Increased transparency in reporting where and how education dollars are spent can foster both greater equity and efficiency. A 2008 law requires districts to post several specific financial items on their websites, including budget documents, audited financial reports, expenditure summaries, spending amounts for government lobbying and travel, compensation details for a district’s highest-paid employees and an accounts payable check register showing individual amounts and vendors. Compliance appears to be generally good, though weak enforcement efforts allow districts to maintain outdated or incomplete data without consequence.[60]
While Michigan has made recognizable progress in district-level financial transparency, the picture of how dollars are allocated among individual schools and for what purposes they can be used has been far less clear. As the writer for a prominent education trade publication described it, “[H]ow districts distribute federal, state and local dollars between schools has long been a mystery even to district superintendents.”[61]
The latest reauthorization of a major federal K-12 education law, the 2015 Every Student Succeeds Act, has pushed states to provide a clearer picture of school finances. States now have to publish detailed reporting at the school level. In June 2020, Michigan launched an online school-level expenditure report, which lists the federal, state and local dollars spent per student at each public school. Every expense attached to a particular building, including total teacher salaries and benefits, is compiled and reported separately. All other district spending is divided on a per-student basis among individual schools.[62]
This additional layer of information can provide some helpful insights, especially in observing the state’s largest districts. How evenly do these districts spend resources among their schools? For example, the data can highlight the gap between a district’s highest-funded and lowest-funded schools. The difference in per-pupil spending among Detroit Public Schools Community District’s 16 high schools is notably large, with figures ranking from about $12,400 to $20,400. Conversely, all five Ann Arbor middle schools spend close to the median of $13,800 per student.[63]
A general relationship exists between school funding levels and populations with economic disadvantages or special learning needs. Within the state’s five largest districts, there is a strong correlation between higher poverty rates and higher per-pupil spending. The sole exception is Dearborn’s 22 district elementary schools, where there appears little connection between a school’s poverty rate and its per-pupil spending level. Additionally, schools with smaller enrollments are much more likely to receive more funds per student.[64]
The recent addition of online reports in school-level spending has brought Michigan closer to the level of transparency prescribed under the federal education law. But other states also highlight areas for further improvement that could point to additional inequities as well as opportunities for greater efficiencies at the local level.
Unveiled in 2017, the Colorado K12 Financial Transparency website clearly depicts how many dollars fund student instruction and other areas that support the learning environment, as opposed to a district’s business operations. Users can also see what is spent on total employee salaries and benefits at each school, compared with supplies and services.[65] Georgia provides a similar level of detail in school system financial information.[66]
Additional enhancements like greater online transparency of public data alone have done little to promote wiser spending. Within the confines of the current system, it does provide some advantages, however. That is especially true when local and state officials operate according to reporting requirements that are clear, consistent and manageable.
Yet, it’s not just a matter how much data is disclosed, but also how it is broken down. Michigan school districts are not required to link spending to specific groups of students. Instead, dollars are tracked and reported based on specific programs and staffing assignments. The subtle but real effect of this approach is to limit public understanding of how money is being deployed to fulfill the primary mission of public education. The ready availability of financial information in direct connection to students served can improve incentives to allocate resources effectively.