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Michigan School Finance Under Proposal A
October, 2004
The Study
This report by Professor David Arsen and David Plank, co-director of the Education Policy Center at MSU, details the impact of Proposal A, Michigan's system of school finance, in its first 10 years of existence. Findings
Proposal A was approved by Michigan voters in 1994. It shifted the funding of schools from local property taxes to the sales tax and other levies. In their analysis, the authors found that the changes produced by Proposal A have on balance been decidedly positive. Proposal A led to a significant reduction in property taxes, while simultaneously reducing inequities in the resources provided for Michigan schools. The average homeowner now pays approximately $2,000 less in property taxes per year as a result of Proposal A. In addition, before Proposal A, per-pupil spending in the highest-revenue school districts was more than three times higher than spending in the lowest-revenue districts. The highest-revenue districts now spend about twice as much. The authors also document strains in the school finance system. These include the fact that Proposal A has slowed the growth of total revenue available to schools, and it has affected different schools in different ways. Rural schools have benefited most from Proposal A, while most central city and low-income suburbs are worse off because of their declining enrollments. Finally, the funding system provides no compensation for regional cost of living differences, nor is state funding adequately adjusted to reflect differences in the cost of educating special needs students. The authors offer three policy recommendations. The call on the Legislature to take steps to ensure the adequacy of revenues earmarked for the School Aid Fund, establish funding that reflects differences in educational costs, and ensure that students not be harmed when other children leave their schools.
What It Means To You
Has your district prospered or struggled under Proposal A? Would the policy recommendations offered by Arsen and Plank provide for a fairer, more effective funding system?
For More Information
Arsen, D. & Plank, D.N. (2003). Michigan School Finance Under Proposal A: State Control, Local Consequences. East Lansing, Michigan: Education Policy Center at Michigan State University. The report can be accessed on the EPC Web site at www.epc.msu.edu
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