Legislative Update: Legislature Passes State Budget
The Legislature approved the FY 2026 state budget early in the morning of October 3. The plan includes $51.8 billion in General Fund spending (HB 4706), and totals about $80 billion total when school aid and higher education are added (slightly smaller than last year’s $82 billion budget). It also includes significant cuts to state departments and significant increases to road funding.
The $21.3 billion School Aid budget (SB 166) passed the Senate by a vote of 31 – 5, and passed the House by a vote of 104 – 5.
The budget now heads to the governor’s desk for signature.
Impacts to MPSERS Funding
Changes to School District Funding
- The new School Aid budget makes a handful of changes to how school districts are funded for their MPSERS contributions. While these changes are somewhat complex, they do not include major adjustments like those enacted last year that directly affected OPEB (MPSERS healthcare) funding.
- Several smaller line items were removed compared to previous years, reflecting a structural shift and slimming down of “categorical” project funding.
- MARSP will continue reviewing budget details as more information becomes available.
Retiree Benefits
- Funding for pensions and retiree healthcare remains consistent with previous years. The state continues to make progress toward paying off pension debt by 2038.
Active Employee Contributions
- Active public school employees in MPSERS with the premium subsidy healthcare benefit are no longer required to directly pay a 3% contribution out of their salary toward future retiree healthcare, increasing take-home pay as part of a deal reached last year.
- To help cover those costs, the budget includes $147.3 million (Section 27l) to support the required retiree healthcare payments from school districts. We are still waiting for clarification on how this funding will be applied.
System Stability
- The funding structure continues to support MPSERS obligations.
- MARSP will continue monitoring to ensure districts’ ability to meet contributions is maintained.
Member Engagement Matters
- Reaching out to your elected officials—through a quick call, email, or short visit—helps remind them that MARSP members are informed and engaged. It’s also worthwhile to make contact just to get to know them better and build a trusted relationship, rather than waiting until there’s a specific issue to discuss. That way, when important matters affecting public school retirees arise, they’ll already know who you are.
We will continue to keep members informed through VISION e-news and at www.marsp.org/news. Thank you for your continued support!
