Local school officials have their work cut out for them after the Michigan House and Senate failed to pass a school aid budget by a self-imposed July 1 deadline. School districts must create spending plans for the new school year despite lack of certainty from Lansing. Regardless of how lawmakers allocate funds, however, districts can count on receiving more money for every student they enroll.
Lawmakers have so far failed to reconcile differences in each chamber’s budget proposals. The most notable difference is the amount of funding each gives to specific programs through categorical grants.
The Senate’s proposal reflects the growing trend of tying dollars to programs lawmakers believe should take priority. While these priorities may have merit, they often don’t align with the diverse needs of local school districts.
The House proposal breaks from this trend, sending less money to restricted funds and more to the foundation allowance. This is the minimum amount districts receive for every student they enroll, and they have more say in how they use it. Instead of being required to pay for programs distant lawmakers favor, schools could fund initiatives that make sense for their community.
Reducing restricted funding has another benefit: It removes some of the administrative burden on school officials. The Legislature has nearly doubled the number of categorical grants over the last 10 years, with a record 128 in the governor’s proposal. Districts need to complete applications and comply with state regulations to access these funds, which represent 44% of the governor’s budget proposal. Conversely, the House budget would give districts more money they could use with no strings attached.
Whether the final budget reflects the House’s, Senate’s, or governor’s version, districts can expect to enjoy more funding per student. Last year, the Legislature neglected to increase the foundation allowance — the first time in over a decade. It instead allocated more state dollars to categorical grants, hampering districts’ ability to direct funding where it’s needed most. With the current budget proposals, districts can expect to receive at least $10,000 for each student enrolled — about $400 more than in the 2025 fiscal year.
The Mackinac Center supports a funding model that allows for more local control over school spending. A budget that increases the foundation allowance while reducing categorical grants would help district officials meet the needs of their school communities more efficiently.
