Running head: EFFECTS OF PROPOSAL A 1

School Funding and the Effects of Proposal A:

Strengths, Failures, and Path to Improvement

Jeremy Mitchell

Oakland University
EFFECTS OF PROPOSAL A 2

Introduction

In 1994 Proposal A set in motion some sweeping changes regarding how schools are

funded in the state of Michigan. The effects of those changes are still seen in our current state

today. While there were many positive effects due to the changes, such as increased funding for

minimally funded schools, categorical grants for at-risk and special education students, and a

lower property tax burden, failures from Proposal A still haunt Michigan to this day. It is obvious

that reforms are needed to ensure that schools can stabilize funding for the education of future

generations, but political values and beliefs about how to do this remain a roadblock to

addressing these challenges.

Strengths of Proposal A

While in our current day it seems that Proposal A is behind the times in addressing school

funding needs, at its inception it made “measurable progress in improving horizontal equity; that

is, reducing the parities in basic per pupil revenue across local districts” (Kearney & Addonizio,

2002, p. 42). For example, school districts in rural northern Michigan like Onaway saw their

school aid fund increase dramatically compared to years past. At the same time, Proposal A also

alleviated property tax burdens on its own residents. Additionally, the proposal did not harm high

funded districts like Bloomfield Hills and allowed them to continue to maintain additional tax

levies so residents could make a choice to fund their schools at the same level.

In addition to horizontal equity, Proposal A has brought about greater educational

adequacy, that is, “does the school finance system provide districts with resources sufficient to

maintain student achievement at high levels” (Kearney & Addonizio, 2002, p. 39). Particularly,

with the ”leveling up” where the foundation formula adjusts higher for districts at the lower end
EFFECTS OF PROPOSAL A 3

of foundation allowance, schools in Michigan are funded better than they were under the past

model. While there are limitations and issues about whether this is truly adequate, it is still

worth noting the change has made improvements

Let's examine the benefits of the changes to property tax funding. Prior to Proposal A,

local communities were responsible for a significant property tax burden. Communities that

highly valued schools could support tax levies up to 50 mils on their own property to fund

schools. However, this created challenges where districts with low property values were required

to pay more taxes to keep up with those that could levy smaller mills on higher value property.

This doesn't even consider those districts with low property values and low political will to

support schools. Thus, prior to Proposal A, there were dramatic equity gaps in funding across the

state of Michigan. By reducing the local property tax burden to 6 mils on local property, and 18

mils on non-homestead property, Michigan property taxes decreased by about 26 percent.

Additionally, an increase in sales tax to be diverted to the state level and redistributed equally

dramatically changed the way schools are funded. When coupled with categorical grants like

31A, plus federal and state special education support, this model is still better than what the

schools were previously funded with.

Drawbacks of Proposal A

While Proposal A has made solid strides in improving educational adequacy and equity

for students, there are many issues that remain unresolved. The greatest of the persistent gap in

funding from district to district. Even though horizontal and vertical equity steps from funding

via sales tax and categorical grants, this still does not come close to the opportunity available to

higher funded districts like Bloomfield Hills that were preserved as “hold harmless” districts that
EFFECTS OF PROPOSAL A 4

were allowed, if willing, “to tax themselves at a rate in addition to the required 18 mill rate”

(Kearney & Addonizio, 2002, p. 46). While the leveling up of foundation allowances,

sometimes even at a “two times” rate to further catch up districts, has brought districts closer

together, there is still a large disparity in the opportunity available to students across the state.

Coupling “hold-harmless” with wealthy communities ability to easily pass enhancement

millages, like facilities bonds, the difference between the “haves and have nots” under Proposal

A still looms large.

The largest issue that must be solved with regard to Proposal A is the fact that school

funding is now tied to state sales tax. Because of this model, Michigan schools are dramatically

affected by economic changes like the collapse of the skilled workforce supporting midwestern

manufacturing and most recently the great recession. Obviously, as the population of the state

decreases due to workers leaving for better opportunities, those people aren’t here to pay sales

tax on purchases. This is also one of the reasons that Michigan schools have had declining

enrollment for years, a serious issue when your schools are funded based upon the number of

pupils. Additionally, as those that were left behind faced greater income challenges, they spent

less, generating less revenue. Lastly, these economic challenges then, in-turn, put greater

pressure on the schools to help families meet basic needs. Needless to say, this vicious cycle has

made it extremely tough for Michigan schools.

Not mentioned yet was the provisions for school choice and Charter school funding that

came about through the legislation. The debate about the value of charter schools cannot and

will not be solved here, there is no denying that it has put more financial pressure on a system

that already has enough. This pressure has been even stronger for school districts in
EFFECTS OF PROPOSAL A 5

economically disadvantaged areas. Local school districts in these areas have had to address the

struggles of society, and because of that have underperformed compared to their better funded

suburban counterparts. Finding a way for these families to seek greater opportunities for their

children when not financially able to leave their current conditions is noble, but it has set in

motion an unstable free market where local schools are losing even more students, and revenue

to service those left behind.

Paths to Improvement

There will never be a perfect school funding model as long as partisan politics exist.

Economics is the study of choices, and priorities differ depending upon geographic and cultural

values. Our school funding models are based upon the balance of hawkish conservative desire

for low taxes and the progressive easy-money call for increased spending (Turner et al., 2016).

Our fifty states are funded in all sorts of ways, some tax property, others income, others sales,

and most are some sort of mash-up. Property taxes provide more stability of funding, whereas

sales and income tax is more elastic or volatile. Some states value local district control residents

political will to fund, while others choose a “Robin Hood” method to redistribute wealth. Again,

political perspective is important.

Educators do not care for the politics involved in the process. We all want a system that

is fair, equitable, adequate, and stable from year to year. Steps taken to identify what the actual

cost to educate a child is are essential. Adequacy studies like those recently released in

Michigan that have taken a comprehensive view should be listened to and acted upon. Then

comes the question of how to address equity across the state? Should wealthier districts that can

afford to, and have the will to, pass enhancement millages, be allowed to? Or should a statewide
EFFECTS OF PROPOSAL A 6

facilities study be done in the vein of the adequacy study to ensure the playing field is level

everywhere? There seem to be so many moving pieces with no great answer. Should poor

communities be given even greater resources to offset the economic challenges they are being

raised in to help correct the probable trajectory of these children’s lives?

The first step that needs to happen is that following the recommendation of the adequacy

study, every student in every school district, should be funded at the same base per pupil

foundation amount. Additionally, the hybrid model of funding schools with a portion of property

taxes should be retained, however, residents should not even be given the chance to vote on

whether or not they would support the decision, i.e. no more voting on operating millages. These

taxes, like the sales tax, should then be collected at the state level and redistributed per pupil.

There should be no question that supporting schools through their property taxes, homestead or

not, are benefits to society. If the overwhelming majority of school budgets continue to be paid

for with sales tax, then their vote would come from whether or not they choose to consume

taxable goods. As mentioned earlier, relying upon such a potentially volatile funding source

could issues when there is an economic downturn. The state should then enact stopgap policies

to supplement funding from other retained sources that would then be repaid during better

economic conditions. One such option would be to increase “sin taxes” on tobacco, marijuana,

and alcohol, and then invest those funds into the retirement system that could then be drawn

upon if needed if sales tax revenue were too low to meet adequacy.

States should eliminate put an end to charter schools. While seemingly beneficial due to

free-market economic choice, these entities have seen little success and more than anything put a

resource drain on local public schools. Properly funding local schools would allow them to
EFFECTS OF PROPOSAL A 7

improve and meet the needs of families. If a new equitable and adequate funding model exists,

then there should be no question of whether or not a local school would be able to meet needs of

students. States and local governments regulate utilities like water, trash, and cable because too

many competitors would wreak havoc on the market, the same policy should exist with schools.

Lastly, a statewide facilities study should be done to assess and ensure that students are

entering a warm, safe, and dry environment. For years, wealthier districts have been able to put

up a vote to use enhancement millages to have at worst, safe facilities, and at best state of the art

facilities. Again, education is a public good, and all Michigan students, and United States

students for that matter, should have a fair and equal opportunity.

Conclusion

No matter what specific path is chosen to fund Michigan’s schools in the future, the path

must lead to schools that are fair, equitable and adequately funded. We are making progress

toward closing the disparity gaps in funding our schools in Michigan and our country, but it is

not good enough. Following the recommendation of the adequacy study that Michigan just

released which has taken in and analyzed data from multiple angles to find what it truly costs to

educate Michigan’s students is vital. Proposal A had many positive effects on the funding of

schools, but many things have changed since 1994 and the formula for getting to adequacy and

equity must be reconsidered and safeguarded from petty politics. “Coming to an acceptable

balance among these competing values, demands, and interests is the continuing task before the

citizens of the state and their elected representatives” (Kearney & Addonizio, 2002, p. 65)
EFFECTS OF PROPOSAL A 8

References

Kearney, C.P. and Addonizio, M.F. (2002). A Primer on Michigan School Finance, 4th Edition

Price, W. J. (2017). Michigan School Finance: A Handbook for Understanding State

Funding Policy for Michigan Public School Districts (9th edition). NCPEA Press.

Turner, C., Krais, R., Zeff, S., McGee, K., Schrank, A., Brundin, J., Manning, R., Tintocalis, A.,

Boger, P. (2016). Is there a better way to pay for America’s schools? Retrieved from

https://www.npr.org/2016/05/01/476224759/is-there-a-better-way-to-pay-for-americas-sc

hools