Contact: David Arsen, Education Policy Center, (517) 432-2276; David Plank, Education Policy Center, (517) 355-3691; Victor Inzunza, College of Education, (517) 355-1826; or Gisgie D�vila Gendreau, University Relations, (517) 432-0924, gendrea3@msu.edu
11/17/2003
EAST LANSING, Mich. � Since it was approved by voters nearly 10 years ago, Michigan�s Proposal A has been successful in keeping property taxes down and reducing inequities in school funding, a study released today by the Education Policy Center at Michigan State University has found.
Proposal A, passed by voters in 1994, shifted the burden of financing schools from local property taxes to the sales tax and other levies.
But because the revenues earmarked for the School Aid Fund (SAF) under Proposal A have never been adequate to satisfy promises the Legislature has made to Michigan�s public schools, the state has transferred an average of more than $500 million per year from its general fund to the SAF.
Current budget shortfalls will make it extremely difficult to continue this practice, the authors � MSU education professors David Arsen and David Plank � predict.
"Proposal A leaves the School Aid Fund dangerously vulnerable to fluctuations in the economy because the fund relies so heavily on sales and income taxes," Plank said. "The economy is in a slump and the state is facing a $900 million deficit, so the question becomes, �Can the Legislature continue to take money out of the general fund to make up the gap in the School Aid Fund?�
"I think it is fair to say that it is going to be increasingly difficult. The funding gap has existed since Proposal A was enacted and it's a problem that needs to be fixed."
The analysis also reveals that Proposal A has slowed the growth of total revenue available to Michigan�s public schools. After adjusting for inflation, statewide per-pupil revenue increased by 13 percent between 1994 and 2002. Compared to the 1980-94 period, the pace of annual real revenue growth since the passage of Proposal A has been cut by nearly half.
Funding under Proposal A has affected different school districts in different ways:
- Most rural districts are better off because their per-pupil foundation allowance (the amount of money the state allocates to schools per student) has increased dramatically. Others, however, are worse off because big enrollment declines have overwhelmed increases in the per-pupil foundation allowance.
- Most suburban districts are also better off because they have seen rapidly rising enrollments. With more students comes more moneyfrom the state.
- Most central city and low-income suburban districts are worse off under Proposal A because of declining enrollments and slow growth in the per-pupil foundation allowance, the authors found.
The report makes recommendations on changes aimed at preserving the gains that have been accomplished under Proposal A, including:
- Taking steps to ensure the stability and adequacy of revenues earmarked for the SAF by increasing the state education property tax and earmarking the new revenues for the SAF.
- The Legislature should ensure that the basis for distributing revenue to schools and school districts reflects the actual cost of educating different students. Currently, the funding system provides no compensation for regional cost of living differences, and for only a portion of the higher cost of educating special needs students.
- The Legislature should provide districts with declining enrollments with more support to ease their financial burden and ensure that the quality of education does not suffer.
�In Michigan, we�re cutting school funding at the same time that national and state accountability standards are requiring much higher student achievement,� Arsen said. �Our recommendations are intended to help schools shift their attention from program cuts back to student learning.�