School Funding Myths

With much talk about school budgets and per-pupil costs of public education in Michigan, there's bound to be plenty of questions and assumptions made about our school funding system. Here's a breakdown of two common myths about one of the most misunderstood concepts — the foundation allowance.

The Inequality Myth

The disparity between the "basic" and "maximum" foundation allowance leads people to believe that the state is handing out more money to some districts than others. While that's true, the foundation allowance amount does not tell us how much the state is contributing to any particular district.

Stay Engaged

Receive our weekly emails!

The state only contributes to the foundation allowance the amount not generated by local nonhomestead property taxes. In fact, in most cases, the districts with higher foundation allowances rely less on state contributions than those with lower ones. Districts with foundation allowances above the basic allowance are generally wealthier districts and generate higher local tax revenues. Therefore, the state actually contributes less to those districts than it does many of the districts receiving only the basic foundation allowance.

The Revenue Myth

Focusing on the amount schools receive through the foundation allowance can create the impression that this is the actual amount each district spends per student. The truth is that the foundation allowance is only one of more than 50 state revenue sources for schools. Here's some examples of the various funds (and their projected appropriation for 2009-10) going to schools in addition to the foundation allowance (and here's the full list):

  • Juvenile Detention Facilities ($2.5 million)
  • Court-Placed Pupils ($8 million)
  • Vision/Hearing Screening ($5.1 million)
  • School Breakfast ($9.6 million)
  • Renaissance Zone Costs ($35.5 million)
  • Declining Enrollment ($20 million)
  • Bilingual Education ($2.8 million)
  • Vocational Education ($26.6 million)
  • Health/Science Middle College Program ($2 million)
  • Anti-Bullying/Crisis Intervention Grant ($0.3 million)
  • MEAP Testing ($26.6 million)

In addition to their regular foundation allowance, districts also receive funds based on special education enrollment. Michigan will shell out about $1 billion this year for special education allowances. Schools also generate additional revenue locally from special millages for a variety of targeted purposes like building and sinking funds, debt services, recreation and vocational-technical programs. Intermediate school districts can raise their own revenues through local millages. Finally, the federal government contributes billions of dollars to local school districts based on the number of students qualifying for certain federal programs.

Factoring in these revenue sources provides a more detailed picture of the revenue generated for public schooling in Michigan. In 2007-08, the most recent year these numbers are available from the National Public Education Financial Survey, the total state revenue per-pupil was $12,825.15. Take out charter schools that cannot levy local millages, and the per-pupil revenue for conventional and intermediate school districts climbs to $13,030.23 — almost twice the basic foundation allowance.