This section of "A Michigan School Money Primer" discusses elementary and secondary education revenues raised through taxes.[viii] These taxes are levied by various government units:
the United States government;
Michigan state government;
conventional local school districts;[ix]
intermediate school districts; and
the 13 counties with county tax allocation boards, with these boards apportioning county taxes to intermediate school districts and other local government units.[x]
These units place taxes on a variety of items and activities, such as property, commercial sales, and corporate and personal income. Federal and state tax revenues are combined in the Michigan school aid fund and then allocated to school districts, including local and intermediate school districts. Local tax revenues are collected locally and then spent by conventional local school districts. In the remainder of this section, the discussion of education taxes is organized by the level of government that levies the tax, beginning with local governments (the last three items listed above) and proceeding to state and federal governments (the first two items listed above).
Note that local school districts, intermediate school districts and charter schools are all able to receive nontax revenues. Conventional local school districts, for instance, sometimes receive substantial interest income on district monies, and conventional school districts and charter schools can realize income from (among other things) the sale of assets, the sale of rights to use land, tuition for summer school and preschool programs, and contributions from charitable foundations. Overall, these nontax revenues are not a large part of Michigan’s public school income, but they are not always negligible, either.
Graphic 1: Revenues to Michigan Public Elementary and Secondary Schools
[viii]Revenues can be obtained by units of government in other ways, such as fees, though there is not strict agreement on the differences between fees and taxes. Generally, the Michigan Supreme Court has held, "...A ‘fee’ is ‘exchanged for a service rendered or a benefit conferred, and some reasonable relationship exists between the amount of the fee and the value of the service or benefit.’ A ‘tax,’ on the other hand, is designed to raise revenue.” (See Bolt v City of Lansing, 459 Mich 152, 161; 587 NW2d 264 (1999)).[ix]Each of Michigan’s charter schools is defined as an independent school district under Michigan law. Unlike conventional public school districts, however, charter schools cannot levy property taxes because they do not have a local jurisdiction. [x]This number is based on information provided to the authors by the Michigan Department of Treasury.