grade-3 program that would include at least one literacy coach in participating districts. - MPSERS (retiree pension) treatment: The house plan assumes a policy change will maintain the unfunded liability cap at 20.96% of payroll rather than lowering it to the 15.22% level that had been anticipated; staff said the effect is that districts would continue to pay 20.96% and the state would not appropriate the additional funds to assume that portion of the liability.

Committee discussion and concerns - Equity vs. targeted help: Several members questioned whether rolling targeted dollars into a statewide per-pupil payment would disadvantage districts with extraordinary, district-specific costs. Representative Glanville asked about Flint-specific funding tied to the Flint declaration of emergency; fiscal staff said the $8.1 million currently appropriated for Flint (split $5.0 million SAF to districts and $3.1 million GF to nonpublic schools) was rolled into the per-pupil payment, which spreads the dollars statewide rather than directing them only to Flint. - School safety conditions: Members asked whether the state has sufficient SROs to meet the proposed requirement that each district support at least one SRO to access a portion of the funding; the committee discussed whether a district’s own security team could satisfy that condition. - Timing and detail: Several members said they received bill text and summaries only shortly before the hearing and asked for more time to review the rollup table and other details.

Formal actions - The committee adopted the H-1 substitute for HB 45 77 on a roll call after a motion by Representative Jenkins Arnold; the substitute was adopted by recorded voice/roll call during the meeting. - The committee later voted to report HB 45 77 H-1 to the full Appropriations Committee with the recommendation that it pass. Recorded votes on reporting included majority yes votes; a minority of members voted no. (See structured actions below for recorded tallies.)

What remains unresolved The bill would move many targeted programs into the foundation allowance; committee members repeatedly requested more time and data to assess how specific district needs (transportation, special programs, disaster-related costs) would be met under the new structure. Negotiations with the Senate and governor’s office were mentioned as the next steps.

Ending note Fiscal staff asked the committee to refer to the rollup table in the summary (page 25 of the document presented) for line-by-line detail on which sections were consolidated into section 22f and how the baseline and rolled-up amounts were calculated.