Michigan House subcommittee hears overview of $20.8 billion school aid budget and one-time investments

LANSING — House fiscal analysts Jacqueline Mullins and Noel Benson presented a briefing on the state school aid budget Wednesday to the House Appropriations Subcommittee on School Aid and the Department of Education, outlining fund sources, major appropriations and one-time spending in the FY budget.

Mullins said the school aid budget pays for K‑12 operations across 537 local school districts, 286 public school academies and 56 intermediate districts, and supports the Department of Education, the Department of Lifelong Advancement and Potential ("MILIP" as named in the presentation) and the Center for Educational Performance and Information (CEPI).

The presentation matters because school aid is one of the state’s largest expenditures and funds classroom operations, special programs and retirement costs that affect districts’ budgets statewide.

Analysts told the subcommittee that total statewide school aid funding is roughly $20.8 billion and represents about 26% of statewide appropriations. They said the budget is funded about 89% from state‑restricted sources (primarily the School Aid Fund), about 11% federal funds and a rounding amount from the general fund for items ineligible for School Aid Fund distribution.

Mullins described the budget structure: roughly 49% of appropriations support foundation allowances (general operations funding), 13% pays Public School Employees Retirement System (MPSERS) costs, 13% covers special education, 8% is other federal spending (including school meals and Title I), about 5% funds at‑risk programming and about 3% funds early childhood programs such as the Great Start Readiness Program (GSRP).

The analysts said statewide enrollment is declining, with projected totals of about 1,380,000 students in the current fiscal year, falling to 1.37 million in FY26 and 1.36 million in FY27. Mullins said that, after accounting for a beginning balance of about $1 billion, the state has roughly $21.5 billion in available resources and is projecting an ending balance of about $1 billion for the year. On a baseline (excluding one‑time items) the FY26 ending balance was described as about $2 billion, roughly half one‑time and half ongoing.

Mullins and Benson also outlined $1.2 billion in one‑time categorical funding in FY25, including $181.5 million for MPSERS employee healthcare reimbursement, $126.5 million for per‑pupil mental health and school safety (with $25 million ongoing), $125 million for transportation costs, $87 million for literacy supports, $71 million for enrollment stabilization, $57 million for charter school per‑pupil payments and $25 million for out‑of‑school time programming (plus $50 million ongoing).

Chair Rep. Kelly, in remarks after the presentation, summarized a recurring theme from committee members: “more money, less students,” and said he and others will examine whether the state is getting adequate outcomes for the investment. Several members asked for follow‑up materials, including inflation‑adjusted foundation allowance history, counts of special education head counts versus FTEs and historical foundation allowance data for different school categories.

The subcommittee concluded the briefing and signaled additional, deeper hearings in the coming weeks.

Notes: The presentation included references to a 2012 public act that caps cyber school enrollment and to the Michigan constitution’s requirement that the state maintain a K‑12 education system; analysts also noted the School Aid Fund can be used for community colleges and higher education subaccounts in limited ways.