Michigan budget allocates $2.6 billion for special education amidst funding challenges

The Michigan House of Representatives convened on March 4, 2025, to discuss critical appropriations for school aid and the Department of Education. The meeting highlighted significant funding allocations aimed at addressing the needs of special education, at-risk students, and public school employee retirement systems.

A key focus of the meeting was the funding for special education, which has reached a total of $2.6 billion for the current fiscal year. This amount includes $2.1 billion from state sources and $533 million from federal funding. The funding is intended to reimburse school districts for the additional costs associated with educating special education students, as mandated by the 1997 Durant Court case. Despite these allocations, districts still face a shortfall of approximately $601.5 million in uncompensated special education costs, which they must cover from general education funds.

The discussion also addressed the public school employees' retirement system (MPSERS), which has appropriations totaling $2.8 billion. Recent changes have reduced the cap on unfunded liability payments from 20.96% to 15.21% of payroll, allowing districts to save money while the state assumes a larger share of these costs. The meeting projected that these unfunded liabilities would be fully paid off by 2038.

Another significant topic was the At Risk program, which is now funded at over $1 billion. Changes to the funding model mean that payments are now based on a sliding scale tied to the proportion of economically disadvantaged students in each district, rather than an equal amount per student. This adjustment aims to better support districts with higher needs.

The Great Start Readiness Program, Michigan's preschool initiative, has also seen increased funding and expanded eligibility, now available to all families regardless of income. This change has led to a rise in the number of children served.

In closing remarks, committee members expressed concerns about the overall effectiveness of the funding, noting that while financial resources have increased, student enrollment has declined, and academic achievement has not improved correspondingly. The committee plans to explore further adjustments to funding formulas to ensure equitable distribution of resources across different types of schools and student needs.