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SB 873

Appropriations: community colleges; appropriations for fiscal year 2026-2027; provide for. Amends secs. 201 & 206 of 1979 PA 94 (MCL 388.1801 & 388.1806).

2025-2026 Regular Session Introduced by Sean McCann

Sets Michigan community college funding for FY 2026-27 with a mix of modest baseline reductions, a large one-time operations boost, tuition restraint, and new cost-control/reportin

REFERRED TO COMMITTEE OF THE WHOLE WITH SUBSTITUTE (S-1)
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Bill Summary · SB 873

SB 873 (2025-2026) – Michigan: Appropriations for Community Colleges, FY 2026-27

Purpose and overall intent
- This bill revises the appropriation provisions for Michigan’s community colleges under the state school aid act (1979 PA 94). It specifies FY 2026-27 funding levels, updates certain funding mechanics, and introduces several new reporting and cost-control measures. The measure adopts Senate changes to the Governor’s FY 2026-27 recommendations and sets limits on tuition restraint and certain one-time adjustments.

Key provisions and changes
- Funding baseline and sources
- Gross appropriation for community colleges: $493,032,100 for FY 2026-27, with $490,763,500 as the adjusted gross after minor interdepartmental transfers.
- All funds are shown as coming from Other State Restricted Funds; no General Fund/GP money is allocated in the baseline section (GF/GP remains $0).
- Total annual state spending to community colleges (State School Aid Fund) is $493,032,100, reduced to $490,763,500 in the Senate version.

  • Operational funding by college

    • The bill lists individual line-item operating appropriations for each community college, totaling $363,570,600 (subject to adjustments in subsection (3)).
    • Each college’s operations appropriation is primarily drawn from the State School Aid Fund, with separate line items for North American Indian tuition waiver costs (ITW) allocated to each college.
    • Notable examples (illustrative, per Sec. 201(2)):
    • Alpena: $6,403,300 for operations (subset of $6,416,800 total appropriation).
    • Delta College: $16,882,400 for operations (total $16,934,200).
    • Lansing Community College: ~$36.1 million for operations.
    • Wayne County Community College: ~$19.46 million for operations.
    • North American Indian tuition waiver costs are allocated separately to each college (e.g., Alpena: $13,500; Grand Rapids: $153,100).

  • Additional statutory appropriations and adjustments (non-ongoing)

    • One-time adjustments and other special provisions include:
    • A 4.0% one-time operations increase for community college operations (total one-time: $14.63 million per Senate rec vs. $10.97 million previously).
    • Removal of the prior year’s 3.0% one-time operations increase for FY 2025-26.
    • Infrastructure, technology, maintenance, equipment, and safety funding (one-time): $33,265,600.
    • MI Maritime Manufacturing Initiative at Macomb CC (one-time): $5,000,000.
    • Reconcilements for MPSERS (retirement system) costs:
    • MPSERS UAAL cost adjustment: reduces ongoing funding by $4.7 million (to reflect actuarial liabilities).
    • MPSERS normal cost offset: reduces ongoing funding by $1.25 million.
    • MPSERS reform costs: $89.5 million in the ongoing category to address broader pension reform costs.
    • North American Indian Tuition Waiver reimbursements: $23,900 (Senate change) for ITW adjustments.

  • Tuition restraint and cost-containment

    • Tuition restraint provisions cap increases: 4.0% or $199 (FY 2026-27) and 3.5% or $179 (FY 2027-28). These caps are designed to limit tuition growth at community colleges.

  • New and revised reporting/requirements

    • Sec. 216e adds two “best practices” to the institutional best-practice set.
    • Sec. 217a requires a report on severances paid to former employees.
    • Sec. 212 adds “increased web-based instruction” as a suggested cost-saving measure.
    • Sec. 217d directs a report on changes to DEI programs within DEI initiatives.
    • Sec. 217e requires a cost-of-attendance report. Sec. 217g creates a holdback for charter school authorizer reimbursements.

  • Payment timing

    • General: For FY 2026-27, the funds (excluding ITW adjustments) are paid in 11 monthly installments on the 16th (Oct 2025 through Aug 2026), with July and August 2026 payments accrued to the prior fiscal year (FY 2025-26).
    • ITW reimbursements and other ITW-related payments are aligned with the same annual cycle.

Who is affected
- Public community colleges in Michigan (the 20+ institutions listed) receive operational funding and ITW reimbursements.
- Students benefiting from North American Indian tuition waivers.
- Local college administrations and boards will implement the cost-control measures, performance-funding considerations, and reporting requirements.
- Retirement system costs (MPSERS UAAL, normal costs, and reform costs) affect ongoing funding levels and future pension-related obligations of the colleges.

Procedural and timeline notes
- Effective and timeline markers:
- If enacted, payments begin October 2025 (with July-August 2026 accruals applying to FY 2025-26).
- Major changes and analyses reflect the FY 2026-27 budget cycle, with Senate subcommittee recommendations issued in April 2026.
- The bill underwent committee action (Appropriations) and has companion/related actions in the Senate (S-1 substitute) and House considerations likely to follow.

Summary
SB 873 (S-1) sets the FY 2026-27 state funding envelope for Michigan community colleges, modestly reducing baseline state spending while adding a significant one-time operations increase and broader one-time infrastructure investments. It tightens tuition growth, adjusts retirement-related costs, expands reporting on DEI and cost-of-attendance, and introduces several cost-saving and governance-focused provisions. The bill specifies detailed college-by-college operation budgets and integrates ITW reimbursements within the overall funding framework.

Compiled from official sources — confirm details with the bill’s official record.

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