JACKSON, Mich. (July 20, 2024) — Earlier this month, Gov. Gretchen Whitmer signed the Fiscal Year (FY) 2025 State Education Budget into law. Sen. Sue Shink (D-Northfield Twp.) and her Democratic colleagues proudly celebrate the signing of the budget and the significant benefits it brings to Michigan’s students and teachers.
This year’s education budget delivers substantial wins for Michigan schools, teachers and students. Thanks to an innovative and strategic approach to school funding, Senate Democrats are enhancing the quality of education by providing schools with the necessary resources for students to thrive.
“This new approach will lead to a more robust and flexible educational environment for all students. By alleviating the financial burdens on our schools, we are empowering educators to focus more on student success and less on financial constraints,” said Sen. Shink. “For our local K-12 schools, this means increased funding for classroom resources, enhanced support services, and more opportunities for extracurricular activities. It’s a transformative step forward for education in our community.”
The new budget delivers significant relief to schools, by providing school districts with increases to their general operating funding. Currently, school districts are charged an annual contribution toward the pension and retiree health care legacy debts of the school employee pension system. The budget allocates $598 million to reimburse districts for a portion of that contribution, thus freeing up existing discretionary funding for other essential needs. On average, this allocation is equivalent to approximately an additional $400 per student or a 4.16% increase in school funds.
Under the Public School Employees Retirement Act, schools must contribute no less towards these debts than they did in the previous year until the debts are fully paid off. As of September 30, 2023, these debts were 126.9% funded.
By allocating funds to partially cover schools’ pension debt payments, the budget will reduce schools’ required contributions from 20.96% to 15.21% of payroll for FY 25. This significant reduction will allow schools to redirect more funds toward the immediate and diverse needs of students, effectively increasing the school funds.
K-12 schools are not the only educational institutions whose students will benefit from the budget. Colleges and universities play an integral role in shaping the future of our young people, whether they pursue careers in health care, technology, the trades, and more. As part of the 2025 state budget, Senate Democrats included $330 million for the Michigan Achievement Scholarship (MAS) — creating the Community College Guarantee. This scholarship program helps lower the cost of community, private, or public college by thousands of dollars a year.
The bipartisan FY 2025 budget delivers significant wins for school districts, students, teachers, and other educational institutions, reaffirming our commitment to the future of Michigan’s educational landscape. For more information on the entire budget, click here.