House approves school‑aid H‑1: per‑pupil increases paired with roll‑up of categorical funding and new penalties for noncompliance

The House Appropriations Committee on June 2025 approved the H‑1 substitute to House Bill 45 77, the state school aid appropriation, advancing a proposal that raises the foundation allowance and consolidates numerous categorical line items into a per‑pupil payment while adding new compliance penalties and reporting rules.

House Fiscal analysts presented the bill summary, saying the House proposes a gross school aid appropriation of about $21.9 billion, an increase of roughly $1.1 billion (5.5%) over the current year. Jacqueline Mullen, senior fiscal analyst, said the foundation allowance would increase by $417 per pupil, from $9,608 to $10,025. The House proposal also creates a new section (22f) providing a supplemental per‑pupil payment funded by rolling up many existing categorical line items; House staff described the section as a $3.1 billion pool that would yield about $1,975 per pupil for K‑12 districts, bringing per‑pupil resources to about $12,000 when combined with the foundation allowance. The roll‑up also includes measures to hold districts harmless where reallocation would reduce a district’s funding (section 22h, roughly $138.8 million).

The bill moves many one‑time and reserve balances into the school aid fund, including an estimated $265.8 million from a school aid reserve. The House package also funds a school consolidation and infrastructure fund closure with an estimated $286.5 million to be distributed for competitive infrastructure grants, consolidation incentives, class‑size reduction and a read‑by‑grade‑3 incentive.

The proposal includes changes to funding for MPSERS, the public school employee retirement system. The House plan assumes passage of a separate implementation bill that would maintain the current district contribution cap (20.96%) rather than the automatic reduction to about 15.22% that would otherwise occur; if the implementation bill does not pass, districts’ required contributions would change and state costs could rise.

Committee discussion focused on program tradeoffs and policy language added as boilerplate. Mullen pointed to multiple new or revised sections: counting dropout recovery pupils by course completion, removing the cap on shared‑time pupils, and several compliance provisions. Notably, section 16 would allow a 20% penalty on a district’s discretionary portion of its foundation allowance for noncompliance with specified prohibitions (the summary lists examples including curricula described as “race or gender stereotyping,” state funding for DEI initiatives, allowing transgender girls to participate in girls’ sports, or multi‑stall unisex bathrooms). Another new section (164k) would authorize MDE to withhold state aid for noncompliance with certain meal‑program and survey requirements.

Members raised several substantive concerns. Representative Price asked about eliminating a universal school‑meals program; Representative McKinney pressed for preservation of at‑risk and after‑school categoricals that serve high‑need students; Representative Glanville sought clarification about MTSS reporting. Former teacher and committee guest Representative Julie Weiss (testifying) warned that shifting funds out of school aid to other purposes in separate budgets could leave K‑12 programs short and urged stability in state support.

The committee adopted an amendment from Representative Kelly to restore EBAS student performance reporting in the bill and later defeated a Democratic substitute (H‑2) that would have preserved separate categorical funding for transportation, CTE, special education and other needs. On the motion to adopt the H‑1 substitute, the clerk reported 17 yays and 12 nays; the H‑1 substitute was adopted and the bill was reported with recommendation as amended.

The bill consolidates many funding streams into a larger per‑pupil payment, while attaching new compliance conditions and reporting requirements that will be subject to negotiation during floor and conference work.