Averaging Our Way to Average (Viewpoint on Public Issues)

The Michigan Education Association and other interest groups are attempting to mandate funding and spending increases in the state education budget. Most of the rhetoric from both proponents and detractors has focused on mandatory funding increases set at the rate of inflation, but the proposal includes other ominous policies that would water down incentives and further damage educational quality.

One such policy is averaging enrollment numbers over three years, a Trojan horse that would substantially and negatively alter incentives for districts to offer quality instruction and practice careful administration and fiscal management. Under current state law, a majority of Michigan’s K-12 education money is provided by the state to local districts through a foundation allowance for each student. The total amount a district receives through foundation allowances is based on its pupil count.

Generally, the foundation allowance follows the student. For example, if the parent of a student at Bunker Middle School in the Muskegon city district wants her child to fill a seat made available by the neighboring Mona Shores district, most of the foundation grant from the Muskegon district would be paid to Mona Shores instead of Muskegon.

The petition circulated by the MEA and currently being considered by the state Legislature would require the state to distribute funds based on the larger of two figures: the current year’s enrollment, or the average of the current year’s enrollment and the enrollments in the previous two years. The three-year calculation method is currently used only for districts meeting very specific size criteria.

If the proposal had been in effect last year, the Muskegon district would have received funding from the state for about 6,100 students, even though the district’s enrollment for funding purposes was about 5,880 that year. Tellingly, the difference between Muskegon’s actual and averaged enrollments is about the same as the number of Muskegon students who transferred to the Mona Shores district last spring, according to data from the state government’s Center for Educational Performance and Information.

Set aside the fact that the proposal’s enrollment calculation would put financial strain on the School Aid Fund by inflating the total number of students actually attending Michigan schools.

The more insidious effect of the proposed mandate would be to weaken incentives created by competition. What strong incentive would the Muskegon district have to improve educational quality enough to encourage students not to transfer to another district or to a nearby charter school? What compelling motive would the Muskegon school board have to be a good steward of taxpayer dollars if the board knew that losing kids to another district would have only a diminished effect on the district’s revenue?

In fact, the mandate would substantially weaken the limited influence parents have in the current system. Under limited public school choice laws, including charter schools and inter- and intra-district choice, some parents can participate in their child’s education in the most fundamental way, by choosing the school that best suits their child’s unique needs.

Every time parents choose a public but nondistrict school for their children, the assigned district loses the state funds it would have received had the parents chosen to keep their kids in the assigned school. When enough parents "vote with their feet," a school district begins to feel the pinch. School board members, administrators and teachers begin looking for ways to cut costs and improve schools. If a district can reverse a downward trend and convince parents it’s successful, enrollment numbers and revenues will increase.

Public school choice options constitute a severely restricted market, but they are creating market-like effects around the state. Parents are able – albeit in a limited way – to influence educational quality by making choices that affect school funding.

Further divorcing district income from actual enrollment figures would tell parents as educational consumers that their choices do not matter much. It would tell teachers and administrators that letting educational quality slip would not make much difference. It would tell school boards in districts with dwindling numbers that they don’t need to keep as close a watch on taxpayer dollars. It would tell kids that they just don’t matter enough to have everyone count.

And it would tell other states and countries that we’re not interested in being competitive. Instead, we’d rather average our way to average.


Ryan S. Olson 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.


The Michigan Education Association and others support a proposal to mandate regular increases in state education spending and to change, among other things, the way that school enrollment is used to determine school district funding. This second provision, though less publicized, is still significant: It would weaken the incentives for schools to improve.

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