Updates About Legislation

Senate Bill 911 passed in the Senate along party lines (20-16) in favor of permanently reducing the retirement contribution cap for Michigan schools to reallocate more funds toward operations and education. Originally appearing as a one-time change in the fiscal year 2024-2025 budget beginning on October 1, SB 911 would cement the retirement reduction into law. The bill also accelerates the timeline for decreasing the unfunded actuarial accrued liability cap to 15.21% by the 2025-26 fiscal year for K-12 schools, faster than the House’s proposed 2027-28 timeline.

The legislation would also eliminate the 3% contribution to retirement health care benefits that is currently considered mandatory for Michigan Public School Employees’ Retirement System (MPSERS) members hired prior to September 2012. Supportive stakeholders consider the vote a significant win for public school classrooms, while opponents saw the bill as a destabilizer to the teacher pension fund. The bill now awaits further action in the House.

On September 25, a conference committee approved $125 million in additional funding for school safety and mental health grants in Michigan’s K-12 schools. After cutting $300 million from the FY 2024-25 budget in a move criticized by House Republicans, the legislature has elected to restore $125 million to help schools enhance student safety and support mental health. Another $1 million from the School Aid Fund will be allocated to a student tip line for reporting improperly stored firearms accessible to minors.

The supplemental funding reallocates School Aid Fund dollars considered underutilized by House Democrats to prioritize these initiatives. The House and Senate approved this supplemental funding alongside a bill that permanently reduces the retirement contribution cap for schools.

The Michigan State House and Senate approproations subcommittees have issued their respective budget recommendations for the upcoming fiscal year beginning on October 1.

The Senate’s Department of Health and Human Services (DHHS) budget closely aligns with the governor’s proposal in overall funding levels but includes some notable differences. Notable changes include adjustments to funding for the Temporary Assistance for Needy Families (TANF) program, Medicaid reimbursement rates, juvenile justice programs, and various one-time funding items and new programs. Additionally, the Senate introduced boilerplate language aimed at safeguarding the privacy of individuals seeking abortion services in Michigan from out-of-state investigations. The Senate’s proposed budget stands at $37.71 billion (with $6.68 billion allocated from the General Fund), coming in $110 million higher than the Governor’s proposed $37.6 billion budget for DHHS.

On the other hand, the House’s DHHS budget introduces its own modifications to the Governor’s proposal. Notably, the House subcommittee opted to allocate $53.4 million from opioid settlement funds toward opioid recovery and addiction care services. The House also proposed various adjustments to Medicaid reimbursement rates, foster care administration rates, and funding for behavioral health initiatives. Additionally, the House prioritized several one-time projects, including investments in public health initiatives, behavioral health programs, and community violence prevention. The House’s proposed budget amounts to $35.9 billion (with $6.6 billion allocated from the General Fund). Their total budget for DHHS is $1.81 billion less than the Governor’s DHHS budget proposal.

Overall, both the Senate and House Budget Recommendations exhibit nuanced differences from the governor’s proposal, reflecting varying priorities and approaches in addressing key areas such as healthcare, social services, and public health initiatives. While the Senate budget came in slightly higher than the executive budget allocation for DHHS, the House proposal is significantly lower. Updated revenues for Fiscal Year 2025 will be presented on May 17 at the next Consensus Revenue Estimating Conference.