The annual guessing game about how much revenue local school districts will receive from the state is causing havoc in creating budgets for the upcoming year.

School districts have to provide final budgets to the state for approval by July 1, but lawmakers have yet to come up with a final school aid budget for the 2025-26 school year.

The Senate budget bill, passed in April, and the House bill, passed June 11, have very different funding priorities and no compromise bill is scheduled for a vote anytime soon. The clock is ticking with less than 8 days left.

The lack of a final budget has forced school districts throughout Oakland County to project their final budgets based on assumptions instead of hard numbers.

“Each year, school districts are forced to wait on the state budget to determine per-pupil allocations and other funding streams,” said Embekka Roberson, superintendent for Birmingham schools. “Without this certainty, we must make conservative assumptions. If we assume too much revenue and the final budget comes in lower, we may be forced to use reserve funds or make mid-year cuts. If we assume too little, we risk cutting valuable academic programming prematurely. Both decisions can disrupt learning and have long-term consequences for students.”

“It is exceedingly frustrating to attempt to put together any credible budget and come up with programs for the following year, and staffing and it affects collective bargaining and several other areas and not knowing what funding will be coming in from the state,” said Bloomfield Hills Superintendent Rick West. “It leads to a lot of angst and questions of credibility for a district throughout the school year.”

Without a final bill from lawmakers, school districts are sometimes forced to present budgets for approval with significant deficits.

West Bloomfield schools just approved their final budget with a $3.9 million deficit and they are not alone according to Nancy Hoover, executive director for Financial Services.

“I have been in conversations with many districts in the area, and many are not the same size that we are, but many of those districts are also bringing to their boards an operating deficit this year,” Hoover told the West Bloomfield school board at a June 16 budget meeting. “We are waiting to see what the state does.”

Several organizations including the Michigan Association of School Boards, Michigan Association of Superintendents and Administrators and the Michigan Alliance for Student Opportunity have sent letters to Gov. Gretchen Whitmer and voiced their displeasure with the current state of the budget.

“The Senate passed a School Aid Fund budget in April, which was balanced and sustainable and funded the necessary items to best support students,” the letter read in part. “In contrast, the House did not pass its School Aid Fund budget until last week, and the proposal is deeply flawed. It drains $1 billion from the state’s rainy day fund and the reserve funds set aside to support school meals, student transportation, educator recruitment, and retirement.”

West Bloomfield Superintendent Dania Bazzi said a budget approved in June with a deficit do not translate into how it will finish the year once state revenue is allocated and a district audit is completed in November.

“Last year we had a planned operating budget with a $2.77 million deficit and we were later presenting for that same fiscal year with a budget surplus,” said Bazzi. “We started the year with a planned projected operating deficit because revenues hadn’t been defined by the state of Michigan.”

There are dozens of line items in the school aid budget that could have an effect on local school districts.

“Without knowing the details of other state categorical and line-item allocations, such as funding for special education, mental health services, literacy support, or the state share of MSPERS (Michigan Public School Employees Retirement System) costs, we are unable to plan for the year ahead fully and responsibly,” said Birmingham’s Roberson. “School leaders are doing their best to balance fiscal responsibility with educational priorities in the face of significant uncertainty.”

“We will be monitoring budget conversations happening at the state level and will be paying close attention to the MPSERS funding, a possible foundation allowance increase, as well as the possible elimination of current categoricals, and any future adjustments to the funding that flows through to districts to bring down unfunded liability with our pension system,” said Kelly Coffin, Farmington schools superintendent.

The House plan sets $10,025 in per pupil aid, up from $9,608 this year and higher than the $10,000 per-pupil aid proposed by Whitmer in February and the $10,008 per-pupil aid in the Senate plan.

“The most impacted area is the per pupil foundation allowance, which is the base amount we receive from the state for each student. This single number influences nearly every other budget decision, from staffing and class sizes to academic programs and extracurricular offerings,” said Roberson. “When we do not know the final per-pupil amount, we are essentially budgeting without a clear picture of our largest revenue source.”

The House plan eliminates the governor’s policy of providing free breakfast and lunch to all public school students, but leaves participation up to individual school districts at their own expense.

The Senate plan contains $20.3 billion in funding, compared to the $20.5 billion for the House plan and Whitmer’s recommendation of $21.2 billion.

The House plan, which has been criticized by state Superintendent Michael Rice, has additional funding for resource officers and mental health supports of $3.1 billion, which would be paid for by cutting funds to other programs including:

Eliminating $125 million for transportation for intermediate school districts based on riders per square mile; Eliminating $33 million for school-based health centers, supporting the primary health care of students up to age 21; Eliminating $42 million for hiring early literacy teacher coaches for intermediate school districts; Eliminating $11.7 million for vision, hearing and dental screenings for Michigan students.

“We must do better for our school children than this duct-taped budget that would remove guaranteed and targeted funding for improving early literacy, addressing the teacher shortage, and supporting students who have the greatest needs,” Rice said in a statement after the House bill was passed.

But while the wrangling over a final school aid bill continues, which is not due until Oct. 1 as part of a final overall state budget, school districts have just over a week to submit their final budgets.

“The process is even more exacerbated by declining enrollment,” said Bloomfield Hills’ West. “Not knowing what we have creates some budgetary assumptions and projections that can scare staff and the community, but we are required to have our budgets submitted and we have no idea when they will pass a final budget.”

West added, “We have to come up with a better pathway going forward because it just creates too much unnecessary stress in communities dealing with the unknown.”