Michigan is one of 18 states where state revenues make up more than 50 percent of public school district revenues. This is due to a rework of public school funding passed by voters in 1994. Proposal A, approved by a statewide ballot, changed the primary school funding mechanism to one based more on statewide sales, use, cigarette and income taxes, and relying less on local property taxes.
These taxes supply the majority of the revenue for Michigan’s School Aid Fund, which is used to provide state aid to school districts based on enrollment. This state aid primarily comes in the form of a “foundation allowance,” a state-provided guaranteed amount of funding per student that every school district and charter school receives. The foundation allowance is an important element of Schools of Choice, because students’ foundation allowances “follow” them to the district in which they enroll.
The state foundation allowance for nonresident students is either the foundation allowance of the student’s resident district, or the foundation allowance of the student’s enrolling district, whichever is less.[*] During the 2012-13 school year, the minimum any Michigan school district received through the foundation allowance was $6,966 per pupil.
Michigan’s school funding mechanism provides a strong incentive for school districts to enroll students through Schools of Choice, especially districts that are struggling financially with rising costs or declining enrollment. Indeed, Schools of Choice provides districts an opportunity to immediately increase their revenue without necessarily incurring large additional costs.
[*] If the student is a special education student, the district will become the student’s resident district for purposes of accounting. Though students enrolling through Schools of Choice do not need their resident district’s approval, the resident and educating districts must enter into a cooperative agreement for each special education student enrolled through 105c Choice. The agreement must address the additional costs for educating the student. If no agreement is reached, the student must de-enroll from the nonresident district. See “5I - Section 105 and 105c Schools of Choice Pupils” (Michigan Department o Education, 2011), accessed Nov. 12, 2013, http://goo.gl/MP2oR4; MCL § 388.1620(5).