In the early morning hours of Oct 3, the House and Senate finally passed the School Aid budget for 2025-2026.  While the budget is months late, MDE should be able to process and deliver the October 20 state aid payments on time.

The budget includes a $442 increase in the per-pupil foundation allowance, raising it to $10,050. That 4.6% increase extends to CTE, rural and isolated districts, special education and ISD operations. Funding for At-Risk (Sec 31a) and English Language Learners was increased by 25%. 

Following, we break down the School Aid Budget by relevant sections. If you have questions, please feel free to contact us. If you missed Views From the Capitol on Oct 6, Jason Helsen from MSBO joined MASB to talk about the budget.  You can view it on our YouTube channel.

Sec. 11x – School consolidation and infrastructure fund

Deposits $83.4 million into the school consolidation and infrastructure fund.

Sec. 12e – Infrastructure grants -- NEW

Allocates $100 million for competitive grants for infrastructure needs. Priority would be given to schools that are in a high opportunity index band, have HVAC or roofing needs, and have not been able to pass a bond for the work. Allows funds to be disbursed from the Consolidation and Infrastructure Fund if the $100 million does not cover all requests.

Secs. 16-16e – Students, Metrics And Results with Transparency “SMART” Plan – NEW

Not included.

Sec. 20 – Per-pupil foundation allowance

Increases the target foundation allowance by $442 per pupil for an allowance of $10,050, a 4.6% increase, and restores the cyber school allowance to 100% of the target foundation allowance.

Sec. 22d – Rural and isolated districts

Increases funding in this section by $566,200, a 4.6% increase, for payments to rural and isolated districts.

Secs. 22k and 22l – Transportation funding

Deposits $130 million into the school transportation fund. Allocates $125 million for district transportation costs through the same formula as last year.

Sec. 27a & 27c – MI Future Educator Fellowship

Maintains $15 million appropriation for the fellowships. Also continues the $20 million for student teacher stipends.

Sec. 27b – Grow Your Own

Allocates $70 million for competitive grants to districts, ISDs or a consortium of ISDs, for Grow Your Own programs. Establishes the grants in three tiers with no more than $40 million per grant for tier 1, no more than $12.5 million per grant for tier 2 and no more than $5 million for tier 3. Each tier has its own set of criteria for a program to qualify for the tier.

Sec. 29 – Enrollment stabilization fund

Maintains $71 million to assist districts with declining enrollment.

Sec. 30d – Universal breakfast and lunch programs 

Maintains $200 million to reimburse schools for the cost of providing free breakfast and lunch to all students. Also provides $1.6 million for nonpublic schools that participate in the federal free and reduced lunch program.

Sec. 31a – At-risk funding

Increases funding by $258.7 million, a 25% increase. Adds language allowing any district receiving funds under this section to use up to 30% of them to lower class sizes in K-3. Districts in opportunity index bands 4-6 can use up to 30% of the funding to support staff retention and recruitment efforts. Adds language that districts must report to parents on how the funding was used and allow parents to provide feedback.

Sec. 31c – Small class sizes

Creates a new section with $65 million for grants to establish small class sizes in grades K-3 for four specific districts and those in an opportunity index band of 4 or higher.

Sec. 31n – School mental health and support services

Maintains funding for this section for licensed behavioral health providers in schools. It also continues to allow those providers to qualify for federal Medicaid matching funds. 

Sec. 31aa –Mental health and school safety grants

Allocates $321 million for per-pupil payments to districts for certain activities to improve the mental health of students and staff and/or to improve school safety. It adds items to the list of eligible activities. $53.5 million each is dedicated to grants for hiring School Resource Officers and grants for staff for student mental health needs. It requires a district to consent to a comprehensive investigation by a person or entity chosen by the Governor in the event of a mass casualty event in order to receive funds under this section.

Secs. 32d and 39 – Great Start Readiness Program 

Increases funding for the Great Start Readiness Program by $28.5 million and expands eligibility to all children who will be four by Sept. 1. However, students in low-income households must be given priority for enrollment slots. It moves most of the oversight, regulation and licensing from MDE to MiLEAP. Increases the allocation per child to $10,650 for full-day and $5,325 for part-day programs. Includes $10 million for GSRP start-up grants.

Sec. 35a – Third grade reading

Maintains $42 million appropriation but changes the distribution to be based on the number of third-grade pupils scoring partially or not proficient on the M-STEP (current law is total number of 1st graders). Eliminates additional funding for added instructional time but maintains $10 million for LETRS training for Pre-K to grade 3 teachers.

Sec. 35e – School libraries

Appropriates $250,000 to Wayne State University to convene a study on public school library programs.

Sec. 41 – English language learners 

Increases funding by 25% to $62.7 million and allows funding to be used for software to assist with learning.

Sec. 51e & 56 – Special education funding and millage equalization

Increases funding for special education programs to continue to fund pupils at 100% of the target foundation allowance. Makes no major changes to millage equalization.

Sec. 54d – Early On 

Maintains $23.7 million appropriation.

Secs. 61a & 61b – CTE added costs and early middle college

Increase funding for each section by 4.6% to $41.7 million for added costs and $8.4 million for early middle college. 

Sec. 61d – CTE per-pupil incentive

Increases the per-pupil payments for students in CTE programs from $35 to $88.

Sec. 61v – CTE expansion – NEW

Establishes $70 million for grants to districts located in a “geographic area with limited or inequitable access to career and technical education programs, as determined by the department.” Allows virtual reality simulations under eligible programs and allocates $1.5 million for an enrollment campaign

Sec. 67f – FAFSA incentives

Maintains $10 million for grants to districts that include completing the FAFSA as a graduation requirement.

Sec. 81 – ISD funding 

Increases funding to ISDs by $3.7 million for a 4.7% increase over last year. 

Sec. 97n – Community violence intervention

Includes $20 million for competitive grants for districts to support community intervention plans to reduce or prevent youth violence.

Sec. 101 – Days and hours

Expands reduced schedule allowances to grades 6-8, if it is in the pupil’s best interest.

Sec. 147 – MPSERS rates 

Makes annual adjustments to all rates.

Sec. 147a – MPSERS offset 

Eliminates the $100 million cost offset.

Sec 147b – MPSERS reserve fund

Does not include a deposit into the fund.

Sec. 147g – MSPERS retiree healthcare 

Does not include funds to reimburse certain employees’ health care costs.

Sec 164k – Provisions to withhold funds

Requires MDE to withhold payments if a district does any of the following:

• Fails to comply with federal rules regarding school meals
• Fails to require every student to fill out the free and reduced lunch application, to the extent practicable
• Gives out financial incentives for attending school on count day
• Does not make all student surveys and results public and notify parents about any survey
• Fails to use curriculum from the department’s evidence-based curriculum list