Michigan

The State of Michigan engaged in a contentious FY2020 budget cycle due in large part to a new Democratic governor's funding priorities compared to a Republican-held Senate and House of Representatives. A primary point of emphasis for the governor was to improve the roads throughout the state with a gas tax increase that would provide longevity to the problem. This was in contrast to the Legislature's wish to provide a one-time lump sum for improvements. This discordance caused tension among other areas of the state budget. The governor vetoed almost $1 billion from the budget. Most notably in public education, the governor removed a $35 million increase for charter schools and minimally raised funding for colleges and universities.

Funding priorities for p-12

• • Michigan Public School Educator Retirement System (MPSERS) Cost Offset: The legislature appropriated $172 million to local school districts participating in MPSERS, based on each participating district's percentage of the total statewide payroll for participating districts across the state. These payments are for the purpose of offsetting a portion of the retirement contributions owed by the district for fiscal year FY2020.

• • MPSERS Retirement Rate Cap Costs: The state allocated $1 billion to local districts and intermediate school districts to remit to MPSERS. This funding is used to pay the difference between the uncapped MPSERS contribution rate (36.88% of payroll for MIP/Basic), and the capped rate that school employers will pay in FY2020 (25.56% of payroll for MIP/Basic).

• • School Mental Health and Support Services: The state allocated $31 million dollars for various mental health and support services.

• • School Readiness Grants: The state provided almost $245 million to improve the school readiness of at-risk four year-olds.

• • At-Risk: The state appropriated $522 million allocated to implement schoolwide reform in schools with 40% or more of pupils identified as at risk. Students qualify for at-risk monies by being documented as having at least two of six at-risk factors. The definition of eligible pupils is being economically disadvantaged, which includes those eligible for free or reduced-price meals, living in a household that receives supplemental nutrition, homeless, a migrant, or in foster care.

• • Special Education: For special education, the state allocated over $1.415 billion to provide payment for special education membership, special education transportation, and other special education categorical programs. This is over a $62 million increase.

• • Early Literacy Coaches: The state allocated $21 million to increase the number of literacy coaches 93 to 186. This allocation also provides $19 million to districts for added instructional time for pupils in grades K to 3.

• • Career Technical Education/Early Middle Colleges: The state provided over $36.6 million for the added costs of secondary-level career and technical education programs. A portion is allocated to increase the number of Michigan residents with high-quality degrees or credentials, and to increase the number of students who are college- and career-ready upon high school completion.

Changes to funding formula for p-12

The state legislature provided all school districts with a $120 to $240 per pupil increase for FY2020 based on the 2x model. The 2x model seeks to provide the largest per pupil increase to the lowest funded schools and the least increase to the highest funded schools. The education budget allocates $415 million for community colleges (1% increase) and $1.68 billion for state universities (0.9% increase).

Pressing state issues affecting p-12

• • Student Enrollment: Student enrollment continues to decline, which directly affects the amount of revenue public schools are appropriated. In FY2015, there were 1,550,802 students, FY2016 1,540,005 and FY2017 1,532,335, FY2018 1,468,256, and 1,507,772 in FY2019. Flat or slightly declining student enrollment is forecasted.

Exclusive to p-12: forces diverting funds from traditional public school districts and exclusive to higher education: trends in state funding for public institutions

School Aid Fund Allocation

A major diversion of school aid funds continues in FY2019. The state decreased the allocation from the School Aid Fund for P-12 to community colleges and higher education institutions. In FY2020...