Michigan Dems mend fences with school leaders with $126M sweetener to controversial budget

(This story was updated to add new information.)

LANSING — The state House, in a move expected to help mend a rift between Democrats and educators over the state budget passed in June, finalized legislation Wednesday to reduce school district retirement costs in future years.

Lawmakers also moved to sweeten the 2025 school aid budget by $126 million, with most of that money directed to mental health and school safety programs, which had been the targets of earlier cuts.

The supplemental spending bill for the fiscal year that begins Oct. 1, House Bill 5503, was approved by a conference committee Wednesday and later passed the full House in a 98-11 vote. The spending plan passed in the Senate 23-15 but was not granted immediate effect, meaning the bill would not become law — and the money would not be sent to school districts — until the first quarter of next year.

Republican senators, after declining to give the bill a two-thirds vote to give it immediate effect, directed their strongest criticism at the smallest spending piece — $1 million set aside to pay for a tip line students can use to anonymously report improperly stored firearms that are accessible to minors.

Sen. John Damoose, R-Harbor Springs, called it a measure designed "to enforce your gun control agenda," and Sen. Thomas Albert, R-Lowell, called it "a tattletale provision."

The spending package was announced at a Wednesday news conference featuring several House Democrats from marginal districts, suggesting that criticism of the school aid budget from Republicans and many school administrators had stirred concerns, with the Nov. 5 election approaching.

"We heard you loud and clear," and "we're taking action," said Rep. Joey Andrews, D-St. Joseph, whose 38th House District, newly created by the 2020 redistricting process, is considered one of the state House battlegrounds in the 2024 election.

Many school leaders were unhappy that the 2025 school budget Gov. Gretchen Whitmer signed into law in July included no increase in the basic per-pupil grant — an unusual departure for an administration that has made school funding a priority.

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Whitmer officials argued that school districts will still have more money to spend in 2025 than they did in 2024, because their required contributions to the school employees' retirement plan will be reduced by about $589 million.

But freezing the per-pupil grant will impact school district budgets far into the future, school officials countered, since annual increases, which have been the norm, build on top of the previous year's increase. What assurance was there that the savings in retirement costs would continue beyond 2025?

There was no such assurance. Due to an apparent oversight during the budget session that stretched into the early morning hours, a bill intended to make the cost reductions permanent passed one chamber, but not the other, before lawmakers adjourned for their summer break. Democrats promised to fix that, which they did Wednesday by sending legislation to Whitmer's desk. They passed House Bill 5803, which had already been approved by the Senate, in a 56-52 vote.

But Democrats made no promises to restore money to improve mental health and school safety, which was reduced to $25 million this year from $328 million in 2024. Administration officials and lawmakers spent months defending the overall school budget, including the cuts to those areas, as one that made historic investments in Michigan K-12 education. They argued that one-time federal funds had been used to fund those measures in 2024, so it wasn't accurate to describe those reductions as a cut.

But on Wednesday, House Democrats made a course correction, with a bill that restores about half of the amount that was cut. They said they were able to shift money that would be left unspent in the 2024 budget.

"We've got your back and we're taking action" on "classroom safety and these critical mental health resources," said state Rep. Jenn Hill, D-Marquette, whose 109th House District is also among a handful of seats that could determine which party holds the speaker's gavel in 2025.

Al Lotosz, superintendent of Algonac Community Schools and president of The K-12 Alliance of Michigan, said Wednesday's actions will have "both a short and long-term positive impact on public education funding and directly benefit the work educators are doing." He said it is also critical to "continue these efforts to ultimately enact the changes necessary to bring Michigan's K-12 funding system to where our students deserve it to be."

Earlier this month, Republicans in the Legislature had proposed school safety and mental health supplemental bills of about $300 million, to fully restore the cuts.

State Rep. Jaime Greene, R-Richmond, who is minority vice-chair of the House Education Committee, said it's too bad the Democrats are not restoring the full amount, but something is better than nothing.

"This is absolutely an election issue," and "clearly, they are panicking," Greene said.

Republicans had opposed the Democratic plan to reduce contributions to the Michigan Public School Employees' Retirement System, arguing the system still has significant unfunded liabilities. Democrats argued the post-retirement health care portion of the system is now fully funded, so the state can afford to reduce contributions in that area while continuing to boost the pension system as a whole.

The 2025 budget, and the MPSERS changes finalized Wednesday, also put more money into the pockets of many teachers. That's because they remove a requirement that teachers hired before Sept. 4, 2012 — the only ones eligible for post-retirement health care benefits — contribute 3% of their pay toward the pension fund. That change is expected to save teachers $181.5 million next year.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com.

This article originally appeared on Detroit Free Press: Dems mend K-12 fences with $126M sweetener to controversial budget