Items of Note from the House, Senate and Governor's School Aid Budget Proposals

This episode of the #FactsMatter focuses on Michigan’s 2026 budget season, with Guy Gordon interviewing the Research Council's Craig Thiel and Bob Schneider. All three major budget proposals—the Governor’s, House’s, and Senate’s—are now public, already making this year’s process smoother than last year. Schools and local governments benefit from early budget clarity. All three FY2027 School Aid budget proposals align on a 2.5% increase to the foundation allowance, bringing per‑pupil funding to roughly $10,300. At‑risk funding continues to grow, though the chambers differ sharply: the Governor proposes a 6% increase, the House 5%, and the Senate a dramatic 25% bump, which Craig describes as “a major revenue stream” for districts with high poverty rates. The Legislature has rejected the Governor’s plan to shift $400 million from the School Aid Fund to higher education, though this could re‑emerge in negotiations. On the General Fund side of the budget proposals, Bob reports modest revenue growth—“better up than down”—but not enough to ease structural pressures. The House proposes deep cuts to university operations, including a $421 million reduction to U‑M and MSU, while the Governor’s proposed new revenues have been dismissed by both chambers. All three budgets create shortfalls heading into FY28, meaning more cuts or revenue changes will be required next year. Despite tensions, there is agreement among the three proposals on several items: funding for universal school meals, continued mental health and school safety grants, and the foundation allowance. The biggest risks ahead include unresolved General Fund gaps, higher‑ed funding battles, and the possibility that K–12 dollars could again be eyed to plug holes elsewhere.