While the last year of teaching and learning has looked different in many ways, Michigan’s school finance trends have mostly continued on the same upward path. Online schools that continued to educate during the pandemic fared worse than schools that shut down, then struggled with the transition to remote instruction. Intermediate school districts were among the biggest budgetary winners.

Given the harsh economic effects of the COVID-inspired lockdown, another statewide funding increase looked anything but inevitable last spring. State sales and income taxes, key sources of school revenue, took a hit early on, but they have bounced back strong. Even better for schools’ finances, their total revenue increased, thanks to federal relief.

School buildings were closed during spring 2020, but the year ended well for most district budgets. This is confirmed by the National Public Education Financial Survey, a product of the Michigan Department of Education that the Mackinac Center used to update its School District Revenue and Expenditure Report. The most recent comprehensive look at dollars and cents reveals more tax dollars continue to flow into public school agencies to pay for fewer and fewer students.

A few key observations stand out:

• Adjusted for inflation, Michigan schools recorded an all-time high of $15,296 in per-pupil revenue for 2019-20. That number reflects every dollar collected by conventional, charter and intermediate districts, divided by the number of students included in the October 2019 count. Every major source of tax revenue — local, state and federal — grew in real dollars on a per-pupil basis over the previous year.
• Statewide averages can sometimes obscure more interesting trends. While per-pupil revenues for the state’s charter schools grew in line with inflation, revenues for conventional districts increased nearly twice as much. Seven out of 10 districts received more real dollars per student in 2020 than the year before. Meanwhile, cyber schools, which continued to provide full-time online instruction through the pandemic, saw their overall per-pupil revenue cut.
• A predictable trend continued, as the state’s 56 intermediate school districts spent an ever-larger share of the state’s K-12 dollars. Increasing every year since at least 2004, that share now tops 10%. ISDs are regional agencies that oversee or provide a host of different services within their boundaries but enroll very few students. From 2004 to 2020, their combined payroll has grown 39% in real dollars, even as total public school enrollment has declined by 15%.

In the heart of the pandemic’s economic uncertainty, the Mackinac Center’s recommendation to downsize ISD budgets made eminent sense as a strategy to protect classrooms from cuts. Yet that’s not what happened, and old patterns continue: increasing revenues for the public school sector and inefficient allocation of resources.

Better strategies are available for focusing education funds fairly and effectively. State officials should waste no time in exploring and pursuing them.

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