07/03/2026

Legislature Passes FY 27 Budget

The Michigan State Legislature has approved a state budget for Fiscal Year 2026-2027 (FY 27). The Democratic-led Senate and Republican-led House came to an agreement on spending for FY 27 two days after their July 1 statutory deadline that marks the beginning of the fiscal year for schools and universities.  

The final FY 27 budget totals $75.2 billion. The General Omnibus budget, Senate Bill 878 appropriates $52.3 billion ($12.9 billion GF/GP), while the Education Omnibus, House Bill 5630 appropriates $22.9 billion ($1.2 billion GF/GP) for K-12 schools, community colleges, and higher education. The K-12 portion makes up $19.8 billion. The final budget stems from a framework deal made between the two chambers and the Governor earlier this week that was contingent on a school funding increase, universal free school meals, no new revenues, and without withdrawals from the state's Stabilization Fund.

Arguably the longest part of the lengthy budget negotiations process was negotiating which policy items were going to move ahead of the summer campaign season. A full list of the legislation passed alongside the FY 27 budget can be viewed here. The legislative website will continue to be updated in the coming days.

Below are especially noteworthy items included in the FY 27 budget. A comprehensive list and all budget materials can be accessed through the link at the end of this email. 

FY 2027 Budget Highlights

The Health and Human Services budget allocates $30.7 billion Gross ($7.5 billion GF/GP), around a 2.2% increase from FY 26. Highlights include:

• $54.3 million to increase staffing capacity and administrative supports for SNAP and Medicaid Work Requirement Implementation due to H.R. 1
• $173.2 million for the Rural Health Transformation Program to align the appropriation with the grant reward and designate two FTE positions
• $70.5 million in one-time funding from the Opioid Healing and Recovery Fund
• $351.9 million to maintain direct care worker wages, as well as funding for minimum wage increases and sick leave
• $27.8 million for a New State Psychiatric Hospital in Southeast Michigan
• RxKids reduced by $20 million in TANF funding that is instead redistributed to different line items and programs

Other notable appropriations include:

• $3.1 billion for roads from the road funding formula passed last fall. Between Cities/Villages and County Road Commissions, this is an approximately $343.7 million increase
• $68.5 million for Michigan small businesses, community growth, and entrepreneurship
• $42.4 million for drinking water and environmental health programs
• $4 million for the Rural Development Fund Grant Program
• $2.3 million for the Office of Rural Prosperity

School Aid Budget Highlights

Notable School Aid items include:

Per-pupil foundation allowance increase to $10,300, up from $10,050 (a 2.5% increase)

• $1.7 billion to create a weighted pupil membership
• $310 million for Mental Health & School Safety
• $73.8 million increase to the Great Start Readiness Program (GSRP), for a total of $730.4 million. This also includes an increase to the Foundation by $1,086 from $10,650 to $11,736
• $400,000 increase in ongoing funding to $202 million for universal school breakfast and lunch
• $50 million in new one-time SAF funding for high-impact tutoring
• $30 million to create statewide early learning partnerships that give families access points into the early childhood system
• $2.4 million SAF increase to the Early On program, bringing the total to $26.1 million

You can access all final budget materials here.