The Flim-Flam Men
Paving our roads with our children’s education
Well, the other shoe has dropped. While Michigan remains without a budget for the fiscal year beginning October 1st — for either government or schools — the House GOP leadership have put their cards on the table, sort of. Everyone wants better roads, but the House idea is to do it without actually spending any new money. Magical thinking, you say? No, just straight politics. How is education involved? Just wait.
First, let’s take another look at the School Aid budget the House passed in June (an earlier analysis offers crucial background). I think it can be best described using three words:
The Hypocrisy
The public justification for eliminating nearly all categorical funding was to put decision-making power back in the hands of local communities. Every public statement, press release, and bill description has featured that rationale. In the very same bill, however, the House majority threatens districts with the loss of 20% of the discretionary portion of the foundation allowance if they fail to eliminate any “DEI” programs or activities, teach a curriculum which makes anyone uncomfortable about our country’s history, allow transgender girls to play sports, or build school bathrooms in a non-approved manner. In previous budgets, the GOP majority never shied away from taking away local control, with everything from “best practices” requirements to state takeover for low test scores.
The Shell game
The large number on the “bonus” payment ($1,975 per pupil!) obscures the fact that the vast majority of that funding is simply a redistribution of money already in the budget but directed to specific purposes. That’s true for about three quarters of the $4 billion newly repackaged spending (see a breakdown in table 3 below). It’s no accident that nearly all these eliminated programs helped students who faced barriers to learning, be they from sparse rural communities or dense central cities. The largest chunk was designed to help local districts meet the ballooning costs of the state school retirement system, but now that will be shared with charter schools which don’t have to make those payments. “Bonus” funding which doesn’t come from existing programs comes from using up money left over from the previous year, and that can only happen once.
The Con
The House passed their School Aid budget with much fanfare, advertising what a boost it would be for local schools. At the very same time, they passed a higher education budget that shifted responsibility for nearly $1.5 Billion from the general government budget to the School Aid Fund. How do they cover that? By stripping $1.5 Billion from rainy-day funds set up to secure key spending priorities (see table 4 below). They knew when they passed it in June that their school aid budget would blow up after just one year (see table 2 below). But hey, kids don’t vote, and the public has a pretty short memory, right? So, if we’re lucky, we’ll end up back where we were, but with more money flowing to for-profit charter schools. If we’re not lucky, we’ll have to find a way to function with $1.5 Billion less than we had this past year.
Other things sacrificed for roads
The House passed its version of the general government budget on 26 August in an omnibus bill which contains a nearly $4 Billion cut in state spending. Only two departments were spared: Veterans Affairs, which received a small increase, and Transportation, where the $3.4 Billion increase reflects the House road funding proposal. (Not surprisingly, the departments with the biggest cuts are generally ones which the GOP majority disfavors: Attorney General; Environment, Great Lakes & Energy; Civil Rights; Sec. of State; DHHS — especially support programs; and Labor. See table1.) But that’s just the beginning.
“Big Improvements For Free”
The House majority’s road funding plan (HB 4180-87, HB 4230) passed in March, but the final funding picture wasn’t clear until the most recent budget bills were made public. Not surprisingly, the plan is to shift money around and pay for roads by cutting just about everything else.
Thirty years ago, the comic strip “Dilbert” featured a strip in which the clueless boss assigned the hero to what he called “Project BIFF,” for “big improvements for free.” The task: recommend ways to increase profits without spending money or changing anything. (The hero comes back with a proposal to replace all managers with lava lamps.)1 Sadly, this pretty much describes what we expect from the GOP side of the aisle in the State Capitol.
The details will make your head hurt, but it involves finding over $3 billion without raising taxes. The nine bills in the road package shuffle things around to make this miracle possible. But guess what? We all still pay, just not in taxes.
In a thorough and devastating analysis by labor economist Tanner Delpier, he traces out all the tax changes and fund shifts and gives us the bottom line. At the end of the day, the School Aid Fund will be cut by over $1.4 Billion, and the state General Fund will be cut by almost $1.7 Billion. In the general fund, you can see where the cuts come from in the table below.
What about the School Aid Fund, that House members said was being “held harmless”? That shoe won’t drop until FY 2027, when all the money that was leftover or stripped from reserve funds is gone, and we find ourselves with one-and-a-half billion dollars less funding than we had this past year.
| Department | Spending change ($) | Spending change (%) |
|---|---|---|
| Agriculture & Rural Development | cut $54 million | 34% reduction |
| Corrections | cut $28.5 million | 1.3% reduction |
| Environment, Great Lakes & Energy | cut $200 million | 19% reduction |
| Gen. Gov’t: Attorney General | cut $38.4 million | 30% reduction |
| Gen. Gov’t: Civil Rights | cut $15.6 million | 53% reduction |
| Gen. Gov’t: Sec. of State | cut $69 million | 24% reduction |
| Gen. Gov’t: Tech., Mgmt. & Budget | cut $431 million | 22% reduction |
| Gen. Gov’t: Treasury | cut $117 million | 4.3% reduction |
| Health & Human Services: Medicaid and Behavioral Health |
Cut $3.8 Billion ($2.7 billion Federal pending funding clarity) |
13% reduction |
| Health & Human Services: Public Health |
Cut $92.5 million | 7.6% reduction |
| Health & Human Services: Human Services | Cut $1.1 Billion | 15% reduction |
| Insurance & Financial Services | Cut $5.2 million | 7% reduction |
| Judiciary | Cut $29.3 million | 8% reduction |
| Labor & Economic Opportunity | Cut $1.13 Billion | 47% reduction |
| Licensing & Regulatory Affairs | Cut $69.5 million | 11% reduction |
| Military & Veterans Affairs | Increased $19 million | 7% increase |
| Natural Resources | Cut $53.3 million | 10% reduction |
| State Police | Cut $66.3 million | 7% reduction |
| Transportation | Increased $3.44 Billion (reflects House road package) |
51% increase |
| School Aid Fund spending, FY2026 House budgets | |
|---|---|
| SAF revenues spent on K-12 HB 4577 (H-3), a net increase of $1,007,120,700 |
$ 19,425,772,000 |
| SAF revenues spent on Community Colleges HB4579 (H-1), a reduction of $5,068,300 |
$ 456,652,500 |
| SAF revenues spent on Higher Education HB4580 (H-2), an increase of $1,474,103,100 SAF. Total net is a cut of $60,084,800. |
$ 1,935,771,400 |
| TOTAL House SAF spending | $ 21,818,195,900 |
| Available funds: | |
| SAF net revenue FY 2026 (per May 2025 Consensus Revenue Estimation Conference) |
$ 18,934,300,000 |
| Estimated SAF beginning balance for FY 2026 (per Senate Fiscal memo on year-end balances dated 5/16/25) |
$ 1,240,200,000 |
| House-proposed "negative supplemental" for FY2025 (adds to beginning balance) |
$ 78,300,000 |
| Closing reserve funds and transfers from others | $ 1,466,170,000 |
| TOTAL available SAF funds | $ 21,718,970,000 |
| SAF surplus or (deficit) based on House FY2026 budgets | $ (99,225,900) |
| Where does that $1 billion increase in spending come from? | |
|---|---|
| New spending items | |
| $ 3,034,908,900 | The new Section 22f "bonus" payments from roll-ups |
| $ 558,150,000 | The $417 per pupil increase to foundation allowances |
| $ 286,500,000 | For competitive grants for infrastucture, consolidation, class sizes and literacy |
| $ 130,900,000 | To keep some districts from a net loss due to the roll-ups |
| $ 77,991,900 | For a projected increase in special education costs |
| $ 13,065,000 | Increase to cover various updated cost estimates |
| $ 4,101,515,800 | Total spending increases |
| Spending cuts | |
| $ (1,181,558,700) | Reduction of support to local districts for MPSERS costs, even after using most of a reserve fund |
| $ (359,000,000) | Savings from reduced costs or taxable value increases |
| $ (284,973,200) | Minor program eliminations and end to one-time grants (many uncontroversial) |
| $ (200,000,000) | Eliminates categorical for universal school breakfast and lunch |
| $ (150,000,000) | Eliminates categorical for mental health and school safety grants |
| $ (125,000,000) | Ends funding for district transportation costs |
| $ (106,545,000) | Eliminate funding for school mental health and support services |
| $ (87,000,000) | Ends one-time funding for literacy supports |
| $ (71,000,000) | Ends support for districts facing budget stress from declining enrollment |
| $ (50,186,100) | Eliminates English language learner grants |
| $ (50,000,000) | Ends program to pay stipends to student teachers |
| $ (42,000,000) | Ends ISD funding for early literacy teacher coaches |
| $ (40,500,000) | Ends funding for adult education |
| $ (40,000,000) | Cuts funding to Great Start Readiness Program (GSRP) preschool support |
| $ (39,899,800) | Ends support for career and technical education (CTE) |
| $ (37,509,400) | Eliminates payments to districts for costs of state mandated testing |
| $ (33,000,000) | Eliminates funding for school-based primary health care for children |
| $ (25,000,000) | Eliminates GSRP preschool classroom start-up grants |
| $ (20,000,000) | Ends fellowship program to help teachers in training pay tuition |
| $ (19,900,000) | Eliminates early literacy added instructional time funds |
| $ (19,400,000) | Eliminates early childhood education block grants to ISDs |
| $ (16,900,000) | Eliminates funds to help districts to provide breakfasts |
| $ (12,306,900) | Ends funding for isolated and sparsely populated districts |
| $ (11,500,000) | Eliminates funding for districts to implement benchmark assessments |
| $ (10,150,000) | Eliminates funds for vision, hearing and dental screenings for students |
| $ (10,000,000) | Ends incentive payments to districts to have all HS seniors fill out the FAFSA |
| $ (9,190,000) | Eliminates funds to equalize revenue from vocational ed millages |
| $ (8,000,000) | Eliminates funds for early middle college CTE enrollment |
| $ (7,634,300) | Ends grants for STEM program regional networks |
| $ (6,137,400) | Ends funding to MDE partnership program for low-scoring districts |
| $ (5,304,300) | Ends incentive payments for CTE programs |
| $ (5,000,000) | Ends emergency support for Flint schools |
| $ (3,500,000) | Ends funding for regional hubs for school district data systems |
| $ (3,000,000) | Ends per-pupil funding to small, "out of formula" districts |
| $ (2,300,000) | Cuts funds to dropout recovery programs |
| $ (1,000,000) | Eliminates one-time immigrant support services funds |
| $ (3,094,395,100) | Total spending cuts |
| $ 1,007,120,700 | Net spending change |
| Reserve funds drained and/or closed | |
|---|---|
| $ 28,000,000 | Taken from GSRP reserve fund |
| $ 286,500,000 | Closes school consolidation and infrastructure fund |
| $ 265,800,000 | Taken from fund designed to protect schools from recessions |
| $ 120,250,000 | Closes school transportation fund |
| $ 235,240,000 | Closes educator fellowship public provider fund |
| $ 50,830,000 | Closes educator fellowship private provider fund |
| $ 193,560,000 | Closes enrollment stabilization fund |
| $ 147,350,000 | Closes remainder of MPSERS reserve fund (not included in cuts above) |
| $ 138,640,000 | Closes school meals reserve fund |
| $ 1,466,170,000 | Total taken from reserve funds |
- This is in no way an endorsement of “Dilbert” author Scott Adams’ later views on politics and race relations, which we abhor. But the early years of his strip included apt comments on dysfunction in American business. ↩︎