Michigan districts brace for cuts, as number of needy students falls

• Michigan has 58,000 fewer K-12 students classified as economically disadvantaged this school year
• Largely the result of families no longer qualifying for Medicaid, the drop also means less money for districts
• School leaders warn that funding reductions could impact tutoring, summer school, class sizes and staffing 

Over 58,000 fewer K-12 students in Michigan are now considered “economically disadvantaged,” a change that will cause hundreds of districts to get less state aid next year, experts say.

Much of the 7.5% drop stems from families who no longer qualify for Medicaid after pandemic-era support ended last year and the state began reviewing recipient qualifications again.

The decrease, to 717,785 from 775,993 in 2023-24, means about 350 of the state’s 820 districts will receive less state aid for “at-risk" students, according to an analysis by the Citizens Research Council of Michigan, a public affairs nonprofit.

Already, districts such as L’Anse Creuse Public Schools in Macomb County are scouring budgets, searching for cuts. The money funds programs such as tutors and summer school.

“It’s kind of a perfect storm,” said Lisa Montpas, assistant superintendent of curriculum and instruction at L’Anse Creuse Public Schools in Macomb County. 

Others attribute the decline in economically disadvantaged students to other factors. 

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Either way, economically disadvantaged now comprise fewer than 50% statewide now, down from 53% of all K-12 students in charters and traditional districts a year ago.

The changes are unevenly distributed across the state, said Craig Thiel, research director for the Citizens Research Council. 

“Three-quarters of all districts (are) experiencing some amount of year-over-year decline among students counted as economically disadvantaged,” Thiel wrote in an analysis. 

“State data shows that several traditional and charter public schools saw (economically disadvantaged) student declines of 20% or more in last fall’s official student count, three times the statewide drop.”

For instance, the Grand Rapids school district has 14% fewer economically disadvantaged students this school year, which will lead to an estimated $1.36 million drop in at-risk funding next year. Its overall budget is $271 million.

In Taylor in Wayne County, a 13% drop in needy students will likely cause a $906,000 drop in funding, according to the CRC. The district has a $107 million budget. 

The declines could be even steeper.

Thiel’s analysis assumes the Legislature will approve Gov. Gretchen Whitmer’s proposed 4% boost in overall “at-risk” funding. 

If her proposed funding level is adopted by the Legislature, 449 districts are estimated to get an overall increase, even some that saw a drop in economically disadvantaged students.

But another 355 districts would still get less money in the 2025-26 school year, because they lost even more economically disadvantaged students

At-risk funding is based upon the prior year’s enrollment and the number and percentage of economically disadvantaged students. Districts with higher rates of poor students get more per student.

Districts warned 

Districts use “at-risk” funding, amounting from $1,200 to up to $1,800 per at-risk student, to pay teachers and support staff, provide smaller class sizes, tutoring and other efforts for academic recovery like summer school.

That’s in addition to the $9,600 per student a typical district gets.

During the current budget year, Michigan is providing nearly $1 billion for the at-risk program. 

State education officials were aware of the potential impact of the shrinking Medicaid rolls in October, telling districts to work with families to ensure everyone was counted. Benefits of economically disadvantaged families include free AP tests, which can cost nearly $100 per test, or student athletic fees.

The state also told districts to plan accordingly, said Diane Golzynski, a deputy superintendent for the Michigan Department of Education.

“You're not going to base your budget on the highest number of enrollees that you've ever had,” Golzynski told Bridge. 

“You're going to base it on a median number so that you can have some flexibility within your structural budget balance.”

That October advice, however, estimated that just 10% of districts would experience a drop. Instead, over 80% did. 

Most of the decrease was attributed to changes in Medicaid eligibility, Golzynski said, but some is because of other factors, including eligibility for other aid programs.

In some cases, she and others said, numbers fell because parents did not apply for free or reduced-price lunches because it is now offered to all students regardless of family income.

Bob McCann, the executive director of The K-12 Alliance of Michigan, a group of 123 school districts in Southeast Michigan, said the state needs a way to classify economically disadvantaged students that  does not rely on parents filling out a form. 

“Just the fact that a form isn’t filled out, doesn’t negate the need for the additional services that those students have been relying on for a number of years,” McCann said. 

Big impact

In the L’Anse Creuse schools, there are 714 fewer students who qualify as economically disadvantaged this year, a 17% drop from 2023-24. 

Thiel and CRC estimate that could lower next year’s at-risk payments by nearly a half-million dollars from $5.5 million if the Legislature approves Whitmer’s funding increase.

But if it does not, L’Anse Cruese estimates the district will get $4.5 million next year.

“A million dollars is a big deal,” said Montpas, the assistant superintendent.

In the Warren Consolidated Schools, the 10th largest district in the state, the number of economically disadvantaged students fell over 9%, from nearly 9,500 to 8,600.

The CRC estimated the district would get nearly $600,000 less next year.

Marla Otterbacher, administrator of state and federal programs for Warren, told Bridge Michigan these funds pay for teachers, counselors, reduce class sizes, provide tutoring and other programs.