More than $19 billion — at last count — makes its way from taxpayers to
Michigan public schools each year, according to a new book published by the Mackinac Center for Public Policy that explains public school financing.
At 180 pages, "A Michigan School Money Primer," is a comprehensive overview
of the system of state, federal, local and intermediate district tax revenues
that pays for public schooling, as well as the state and local school budgeting
processes that determine how the money is allocated and spent. The primer also
explains how the state constitution and various Michigan statutes, as well as
court decisions, affect school financing.
"Our desire was to produce an accurate, thorough and objective overview for
anyone involved or interested in how public school dollars are raised, channeled
and spent," said Ryan S. Olson, director of education policy at the Mackinac
Center. He, along with Michael D. LaFaive, the center’s director of fiscal
policy, coauthored the book. The primer is designed both for readers who know
little about school finance but would like to learn more, and for those already
familiar with the system who would like a broader understanding of it, Olson
The primer opens with an introduction to more than 25 revenue sources that
channel money to Michigan school districts, explaining those as well known as
the local property tax to those as little known as housing project service fees.
The Michigan Lottery, for example, contributed about $688 million to the
Michigan School Aid fund in 2006, or about 5.5 percent of the $12 billion School
Aid Fund that year.
In the next section, the authors explain how state legislators disburse money
to local and intermediate school districts and charter public schools, and the
process used to determine the "foundation allowance," or how much each school
district will receive per pupil each year. In addition, it explains the
"categorical funding" earmarked for specific purposes such as special education
Since 1994, the way in which Michigan’s public schools are financed has been
largely guided by Proposal A, a voter-approved constitutional amendment that
reduced the reliance of most school districts on local property taxes and
increased their reliance on state sales and property taxes. Today, most public
schools receive the majority of their funding on a per-pupil basis from the
state, meaning that enrollment changes can — and often do — have a significant
effect on each district’s budget.
Finally, the primer explains how local school districts develop budgets and
account for their spending. School districts are required to prepare an annual
budget that shows the previous year’s expenditures and the coming year’s
estimated expenditures, as well as an estimate of revenues for the coming year
and the amount of any surplus or deficit from the past year or anticipated in
the current year, among other items.
The primer "explains and simplifies what, to the outsider, can too often appear to be a complex and arcane school funding process."
Nearly 9,000 copies of the primer were sent to school district
superintendents, school board members, state legislators, public libraries and
reporters. In conjunction with the primer, the Mackinac Center has compiled
school finance data from the Michigan Department of Education into an
interactive Web database. The database may be accessed through the center’s Web
site and used to create reports, perform comparisons between local school
districts, sort districts by varied revenue and spending categories, and more.
"It is difficult and time consuming to teach reporters how to deal with
audits, budgets and millages. Thanks to the Primer, my job just got easier,"
said Oscoda Press Editor Holly Nelson in an e-mail to LaFaive.
The primer "explains and simplifies what, to the outsider, can too often
appear to be a complex and arcane school funding process," said Michael
Williamson, former deputy superintendent for the Michigan Department of
The "Michigan School Money Primer" is a companion publication to the Mackinac
Center’s "Collective Bargaining Primer," released earlier this year, and "A
School Privatization Primer," released in June. (See related story, this issue.)
The Mackinac Center also is publisher of Michigan Education Report.
The primer acknowledges the help of 20 state and local education officials,
including a number of school finance administrators and Michigan Department of
Education analysts. 6
The school finance database is at