Attorney General Dana Nessel and education leaders across the state say local school agencies were counting on the funds for the coming school year.

The investigation comes after authorities accused a Chinese scientist and his girlfriend working in the school's lab of smuggling a toxic fungus into the U.S.

"Today, the U.S. Department of Education's Office of the General Counsel (OGC) opened a foreign funding investigation into the University of Michigan (UM) after a review of the university's foreign reports revealed inaccurate and incomplete disclosures," the DOE said in a news release.