A student-based funding system should generally provide equal funding on behalf of each student. The state has been steadily moving in this direction for decades: The wide funding disparity between districts has narrowed significantly over time.
Before the passage of Proposal A in 1994, districts received much of their revenue from property taxes, which caused funding disparities based on the value of property within the school district’s boundaries. Lawmakers have frequently prioritized greater increases to district foundation allowance rates at the floor level, enabling them to catch up, over time, with districts that have higher rates. More than 25 years later, exactly 75% of conventional school districts and all charter schools received the same minimum foundation allowance in both 2020 and 2021: $8,111.
In 2022, the share of conventional districts at the record highest floor level of $8,700 swelled to 92%. The higher-funded districts tend to be larger. Thus, including charter schools in the calculation, 88% of students bring in $8,700 in per-pupil funding through the foundation allowance. Today, excluding two tiny districts, the highest foundation allowance is only 44% higher than the amount taken in by the vast majority of the state’s schools. By comparison, in 1994, the maximum district foundation allowance some of these districts received was nearly four times greater than the lowest-funded district.[*]
The creation of a guaranteed foundation allowance shifted the balance of K-12 funding from the local to the state level. The share of state funds that support Michigan’s public schools doubled from 29% the year Proposal A passed to 59% today, while local funds shrank from 65% of the pie to 32% over the same time period. Local taxes nonetheless still play a role in funding Michigan’s 537 conventional school districts, including as part of the foundation allowance. In 2020, school districts and charter schools across Michigan together received nearly $11.8 billion in foundation allowance money.[†] Of that amount, $2.4 billion was raised locally by school districts from the 18-mill nonhomestead tax. Nearly 80% of the allowance, $9.4 billion in all, came from state aid.[‡]
[*] The gap was nearly 56% two years earlier. Kathryn Summers, “Overview of K-12 / School Aid” (Michigan Senate Fiscal Agency, Feb. 2019), Table 6, https://perma.cc/CSZ7-CFT3.
[†] Author’s calculation based on data from the Michigan Department of Education and Center for Educational Performance and Information. Total foundation allowance spending was derived from combining two pieces of information: 1) Each district’s 2019-20 foundation allowance amount, and 2) Calculating state aid membership from each district’s audited FTE pupil membership for fall 2019 and spring 2019. “2019-2020 School District Foundation Amounts” (Michigan Department of Education), https://perma.cc/8VRQ-AD5Q; “District FTE Pupil Counts” (Center for Educational Performance and Information), https://www.mischooldata.org/ historical-district-fte-pupil-counts; “2019-2020 State Aid Financial Status Report” (Michigan Department of Education, 2020), https://perma.cc/CXM6-X2ZM.
[‡] Author’s calculations based on "Line Item and Boilerplate Summary: School Aid, Fiscal Year 2019-20, Public Act 58 of 2019, House Bill 4242 as Enacted, Including Vetoes and Supplemental Appropriations through December 31, 2019" (Michigan House Fiscal Agency, Jan. 2020), 2, https://perma.cc/WR3P-XPFT. The amount represents the sum of appropriations for Sec. 22a ($4.943 billion) and Sec. 22b ($4.556 billion).