Per-pupil School Funding Guarantee

Proposal A would establish a per-pupil state and local funding guarantee for all local public school districts across the state. For each district levying 18 mills the state would guarantee that the combined local property tax revenue and state aid would equal at least $4,800 per pupil. This guarantee is indexed to state and local revenue growth adjusted for tax rate changes. Thus, the local school districts would have a stake in a growing Michigan economy.

In the initial year, millage rates above 18 mills would be determined as the rate necessary to allow a 3% increase. This is implied in the constitutional amendment, and stated in Senate Bill 597 introduced on April 29. According the Michigan Department of Treasury, the statewide average school operating millage under "A" would be approximately 22 mills.

Hold Harmless & Transition Rules

Schools currently receiving more than $4,800 revenue per pupil would be guaranteed at least a 3% increase in 1993-94, and future aid to ensure no reduction in revenue. Those school districts receiving less than $4,800 currently would be limited to a 10% annual growth in revenue.

Does More Money Mean Better Schools?

School districts currently spending less than $4,800 per pupil would receive 10% per year increases in funding until they reach the per-pupil guarantee level. Since this level would be indexed as well, it would give some school districts 10% annual revenue increases for a number of years. This is a substantial increase in revenue, and will result in those districts currently below the state average in spending to dramatically increase salaries, facilities, and workforce size.

Reducing the disparity in per-pupil spending is one goal of the amendment, and the proposal would accomplish that by increasing the spending of the lower-spending districts. Will such an increase in spending result in improved education, or just more spending? Exhaustive research over the past quarter-century has demonstrated clearly that there is no firm relationship between spending and student performance. As Eric Hanushek's research, recounting 187 studies on public schools, concluded: "There is no strong or systematic relationship between school expenditures and student performance."[24] Thus, while the goal of reducing the Current disparity in expenditures may be laudable, the higher expenditures in and of themselves will probably not result in better student performance.

What "Schools" Are Guaranteed Funds?

The Constitution, at Article V111 section 2, currently prohibits state aid to nonpublic schools, so all "schools" would not receive funds under "A." However, "A" would establish the principle of the state guaranteeing a per-pupil amount of funding. This would allow an easier transition to a system where parents could choose which schools their children would attend, with the dollars following the students. Unless the prohibition on aid to private schools was changed, however, such a "schools of choice" system would be limited to public schools.

Given the likelihood that increased school expenditures under "A" would not result in improved student performance, this prospect for a limited amount of competition is probably the most important school quality reform contained in "A."

What Does the Guarantee Fund?

The proposal would guarantee school funding for "operating purposes," and also allows the legislature to fund additional "instructional programs." Currently, the state gives "formula" aid to most school districts, and "categorical" aid for specific programs to all.[25] Proposal "A" would roll many of these funding vehicles into one. This would allow school districts to more efficiently use their funds, since the local districts could choose how best to allocate resources.

This raises two implementation questions that are not resolved in the amendment itself. First, the legislature is allowed to define expenditures for operating purposes, and to select additional "instructional programs" for additional funding. Second, and more important is the question of what guarantee funds are counted against the requirement in Article IX section 29 ("Headlee") that the state fully fund all mandated school programs. Some categorical programs, such as vocational education, are required by state law, and the "Headlee" amendment requires that the state fund these, even for "out of formula" school districts.[26] The amendment implies that such programs would continue to receive protected funding, but it is not clear whether guarantee funds could be counted as funding for required programs. These questions are important both in terms of local control, and the continuing effectiveness of the "Headlee" amendment in protecting local school districts.