In June, the State of Michigan released the Michigan Education Finance Study prepared by Augenblick Palaich and Associates (APA). The APA finance study team concluded that, “Michigan should work to create a more equitable state funding system.”

In 2014, the Michigan legislature enacted legislation authorizing “a comprehensive statewide cost study” to determine the “sufficient resources per pupil” for students to achieve State academic standards. The State then contracted with APA to analyze the school finance system in a number of areas and to make recommendations based on these analyses.

Based on funding and spending data from successful school districts, the study team recommended that Michigan establish a per-pupil base expenditure of $8,667 for all school districts. In addition, APA recommended that districts be provided with additional funding for students in poverty, at 30% of the per-pupil base, and for English language learners, at 40%, to enable schools to meet the educational needs of these students.

The APA study team noted that in order to make the State’s funding system fairer Michigan should find ways to narrow the wide gaps in per-pupil revenues among districts without consideration of students’ special needs, while also increasing spending to better address particular student need.

The study explained that much of the disparity in district spending across the state is due to large differences in local property tax bases. The APA team recommended increasing state aid for the lowest-spending districts and narrowing the gap between high-spending and low-spending districts over time. Increasing the base expenditure level “will help make progress toward this goal,” the team noted.

The study team found that Michigan falls short on need-based equity because revenue fails to increase sufficiently for districts with more student need. In fact, it is not uncommon for spending in districts with high student need to be lower than in districts with less student need.

The “formulas for determining special needs funding are not generating enough revenue,” the APA report stated. And, “districts with the means to supplement these sources locally are doing so.” Other districts are left short of funds.

The APA team was unable to determine actual special education expenditures because Michigan’s accounting is inconsistent across districts. Therefore, the team recommended that the State set up a better system to track these costs.

Finally, the study team examined costs by region and found many variations and no pattern that would allow them to make recommendations for funding adjustments by region. Similarly, underlying variations in the data for capital and debt service led the study team to refrain from recommending regional benchmarks or a state baseline figure for these expenditures.

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Sharon Krengel
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