On Tuesday we were given an overview of the proposed School Aid Budget put together by Legislative leadership and the Governor’s office. It was disappointing at best.

The proposal included a MPSERS rate reduction of about 5.8%. However, that is a one-year adjustment only. There are no assurances that the rate will be made permanent. The budget drastically cut school safety and mental health funding and did not include a foundation allowance increase, except for charter schools. Charter schools would see an increase of $57 million and, for the first time, be funded at a higher level than traditional public schools.

We argued this proposal would provide no long-term relief for retirement costs. Additionally, the combined consequences of a freeze in the foundation amount and cuts to the per-pupil allotment for safety and mental health will be layoffs this fall and in the future. The funding for our schools will simply not be enough to keep up with inflation, rising healthcare costs and the end of federal relief dollars. While the MPSERS rate cut is appreciated, it does not provide a lasting financial impact. Unless the rate is permanently reduced, it will go back up next year and schools will have to pay the money again. This means districts will struggle to use their one-time savings for ongoing expenditures like salaries or new hires, because MPSERS relief is not guaranteed.

We, along with MASA and MAISA, urged our members to contact their legislators in opposition to the plan. Thank you to the more than 350 board members who contacted their Senators and Representatives. We know you were getting through because people were getting frustrated with us!

As the night went on, we received information that the House had an agreement to get the budget passed. House Leadership agreed to move Senate Bill 911 with the budget. SB911 would put the rate cap reduction into law to ensure ongoing savings for districts. And though the reductions were not as high as we would have liked, it was a small step in the right direction. 

SB911 is also the vehicle for two other important and necessary changes: it would eliminate the 3% employee contribution, resulting in the equivalent of a 3% pay raise for those employees who are currently paying those costs; and it changes current law, allowing the $670 million to be freed from having to be deposited into the overfunded MPSERS retiree healthcare system. Without this change, the state would not be able to access those funds, effectively undermining the budget.

In the wee hours of Thursday morning, we heard that the budget proposal, along with moving SB911, had the votes needed to pass. The Conference Committee met at about 12:20 am to approve the proposal as HB5507 CR-1. It was later passed by the House on a party-line 56-54 vote. After the budget passed, SB911 was brought up and amended to the agreement they reached on rates and also passed 56-54. As passed, SB911 would reduce the district MPSERS rate as follows:

• 2024-25: 3.5% reduction (capped rate of 17.46%)
• 2025-26: 3.96% reduction (capped rate of 17%)
• 2026-27: 4.96% reduction (capped rate of 16%)
• 2027-28: 5.75% reduction (capped rate of 15.21%)

The benefit of a rate cap reduction is that it ties the hands of future state legislators by locking in the amount of money that the state contributes toward MPSERS debt, regardless of political whims, while reducing the amount that has to come from local districts.

The Senate passed the budget around 5 am, but adjourned before acting on SB911. We then found out that SB911 was not transmitted from the House to the Senate until after they adjourned, so they did not have an opportunity to vote on it. The bill is now stalled in the Senate, along with HB5803, which would lower the rate faster.

Both the House and Senate then adjourned until July 30. We would like to thank Rep. Regina Weiss (D-Oak Park) and Rep. Matt Koleszar (D-Plymouth) for their support of our proposal to invest in our classrooms responsibly, protect the retirement account and create a stable budget. Their efforts were helpful in talking to members. 

We are very disappointed that this was the direction the Legislature took and that they left the permanent rate reduction behind. We call on Senate and House Leadership to pass a statutory rate cap reduction when they return on July 30, send it to the Governor and get her signature.

We will have a more detailed summary available on our website soon, we are still going through the details. Also, join us on Monday at noon for Views From the Capitol, when Jason Helson from MSBO and Jennifer Smith from MASB walk you through the budget that is headed to the Governor for signature.