Legislative Update June 2026: Budget Forecast, Property Tax Reform, and the August Primary
As lawmakers negotiate the state budget and prepare for elections, MARSP is monitoring developments that could affect Michigan’s public education and public school employees’ retirement systems.
School Aid Fund: Moderate Growth
The School Aid Fund (SAF), the primary source of K-12 education funding in Michigan, continues to see moderate growth:
- The latest state revenue forecast raised school funding projections by $98.1 million compared to January estimates.
- Current SAF revenue stands at $19.2 billion, expected to grow by a billion or more each year for the next two years
- Roughly $2 billion in flexible SAF dollars remains for FY 2026-2027 — about half ongoing funds, half one-time money
Several factors are driving that growth:
- Income tax payments are split between SAF and the General Fund, but refunds come exclusively from the General Fund — shifting more money toward education
- “Hold harmless” provisions in state law require additional General Fund dollars to flow into SAF
- Slightly lower-than-projected pupil membership this year carries unused balances forward, adding to next year’s opening balance
Key Facts
School Aid Fund: Revenues are growing steadily, with about $2B in flexible funding available heading into FY 2026–27.
General Fund: Rising costs, especially Medicaid, are projected to create about a $1B shortfall next fiscal year.
Property Tax Reform: Lawmakers remain divided between broad tax cuts and more targeted relief tied to school funding impacts.
Elections: All legislative seats and statewide offices are on the August Primary ballot, with major statewide races drawing early attention.
MARSP in Lansing: MARSP monitors policy daily in Lansing through staff, a lobbyist, and member-led governance focused on retirement security.
Bottom line: Budget, tax, and election decisions this summer all carry direct implications for public school retirees.
General Fund: Under Pressure
Significant spending pressures — driven largely by Medicaid costs — are projected to leave a roughly $1 billion shortfall in the coming fiscal year. This split between a steady SAF and a stressed General Fund is shaping the whole budget negotiation.
With updated numbers now available, state leaders can move toward a final budget agreement. The statutory deadline is July 1. Last year, the process stretched past October 1, the start of the new fiscal year. School districts rely on a finalized budget to plan for the year ahead, and so do retirees — the state budget sets annual funding levels for MPSERS, including pensions and healthcare. MARSP advocates for on-time budgeting every year and will continue monitoring as negotiations move toward a final agreement.
Property Tax Reform: Still in the Mix
- House Republicans are pushing for any budget deal to include at least a portion of their property tax reform package — a proposal that would reduce property taxes by $5 billion statewide annually
- Governor Whitmer and Senate leaders continue to favor a more targeted approach through expanding existing tax credits
- Property taxes are a significant source of school funding, and MARSP is tracking how these negotiations develop
Elections: Two Months to the August Primary
The candidate field is now set for Michigan’s August Primary Election. Every seat in the Michigan Legislature is on the ballot this year, along with statewide offices. The Republican gubernatorial primary and Democratic U.S. Senate primary are expected to generate significant attention between now and August.
MARSP encourages members to learn about local candidates and the issues that may affect retirement security and public education so they can make informed choices that reflect their priorities. For practical advice on evaluating candidates, finding reliable information, and staying focused on the issues that matter most, read our tips for navigating election season.
MARSP’s Role in Elections and Advocacy
MARSP is an independent, nonpartisan organization. It does not endorse political parties or candidates. Instead, MARSP monitors, reviews, and analyzes legislation based on its impact on public school retirees.
MARSP staff and a lobbyists in Lansing monitor legislative and policy developments on a day-to-day basis, tracking proposals and assessing their potential impact on pensions, healthcare, and retirement security. MARSP’s Legislative Committee and Board of Directors are made up of members who help guide the organization’s advocacy priorities and review recommendations on issues affecting public school retirees. Together, this structure ensures MARSP serves as both a voice for retirees and a watchdog on issues that matter to members—while also reporting back to members each step of the way.
MARSP membership makes this ongoing monitoring, advocacy, and reporting possible. Timely renewal helps ensure MARSP has the strength and reach to remain an effective voice during critical budget and election decisions. Join or renew by June 30.
