Why Are Mighigan's School Districts Borrowing More?

K-12 Enrollment in Michigan Public Schools

Michigan public schools face an unpleasant demographic reality, but may not be doing enough to prepare for the consequences. The result could be higher local taxes and too many under-utilized school buildings.

The unpleasant reality is this: For at least the next eight years there will be fewer school-aged children in Michigan. According to projections from the National Center for Education Statistics, an arm of the U.S. Department of Education, total enrollment in Michigan public elementary and secondary schools will have dropped from 1,743,000 in 2000 to 1,616,000 in 2012. That is a decline of 127,000 students, or 7.3 percent.

School districts tempted to dodge the demographic bullet with deluxe buildings and beggar-thy-neighbor policies should think twice. Instead, they should work on what really matters: making their education programs better.

The figures are broken down by elementary and secondary grades. For elementary schools, enrollment will fall from 1,256,000 students in 2000 to 1,147,000 in 2012, a loss of 109,000 students, or 8.7 percent. High schools will see smaller declines, but the primary school figures presage declines in secondary school enrollments after 2012.

Yet, rather than consolidate and reduce the number of school buildings, schools statewide have been on a building binge. According to a 2001 study commissioned by the Michigan Chamber Foundation, “Annual school building debt, and sinking fund millage tax revenue has grown from $451.9 million in 1994 to almost $1 billion in 2000 — a 117 percent increase.” At the end of 2002, school debt qualifying under the state School Bond Loan Fund totaled $12.2 billion, up $2.4 billion since just 2000, or a 24 percent increase. Michigan Department of Treasury estimates this represents approximately 80 percent of total school debt.

New construction often is warranted by local circumstances that buck the overall population trend, and most school districts are careful to assess future needs. Yet, practically wherever you look it appears that school districts are planning to take on new debt for infrastructure. Detroit is reportedly considering its second $1.5 billion bond proposal in 10 years. The Lansing School District’s enrollment is already in decline, but it will borrow more than $30 million to build a new middle school, at a cost of almost $500,000 per classroom. The Bloomfield Hills School District is considering $127 million for two new high schools. Rochester schools want $65 million and Troy schools $100 million for upgrades. In Grand Rapids, the school district has been slow to sell a number of vacant school buildings, despite a five-year enrollment decline of 9 percent.

This construction spending becomes all the more questionable when you consider that every year at least a hundred million dollars of it is wasted. The reason: The governor and Legislature won’t get rid of the archaic 1965 Prevailing Wage Act, which mandates inflated construction costs as a favor to organized labor. Ohio public schools have saved hundreds of millions of dollars since the Ohio Legislature exempted them from a similar law in 1997.

The building boom may also be a perverse reaction to Michigan’s limited inter-district “schools-of-choice” program. School operating expense money is distributed by the state on the basis of how many pupils a school district serves. A district with extra capacity can open its doors to students in adjacent districts. Those adjacent districts must let their children go if parents so choose, and the state money follows those children to the new district.

What may be happening is that some school districts are trying to “protect their turf” with new gold-plated facilities instead of better academic programs. One school executive told me there is “…no doubt [that] schools are looking at what attracts parents. A new school attracts parents.”

The overall demographic numbers suggest that “reversing student declines” in a given district may be a sucker’s game, in which schools just pick each other’s pockets in the same way Michigan communities use tax abatements to compete with each other for employers. In the schools’ case, the competition may occur through big debt and millage hikes to build “Taj Mahal” schools that still crank out mediocre results at best.

The bottom line is that the size of the market Michigan schools serve is declining, and there is nothing they can do about it. School districts tempted to dodge the demographic bullet with deluxe buildings and beggar-thy-neighbor policies should think twice. Instead, they should work on what really matters: making their education programs better.

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Jack McHugh is legislative policy analyst for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. More information is available at www.mackinac.org. Permission to reprint in whole or in part is hereby granted, provided the author and his affiliation are cited.


Despite demographic projections showing that Michigan’s K-12 public schools will experience a 7.3 percent decline in enrollment by 2012, school districts throughout the state are on a building binge.

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