Michigan school districts are facing budget problems, and the blame is falling
on this year's "draconian" state school aid cuts and on Michigan's
"unpredictable" school funding system. Schools are now said to
But the record
shows that Michigan's schools have been generously financed for years. This
suggests policymakers should stop focusing on school revenues and instead
encourage schools to control their costs.
public school system has received increased revenues — even after adjusting for
inflation — nearly every year since the state's voters passed Proposal A, the
constitutional amendment that guides Michigan's school funding system. From
1995 until 2008, inflation-adjusted total revenue for Michigan schools grew by
nearly one-third, according to data from the Center for Educational Performance
and Information. With virtually the same number of pupils today as in 1995,
per-pupil revenue rose accordingly. In constant 2008 dollars, Michigan schools on
average received about $3,000 more per student in 2008 than they did in
Proposal A's first year.
Herein lies the lesson for policymakers and taxpayers: More revenue for schools won’t necessarily stabilize their budgets.
point to recent revenue declines in the state school aid fund — the schools'
primary source of income, and the repository of taxes from Proposal A — and
call for an overhaul of Michigan's school funding system. This argument, too,
is questionable: The school aid fund has grown 18 percent above inflation since
that schools would experience some level of decreasing revenues during an
economic recession should surprise no one. No matter what funding system is in
place, revenues for public schools will eventually wane as the economy wanes.
Attacking Proposal A's funding mechanism for not being immune to economic
reality is specious.
performance of Michigan's economy since the passage of Proposal A.
Inflation-adjusted per-capita personal income in the state has grown by less
than 6 percent since 1995. This growth is the worst of any state in this period
and is a stark contrast to the increased revenue flowing
to schools during the same period.
remarkable that schools haven't suffered large funding cuts in recent years.
Ironically, one reason they've been protected is Proposal A's diverse
revenue streams. While real sales-tax revenue for schools has declined slightly
in the last decade, inflation-adjusted school revenue from income, use, real
estate, state property and casino taxes — all introduced since Proposal A — has
grown. Schools now rely on more than a dozen different taxes funneling into the
school aid fund, and this has meant that state tax revenues for schools have
not fallen dramatically, even though the tax revenues have decreased somewhat
inflation-adjusted state tax revenues for schools have declined, why has the
schools' overall funding increased? The answer is generous increases in federal
and local funding, which are secondary revenue sources for the schools. Since
Proposal A, accounting for inflation, local revenue grew by 105 percent and
federal revenue grew by 104 percent, enabling the 33 percent real school
revenue growth since 1995. Federal revenue in particular — largely from the No
Child Left Behind Act of 2001 — has taken on a larger role in paying for
schools: a double-edged sword, given the new federal requirements on state
schools and Michigan's growing dependence on federal support.
of this adds up to one simple and straightforward point: Michigan is not facing
a school funding crisis. At most, Michigan schools are merely dealing with the
economic realities of a state in decline. For years, schools have largely been
shielded from these realities, and schools overall are much better off than
they were 15 years ago. Yet facing modest reductions — most school districts
will experience cuts of less than 5 percent — has districts dipping into fund
balances and teetering
on the brink of bankruptcy.
Herein lies the lesson for policymakers and
taxpayers: More revenue for schools won't necessarily stabilize their budgets.
Too many districts have failed to control their costs, even with evidence of
cost-saving practices like privatizing noninstructional services, consolidating
services or having employees contribute more to their own health insurance
premiums. State policymakers should look to the expense side of the school
ledger if they want to help schools deal with their fiscal problems.
Michael Van Beek
is director of education policy at the Mackinac Center for Public Policy, a
research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is
hereby granted, provided that the author and the Center are properly cited.