“We realistically could start the 2025-26 school year without knowing how much money we’re going to have from the state for the year.”

So says John VanWagoner, superintendent of Traverse City Area Public Schools (TCAPS). The district adopted its own 2025-26 budget last month, and kicked off a new fiscal year on July 1. Nearly two weeks into July, though, TCAPS is in limbo, thanks to a partisan budget standoff in the state legislature that has left Michigan without anything close to a finalized budget.

Technically, Michigan’s next fiscal year doesn’t start until October 1, but state law requires the legislature to “pass and present general appropriation bills for the upcoming fiscal year to the governor on or before July 1.” The two chambers of Michigan’s legislature blew past that deadline earlier this month, marking the first time in years that school districts in the state had to begin their fiscal years without budgetary assurances.

The problem is one of political divide: Michigan currently has a Democrat-controlled Senate and a Republican-led House, and the two chambers have been at odds about the state’s next budget. School districts, VanWagoner says, are immediately bearing the brunt of that partisanship. With the July deadline already blown, he tells The Ticker that “the only real deadline now is October 1,” which could leave TCAPS waiting months before it has any clarity about state funding.

As VanWagoner explains it, a school district’s budget is a living document. The board approves a fiscal year plan in the spring, but can modify it throughout the summer (and beyond) as more details emerge about state funding. As a result, districts typically start with a conservative budget and then fill things in if there is more money available to spend. For a variety of reasons, those budgetary audibles become more difficult as the start of school approaches.

“Our board always has to be very smart with the dollars that we think we will get, knowing that there are always other things we’d like to do for kids if we get more money,” VanWagoner explains. “[A late state budget] forces us to kick those decisions down the road. It forces us, if we’re wrong, to depend on the money we have in the bank. And, the closer we get to school, the less opportunity we have to make any effect if we do get more funds than we’ve budgeted.”

The uncertainty can trickle down to the classroom level, particularly with staffing.

“80-85 percent of our budget at TCAPS is people,” VanWagoner explains. “If we had more money, we could hire more teachers, more support staff. Since we had to budget conservatively this year, we had to make the hard decision not to hire as many people as we normally would, or not to replace as many people as we had that retired. And the closer we get to school [without budget clarity] the fewer teachers are out there for us to hire.”

Even at a baseline, VanWagoner says Michigan is dealing with a teacher shortage. That shortage is more deeply felt for districts that have to make late-in-the-game hires.

“If we had a budget by the end of July, that gives us a month to find somebody and maybe reduce class sizes in a few spots,” VanWagoner says. “But the closer we get to school starting, the less opportunity we have to even think about that. Here, in the second week of July, the teacher market is already starting to get thin. And that means we’re getting pretty close to the point of no return, where we're just going to have to live with exactly what we budgeted for.”

While TCAPS could risk hiring more teachers ASAP and then paying out of its fund balance if state funding doesn’t exceed the district’s approved budget, VanWagoner says that’s a bigger risk than people realize.

“Right now, we're running somewhere around 10-12 percent of our yearly budget that we have in that savings account,” he notes. “It’s recommended for it to be 15-17 percent, which is essentially three months of operating costs. We very well may have to dip into that, and that’s hard, because then you’re dwindling your savings.”

The question VanWagoner fields most often, these days, is why the district can’t just redirect bond dollars from major but not-very-urgent capital projects to patch budget holes. That’s not an option, he says, given that bond dollars can only be spent on “bricks-and-mortar and building type projects,” not on things like staff salaries and benefits.

“People have said to me, ‘Well, rather than do that parking lot at West, why don’t you use that money to hire more teachers, or more aides, or more bus drivers?’” VanWagoner says. “And the answer is, state law doesn’t allow that.”

While staffing is the biggest pain point, the state budget situation will have other consequences for the TCAPS budget.

“We’re also not buying as many educational materials; we’re not doing as much professional training with our staff” VanWagoner says. “With our athletics programs, you’re probably going to see parents and teams doing more fundraising, because costs have gone up but we weren’t able to provide any additional money for transportation or equipment. You’ll probably see that our offices aren’t staffed as long in the summer as they have been in the past. And some of our extracurriculars, we might have to charge a few more dollars. We very much tightened the belt across the board, but we’re trying to keep [the cuts] as far away from kids and learning as possible.”

Question marks around the state budget aren’t the only ones facing TCAPS right now, either. In light of President Trump’s move to gut the Department of Education, VanWagoner says the storm is hitting from the federal side as well.

“That’s the side that has me the most worried, actually,” VanWagoner says of the federal funding unknowns. Right now, he explains, Title funds from the Department of Education provide supplemental funding to help school districts provide support services for special education, students from low-income households, non-native English speakers, and more.

“It’s my understanding that a lot of those Title funds are being eliminated, and the ones that worry me the most are the funds for our English language learners, our Native America students, and our homeless students,” VanWagoner adds. “We’ve got to figure out if there’s going to be a shortfall, and if so, how we provide those resources to some of our students who need support the most.”