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HB 6130

Education: financing; Michigan trust fund act; modify. Amends sec. 12 of 2000 PA 489 (MCL 12.262).

2025-2026 Regular Session Introduced by Ann Bollin

Creates a temporary Community District Education Trust Fund to offset local revenue gaps for state foundation allowances, with $72M/yr from tobacco revenue, ending Sept 30, 2026 an

transmitted
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Bill Summary · HB 6130

Summary of Bill: HB 6130 (2025-2026) – Education: financing; Michigan trust fund act; modify

Purpose and intent

  • The bill amends the Michigan trust fund act (2000 PA 489, as amended) to create and modify the framework for a dedicated funding source called the Community District Education Trust Fund and to regulate how tobacco settlement revenue is allocated to state education funding, with a sunset event ending the fund and redirecting remaining assets to the School Aid Fund.

Key provisions and changes

  • Creation of a new fund

    • Establishes the Community District Education Trust Fund within the state treasury.
    • The State Treasurer is responsible for receiving money/assets for deposit, directing investments, and crediting the fund with interest and earnings.

  • Use and administration

    • The Department of Treasury is the administrator of the fund for auditing purposes.
    • Expenditures from the fund, upon appropriation, may only be used to offset the absence of local school operating revenue in a community district to fund the state portion of foundation allowances under section 22b of the State School Aid Act (1979 PA 94, MCL 388.1622b). “Community district” is defined per the Revised School Code.

  • Revenue source and limits (subsection 6)

    • Beginning in fiscal year 2017 and in each subsequent year, $72,000,000 of tobacco settlement revenue (that is not classified as TSR under the Michigan Tobacco Settlement Finance Authority Act) shall be deposited into the fund.
    • Cumulative cap: total deposits into the fund may not exceed $617,000,000.

  • Interim financing mechanism (subsection 7)

    • If deposits under subsection (6) are insufficient to offset the absence of local school operating revenue in a community district (and while that district is prohibited from levying a school operating tax under the Revised School Code), the General Fund shall reimburse the School Aid Fund.

  • Sunset and transfer (subsection 7)

    • After September 30, 2026, no money may be appropriated to or expended from the Community District Education Trust Fund.
    • Any remaining money in the fund on or after October 1, 2026, must be transferred to and deposited in the State School Aid Fund (SSAF).

Affected entities and stakeholders

  • State government and the Department of Treasury: responsible for administration, investment, and auditing of the new fund.
  • Local school districts within “community districts” as defined by the Revised School Code: potential beneficiaries if they experience gaps in local operating revenue that affect the state portion of foundation allowances.
  • Michigan tobacco settlement revenue streams: earmarking rules for the portion not classified as TSR.
  • State School Aid Fund (SSAF): recipient of funds remaining after the sunset.

Procedural and timeline aspects

  • Introduction and referral: Introduced June 25, 2026, to the Appropriations Committee.
  • Implementation timeline:
    • Annual deposits of $72 million into the fund begin in fiscal year 2017 (note: dates in the bill description align with long-standing structures; the 2026 sunset is explicit for the fund’s termination).
    • The fund is effectively a temporary mechanism with a hard end date of September 30, 2026; any remaining assets transfer to the SSAF on October 1, 2026.
  • Sunset and dissolution: The fund ceases operations and resources are redirected to the SSAF, which may alter the timing and structure of local funding offset for community districts post-2026.

Practical impact and considerations

  • Purpose: To provide a dedicated, limited-duration revenue stream intended to offset gaps in local school operating revenue for certain community districts via the state portion of foundation allowances.
  • Limitations: The program is constrained by a cap on deposits ($617 million total) and a hard sunset date, after which funds revert to the SSAF.
  • Financial governance: The Department of Treasury oversees administration and auditing, with explicit expenditure restrictions tied to foundation allowances.
  • Policy implications: If a community district relies on this mechanism for operating funding, the sunset could necessitate alternative funding arrangements or rely more on other SSAF distributions post-2026.

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

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