This and other school funding myths are explored here
often complain (and the media repeats) that funding for Michigan's public
schools is "unstable" because it relies in part on revenue from the 6 percent
state sales tax. Additionally, many people seem to think that a significant
proportion of the money going into our schools comes from the Michigan Lottery.
In fact, over
the last 15 years, even though the proceeds from the sales tax and lottery have
increased, the portion of total school revenue from both has steadily
decreased. In 1995, they contributed 32 percent and 5 percent, respectively. In
2010, it's forecasted that they'll make up just 21 percent and 3.5 percent.
The current funding system has produced relatively predictable and stable income, vastly different from the pre-Proposal A era.
about the magnitude of the Michigan Lottery's contribution may arise because
the operation markets itself as a significant source of school revenue. Part of
the strategy behind its $27 million annual advertising budget is to
convince people that gambling away their income really isn't so reckless given
that their loss is education's gain.
includes giant yellow billboards declaring that $15 billion has been
dedicated to public schools thanks to the public's gambling ways. What the
signs don't reveal is that this amount is the total cumulative contribution
over 36 years! This is not to say the lottery is a bust, just that it doesn't
provide as much as many believe.
The sales tax
myth is also common and deeply rooted. One reason is that a 50 percent sales
tax rate hike was a key component of the Proposal A school funding overhaul
adopted by voters in 1994, with 100 percent of the new revenue (and 60 of
the revenue from the original 4 percent levy)
going into the state School Aid Fund. All told, 73 cents of every dollar
paid in sales tax goes to schools.
members and officials perpetuate the myth when they express frustration at
having less control over their revenues than they did before Proposal A. An oft
heard complaint during the difficult process of crafting annual local school
budgets is that the state controls funding levels and relies heavily on the
Like many good
myths, there's more than a grain of truth to this one. Forty-one percent of all
state-based revenues for schools in 2009 came from the sales tax. Although the
proportion from other state sources is growing (the income tax, Michigan
Business Tax and the 6 mill state education property tax), the sales tax still
remains the largest single revenue source for state-based school funding.
However, the proportion falls to just 21 percent when all school revenue
sources are considered, including money from local property taxes and the
money represents an ever-growing share of school budgets over the last decade.
The amount has almost tripled since 2000, rising from $890 million to $2.46
billion in 2009. Likewise, local property tax revenues also grew by $900
million from 2004 to 2009 (the net
increase may be less going forward due to depressed real estate values).
officials should be grateful for state-based sources of revenues like the sales
tax. The current funding system has produced relatively predictable and stable
income, vastly different from the pre-Proposal A era when when school districts
were forced to devote extensive resources to passing uncertain operating-fund
millages to keep their doors open. Instead of complaining about their lack of
control of revenues, school board members should make it a habit to focus on
the things they can control — like their district's expenses.
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.