Appropriations subcommittee reviews governor's FY26 higher-education recommendations, flags Michigan Achievement Scholarship for deeper review

The Senate Appropriations Subcommittee on Universities and Community Colleges convened to hear an overview of the governor's fiscal year 2026 recommendations for higher education and community colleges, with a particular focus on the Michigan Achievement Scholarship and its funding trajectory.

Josh Sefton of the Senate Fiscal Agency presented the packages, saying the governor's recommendation for higher education is "a 2.3% overall gross increase" and outlining parallel changes affecting community colleges. He described several recurring items in the governor's proposal, including tuition restraint targets and the removal of prior one-time appropriations.

Why it matters: the recommendations would adjust ongoing support across public universities and community colleges while altering the structure and funding approach for the Michigan Achievement Scholarship (MAS), a large, state-funded scholarship program that draws from the Post Secondary Scholarship Fund.

Summary of major proposals and figures - Higher education: Sefton said the governor proposed a roughly 2.3% gross increase for universities ("the governor's recommended a 2.3% overall gross increase"), with a notable 19% rise in other state-restricted funds tied to the School Aid Fund. Several prior one-time appropriations were removed from the baseline.

- Tuition restraint: The recommendation includes a 4.5% tuition restraint for FY26 (Sefton gave the example of a $735 cap for universities) and a projected 5% restraint for FY27 (Sefton cited an $814 figure for FY27 projections). Sefton said the same percentage figures apply to community colleges, though the dollar impacts differ by institution.

- Michigan Achievement Scholarship (MAS) and scholarship funding: Sefton described MAS funding mechanics and the governor's proposed change to the fund deposit. He said MAS is funded from the Post Secondary Scholarship Fund, which "doesn't have its own statutory revenue source" and receives an annual general-fund deposit. Under current law Sefton said the ongoing deposit is $300,000,000 and that for FY26 the recommended deposit is $330,000,000 because of a $30,000,000 one-time deposit in the prior year. He said program cost estimates have risen as cohorts mature: "The cost model I have for MAS says that next year, it should be about 350 or so million." Sefton added that projections could result in either spending down or maintaining the fund balance depending on enrollment patterns.

- Community colleges: Sefton said the community-college budget shows a larger gross increase (about 7.5%) than the universities' because of pension-related costs now borne by the state. He identified a $27,400,000 increase tied to the unfunded accrued liabilities (UAL) shift resulting from a statutory payroll-cap change and noted ongoing normal-cost pension adjustments.

- Other technical items: Sefton listed line items that reflect reported costs such as Indian Tuition Waiver reimbursements, an increase in dues for the Midwest Higher Education Compact, and continuing use of a community-college performance-funding formula unchanged from the current year.

Questions and next steps Senator Erwin asked whether the increase in the MAS deposit reflected underestimating cohort size or an effort to build the fund balance, saying, "Is it that the $300,000,000 is not enough to meet the needs of the next cohort?" Sefton replied that he could not speak for the administration but that program costs have grown as additional cohorts become eligible and that the recommended deposit is intended to roughly stabilize the fund balance into FY26 and FY27 based on current projections.

Senator Singh asked for comparative data showing how Michigan's scholarship effort compares with other states; Sefton and the subcommittee indicated staff will provide a deeper MAS briefing at a later meeting.

The subcommittee recessed with plans to pursue a focused discussion of the Michigan Achievement Scholarship at the next meeting.

Ending note: No formal votes or motions were recorded during the presentation; the session concluded after questions and scheduling of follow-up work.