The supreme courts of Arkansas and
Ohio ruled late last year that their respective states’ public school funding
systems are inequitable, inadequate and unconstitutional. Both states have
property-tax-based funding systems similar to Michigan’s before voters in the
Great Lakes State passed Proposal A in 1994. The same sort of remedy that
solved many of Michigan’s school funding problems might work for Arkansas and
Prior to passage of
Proposal A, Michigan’s school funding system was blamed for vast inequities
between school districts located in poor areas and those in more affluent
neighborhoods. Wealthy areas, being better able to withstand higher taxes, were
able to raise far more money for their schools than were poorer neighborhoods.
In 1994, local per-pupil expenditures ranged from $3,277 to $10,356, with 55
percent of districts spending less than $4,500 per student.
Similar situations have evolved in
Ohio and Arkansas. For example, last year, CNN reported that the rural Meigs
Local School District in rural Ohio was able to raise only $1,190 per student in
local property taxes, while suburban Solon school district, also in Ohio, raised
$7,585 per student in the same fashion.
Proposal A eliminated much of this
sort of inequality in Michigan, in favor of a system partially funded by an
increased sales tax. Each school is guaranteed a certain amount of funding per
Michigan student, an amount that comes to $6,700 this school year. Any of that
money not raised by a district through property taxes is supplied by the state.
Arkansas and Ohio also would benefit from lower
property taxes, a major plus conferred on Michigan taxpayers since passage of
Proposal A. Before the measure was passed, the average annual property tax in
Michigan was 35 mills for schools alone (this amounts to $3,500 for a house
valued at $100,000). Proposal A has reduced that level to an average of 18
mills. A 2-cent hike in the state sales tax, earmarked for the state’s School
Aid Fund, makes up the funding difference. Currently, both Ohio and Arkansas
allow city and/or county to add their own sales taxes.
Arkansas’ troubles are more complex than
Ohio’s. It has a constitutional amendment that compels districts to set a
property tax levy of no less than 25 mills for maintenance and operation of
schools. But according to news reports, in order to keep the millage at
manageable levels in poorer areas, school districts have been including
debt-service millages in their millage totals, giving the illusion of a 25-mill
tax for operating and maintaining schools. The Arkansas Supreme Court has ruled
that debt service millages are not to be counted toward the 25-mill total, while
the amendment’s authors claim they specifically worded it to allow such a
Legislators in Ohio and Arkansas
currently are debating how to meet the requirements laid down by their
respective supreme courts for constructing school funding systems that are
equitable and fiscally adequate for meeting the needs of school districts. They
would do well to take Michigan’s Proposal A as an example of how to go about
it. By prohibiting districts from constantly raising local property taxes,
Proposal A encourages frugality and accountability in local school districts, in
addition to helping resolve funding inequities.
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Neil Block is managing editor of
Michigan Education Digest, a service of
Michigan Education Report, a quarterly news journal published by the
Mackinac Center for Public Policy.