The House education budget proposal would give school districts more money with fewer strings and increase funding. So why are local school officials so sad about it?

The House budget, totaling $21.9 billion, would give school districts $100 million more in funding than the Senate’s or governor’s versions and a billion dollars more than schools get this year. And unlike the other proposals, it would roll up most of the categorical grants into the per-pupil foundation allowance.

Categorical grants are restricted funds that districts must use for designated purposes. The current K-12 budget includes 128 of these grants – significantly more than in most other states.

Conversely, the foundation allowance, derived from state and local sources, is the minimum per-pupil allocation guaranteed to every district. Districts decide how to spend these dollars to keep their schools running. There are no strings attached.

The House budget would increase the foundation allowance to a record level. Districts would receive a minimum of $10,025 for each student they enroll, compared to the $9,608 they receive now. And since the budget rolls up most of the categorical grants into the per-pupil allowance, it would give local school leaders greater control over how these funds are spent.

But some school leaders aren’t convinced about the benefits of this different approach to school spending.

The superintendent of Escanaba Community Public Schools worries about having enough money to offset the district’s transportation costs under the House’s plan, according to a Michigan Public Radio article. He told the news source that the district received a categorical grant of $266,000 last year to cover transportation costs.

But his concern seems unfounded based on a closer look at the House District Impact Statement. If the legislature adopts the House’s budget, Escanaba schools will receive $3.6 million more in unrestricted funding than they did in the 2025 budget. The superintendent would have the flexibility to decide how much to spend on transportation versus other priorities.

None of the state’s school districts would receive less money under the House budget proposal. Conversely, 26 districts will get less if the Senate proposal passes.

With more unrestricted funding, district leaders would have greater autonomy to decide how to spend their per-pupil dollars. While rural districts like Escanaba might opt to spend more on transportation, others might spend more on priorities that reflect their unique needs or student population.

Perhaps more autonomy will encourage school leaders to engage more intentionally with families of their students. By gathering feedback from the community, school officials can develop a better understanding of the areas of greatest need and ensure dollars are spent in the best interest of the families they serve.

Local school leaders need not fear the House budget proposal. The plan doesn’t cut funding; it gives districts more money they can spend on priorities of their choosing, with fewer strings attached.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.