Michigan schools cover $616.8M in special-ed costs from general funds
Summary
Michigan's own 1997 Supreme Court-mandated funding formula, plus federal IDEA money and roughly $1.5 billion in local property-tax millages, still isn't enough. For fiscal year 2023-24 -- the most recent year the state's own fiscal analysts report a cost-coverage figure for -- combined funding covered just 86% of the state's approved special education costs, leaving districts and intermediate school districts to cover $616.8 million from general education budgets. For the current fiscal year, 2025-26, Michigan has appropriated $4.3 billion in special education funding overall.
A court-ordered formula, a federal mandate, and still a gap
In Durant v. State of Michigan (1997), the state Supreme Court found Michigan was underfunding special education below levels required by the Headlee Amendment. The result: the state is now constitutionally required to fund at least 28.6138% of approved special education costs and 70.4165% of special education transportation costs -- the 'Durant percentages.' Layered on top is the federal Individuals with Disabilities Education Act (IDEA), which guarantees a free, appropriate education for students with disabilities but doesn't fully fund it, and local ISD property-tax millages that all 56 of Michigan's intermediate school districts levy with voter approval. None of it, combined, has closed the gap.
View data as table
| Local ISD millage (estimated) | 1,500,000,000 |
|---|---|
| State School Aid Fund | 2,200,000,000 |
| Federal | 583,000,000 |
86 cents on the dollar -- and general funds cover the rest
The 86%/$616.8 million figures are from fiscal year 2023-24 -- a different, earlier year than the $4.3 billion figure above, which is this year's (FY2025-26) budgeted appropriation, not a measure of actual costs. When approved special education costs exceed what dedicated funding covers, state law requires districts and ISDs to make up the difference using general education funds -- money that would otherwise support all students, not just those with disabilities.
View data as table
| Covered by special education funds | 86% |
|---|---|
| Shortfall covered by general education funds | 14% |
A more generous formula arrived the same year as the gap
One coincidence of timing worth noting: Michigan increased special education compensation heading into FY2023-24. Before FY2022-23, a district's special education foundation allowance counted toward satisfying its Durant-mandated reimbursement, meaning some districts received no extra money beyond that allowance. The formula shifted to paying 75% of the foundation allowance separately from Durant in FY2022-23, then completed the transition to 100% separate payment in FY2023-24 -- the same fiscal year as the $616.8 million shortfall. The brief itself doesn't connect the two facts, and there's no year-over-year data here to say whether the gap would have been larger without the change; the coincidence simply underscores that the formula revision, whatever it did, didn't close the gap that year.
The takeaway
- Combined funding covers 86 cents on the dollar, not 100. In FY2023-24, federal, state, and local special education funds covered 86% of Michigan's approved special education costs, leaving $616.8 million to come out of general education budgets statewide.
- A court order and a federal law both apply, and neither closes the gap. The 1997 Durant ruling forces the state to fund fixed percentages of special education and transportation costs; federal IDEA money and $1.5 billion in local ISD millages add more -- but the shortfall persists regardless.
- The state made the formula more generous the same year the gap was measured. FY2023-24 was also the first year Michigan fully separated special education foundation payments from Durant reimbursements, a change meant to increase compensation. The brief doesn't link the two facts, but the shortfall still ran $616.8 million that year.
This piece is based on a single nonpartisan Michigan House Fiscal Agency fiscal brief, which itself draws on the state's own School Aid Act appropriations and district/ISD cost reporting; it is a fiscal-analysis document, not an audit or investigation, and this piece does not independently verify the underlying district-level cost data behind its figures. The $616.8 million shortfall and 86% coverage rate are FY2023-24 figures (the most recent year the brief reports them for); the $2.8 billion state/federal appropriation and $4.3 billion total are FY2025-26 figures (the current budget year) and are not directly comparable to the FY2023-24 numbers. The brief contains no year-over-year trend data on the shortfall or coverage rate, so this piece makes no claim about whether the gap is growing, shrinking, or stable over time; the observation that a formula revision and the shortfall measurement land in the same fiscal year is this piece's own framing, not a connection the brief itself draws.
Sources(1) ▾
- Michigan House Fiscal Agency, Fiscal Brief: Special Education Funding -- FY 2025-26 Update (2026-02-25) — The nonpartisan Michigan House Fiscal Agency's own brief on special education funding, covering both the current FY2025-26 appropriation and the most recent fiscal year (FY2023-24) it reports an approved-cost coverage figure for. This piece draws on its funding-source breakdown, the Durant v. Michigan funding-percentage mandate, and its uncompensated-cost figure. house.mi.gov · original document
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Michigan school districts covered $616.8 million in special education costs out of general education budgets in fiscal year 2023-24, according to a Michigan House Fiscal Agency brief⧉ -- the most recent year the brief reports a cost-coverage figure for. That's despite a state funding formula born from a 1997 state Supreme Court ruling, federal IDEA reimbursements, and roughly $1.5 billion a year in local property-tax millages. Combined, those three funding streams covered only 86% of the state's approved special education costs that year.