State budget talks drag on amid controversy over Michigan school funding

LANSING — Strong opposition to a new and unusual proposal to fund Michigan schools in 2025 dragged budget negotiations through all of Wednesday afternoon and could push votes into late Wednesday night or Thursday morning.

In another development, the school aid budget lawmakers are expected to vote on Wednesday or Thursday doesn't quite achieve Gov. Gretchen Whitmer's call for universal publicly funded pre-kindergarten — but it comes close.

On Wednesday's major controversy, school officials briefed on a budget plan agreed to by Whitmer and Democratic leaders in the Senate and House said it would provide no per-pupil funding increase to school districts for the first time in more than a decade.

Instead, school districts would enjoy a windfall — and arguably have more money to spend in 2025 — as a result of a one-time reduction of more than $500 million in the amount they are required to pay into the school employee retirement system. But some school officials said the plan would ultimately cost them money and result in layoffs.

The final budget plan, expected to total close to $81 billion for all of state government and schools, had not been made public as of late Wednesday afternoon. Lawmakers were working to finalize it by Thursday before breaking for the summer. Though the state's 2025 fiscal year does not begin until Oct. 1, finishing the school aid budget is particularly pressing, because most Michigan school districts operate on a fiscal year that begins July 1.

The proposed budget is to be finalized by a conference committee of House and Senate members from both parties after the House and Senate earlier each passed their own versions of the spending plan , with significant differences between them. Once the conference report is approved, the bills must be voted up or down in each chamber, with no further amendments permitted. Democrats hold the narrowest of majorities in both the House and Senate, so any budget plan must receive either unanimous Democratic support or win some Republican support. Also, in order to receive immediate effect, the budget bills will require a few GOP votes in the state Senate.

Holding the basic school funding grant flat at $9,608 per pupil would be contrary to Whitmer's recommendation in the budget she proposed in February , and to versions of the school aid budget passed by the House and Senate. All had proposed increases in the range of 2% to 3%, at a cost of about $300 million.

But Whitmer and legislative leaders revised the funding plans as they simultaneously worked on significant economic development funding amid potential tightness in the School Aid Fund. The idea of reducing payments to the Michigan Public School Employees' Retirement System is not new. Whitmer said in her February budget that significant progress in reducing the pension plan's unfunded liabilities would allow the state to reduce its annual contribution to the fund by about $670 million. What's new in the most recent plan is that the school districts, rather than the state, would reduce their contributions to the plan, leaving them with more money to spend. Also, teachers hired before 2013 who are part of the MPSERS plan would not have to contribute 3% of their pay to the plan in 2025, as they normally do, effectively giving them a pay hike.

Robert McCann, executive director of the K-12 Alliance of Michigan, said he hasn't seen all the details of the school funding plan but understands it includes at least one other significant cut that will hurt schools and lead to layoffs. Funding for certain mental health services, which had been proposed at $300 million, would be cut to $25 million, he said.

More importantly, with school districts facing significant inflationary cost increases, a flat per-pupil grant will hurt them not just in 2025, but every year going forward, since any future increases will be built on a smaller base, he said.

The Michigan Association of Superintendents and Administrators sent out a "call to action" Wednesday, urging its members to lobby against the plan. The association said in its notice to members that charter schools, which don't participate in MPSERS, would receive a $50 million boost in their per-pupil grants under the plan, marking the first time pupils at charter schools would receive higher funding, on a per-pupil basis, than traditional public schools.

"The proposed budget for the upcoming fiscal year provides no long-term funding relief and will lead to layoffs this fall and in the future, as the funding for our schools will not be enough to keep up with inflation, rising health care costs, and the ending of federal relief dollars," the notice to members said.

But Whitmer spokesperson Bobby Leddy hit back at the critics, suggesting the administration might be prepared to dig in its heels in defense of the plan.

"It is shocking that a group of lobbyists who falsely claim to stand on the side of students and educators are now calling to defund K-12 schools in Michigan only a few days before the July 1 deadline," Leddy said.

"The fact is this budget makes the largest investment in schools in our state's history (for the sixth year in a row)," he said. "It will deliver funding for districts that outpaces inflation and gives schools the flexibility to use the funding to meet the needs of individual students in their area through investments in school safety, mental health, before- and after-school programs, and more."

In another area related to schools, the budget is expected to mark significant progress toward Whitmer's goal of free pre-kindergarten for all Michigan 4-year-olds.

In her State of the State of the State address in January, Whitmer called on the Legislature to remove all income requirements for sending 4-year-olds to publicly funded classrooms. Her proposal accelerated by two years her previously announced plans for the Great Start Readiness Program.

The latest budget plan expands eligibility to 400% of the federal poverty level, up from 250% currently. But it adds a new wrinkle, said Lauren Leeds, a spokeswoman for the State Budget Office. Any 4-year-old, regardless of family income, would be eligible to attend public pre-kindergarten, she said. But if there is a shortage of available pre-kindergarten classroom spaces, priority will be given to the lower-income families, she said.

The budget would allocate $54 million to provide pre-K spaces for an additional 5,300 children, said Leeds. It also includes $31 million to increase per-child allocations to $10,185; $25 million to open new classrooms in underserved areas; $18 million to improve student transportation; and $2 million for marketing and outreach to ensure parents are aware of pre-K options in their area, Leeds said.

Pre-kindergarten enrollment topped 38,000 in 2023 and was expected to top 50,000 in 2024, the state has said.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on X, @paulegan4.

This article originally appeared on Detroit Free Press: State budget talks drag on amid controversy over Michigan school funding