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State Budget Office presents FY27 higher-education funding plan, proposes scholarship increases and TIP changes
Summary
State Budget Office officials told the subcommittee the governor's FY27 recommendation increases ongoing scholarship funding, shifts funds to sustain Michigan Achievement Scholarship awards, proposes a Reconnect eligibility expansion and introduces policy changes to the Tuition Incentive Program to control long-term costs.
Beth Bullion of the State Budget Office presented the 2027 governor's executive recommendation for community colleges and public universities to the House Appropriations Subcommittee on Higher Education and Community Colleges and described ongoing and one-time funding priorities.
Bullion told the committee the executive recommendation proposes approximately $525 million for community colleges with a $32.3 million (6.6 percent) increase over the current fiscal year, funded entirely from School Aid Fund dollars. On the public university side, she said the executive recommendation totals nearly $2.6 billion in combined ongoing funding that the presenters described as roughly a 50/50 split between general fund and School Aid Fund resources, with a small state-restricted and federal funding component for scholarship reserves.
Rebecca McDonald, Higher Education Policy and Fiscal Analyst with the State Budget Office, gave a detailed review of state scholarship proposals. The executive recommendation would allocate about $753 million for state scholarships and grants in FY27, with funding drawn from general fund, School Aid Fund and the Postsecondary Scholarship Fund. McDonald said the proposal increases Michigan Reconnect funding by $25 million (to an ongoing $67 million) and asks the Legislature to lower eligibility to age 21, which the presenters said would broaden access for adult learners. She said the executive recommendation also proposes $532 million for the Michigan Achievement Scholarship in FY27 (including $132 million from the Postsecondary Scholarship Fund) and noted that continued reliance on the reserve fund without raising ongoing appropriations could deplete the fund by FY29.
To address rapid cost growth in the Tuition Incentive Program (TIP), SBO proposed a $26.5 million increase to cover near-term costs and two policy changes: a phase-one cap (limiting public university phase-one awards to 2.5 percent of the average community college tuition rate beginning in academic year 2028) and a phase-two sunset (no new phase-two awards after academic year 2026; existing phase-two recipients would continue to receive awards). McDonald said these policy changes aim to curb long-term program growth while preserving awards for current students.
Committee members questioned whether the budget reflected reactions to federal funding shifts; SBO staff said that the presentation did not reflect direct reductions tied to a specific federal bill and that many adjustments reflect the winding down of carry-forward funds. SBO staff also explained that tuition-restraint rules would be applied to one-time increases (4 percent in FY27 and a proposed 5 percent in FY28).
The committee thanked the presenters and asked for follow-up details; no formal appropriation votes were taken in the recorded meeting.
