Michigan’s 56 intermediate school districts are regional bureaucratic agencies. All are charged with overseeing local special education services, auditing district student counts for funding purposes and administering money for the state’s preschool program. But wide variations exist in the precise programs they provide. ISDs directly serve less than 1% of Michigan public school students, mostly students with disabilities enrolled in special programs. Yet these agencies have fared much better financially in recent years than the state’s districts and charter schools.
ISDs receive a small amount of foundation allowance funding for special education students whom they serve directly, but they are heavily dependent on other revenue sources. Nearly a billion dollars, or 27% of all categorical dollars, was delivered to these regional agencies in 2019-20.[*] Meanwhile, ISDs also took in $566 million, or 29% of the state’s total K-12 federal allotment.[†] Some of these state-appropriated funds are passed through to local districts and other educational providers, but most are retained and spent by ISDs.
ISD oversight of special education services are more heavily dependent on local tax revenue, and thus, more unevenly funded than K-12 school district budgets.[‡] These regional agencies collected nearly $1.1 billion from local special education taxes in 2019-20, about half their total annual revenue to fund special education services. Measured on a per-pupil basis for all special education students within a regional ISD, a wide gap in millage funding exists. Washtenaw ISD, for instance, raised $13,400 for each student with a disability within its boundaries, more than 10 times the rate of Lapeer ISD ($1,196), Sanilac ISD ($1,292) and the Midland County Educational Service Agency ($1,325). However, this wide gap is significantly smaller than in 2004, when Bay-Arenac ISD brought in nearly 80 times more special education millage funding per eligible student ($12,835) than the Upper Peninsula’s Copper Country ISD ($165).[§]
These pots of local funding in many cases come with restrictions that limit student opportunities. As of 2017, 21 of the 56 ISDs specifically prohibited millage funds from being used to provide services to nonresident students. A small number of those agencies further limit some or all state funds to serve only those who live within certain regional boundaries.
State lawmakers appropriate in the school aid budget a pot of money to help equalize special education revenues: just over $40 million in each of fiscal years 2019 and 2020 to ISDs that collect less property tax revenue for the students served. The formula for allocating these funds to some ISDs is not necessarily aligned to how much local money is raised per pupil, however. Injecting this money along with federal special education revenue somewhat reduces the regional gap, but the highest-funded ISD still receives nearly four times as much per eligible student as its lowest-funded counterpart.
Inequities also occur within the service regions. Wayne Regional Education Service Agency, the largest of the state’s 56 intermediate districts, uses local policy to limit access for certain special-needs students. Wayne RESA’s large pot of local tax money is allocated for programs designed to serve specific student populations and operated by certain conventional district schools. As a result, students with disabilities in the region are limited to programs offered by conventional districts and are less likely to be fully served if they enroll in a local public charter school. This disparity is not evident in Michigan’s other highly populated regions.
A series of other millages that ISDs can levy brought their total local property tax revenues to nearly $1.55 billion in 2020. Adding in state and federal education dollars, intermediate school districts have grown their overall financial footprint. As Michigan’s special education student enrollment declined by 14% from 2004 to 2020, ISD operational spending rose by 35% (including a 39% increase in payroll spending) in inflation-adjusted dollars. During that time, ISD spending increased from 6.3% to 10.1% of the statewide K-12 total.
[*] Author’s calculation based on 2019-20 NPEFS data. Michigan ISDs collected $996.1 million in state revenues. The state made roughly $3.64 billion in school aid allocations outside the foundation allowance.
[†] Author’s calculation based on 2019-20 NPEFS data. Michigan’s total K-12 federal revenue was nearly $1.955 billion.
[‡] Peer-reviewed research has found that inequities in special education funding are “exacerbated by Michigan’s Intermediate School Districts.” See Michael Conlin and Meg Jalilevand, “Systemic Inequities in Special Education Financing,” Journal of Education Finance, vol. 41, no. 1 (Summer 2015): 85, https://perma.cc/X4MQ-Q9Z5.
[§] Author’s calculations based on CEPI’s “Financial Information Database,” https://www.mischooldata.org/historical-financial-reports and “Special Education Enrollment,” https://www.mi schooldata.org/historical-special-education-enrollment. Inequitable special education funding among ISDs has been documented for some time. For the most notable and comprehensive output, see “Financing Special Education: Analyses and Challenges” (Citizens Research Council of Michigan, Report No. 378, March 2012), https://perma.cc/XXZ8-DADM.