The Article
Professor David N. Plank, co-director of the Education Policy Center at MSU, and Tom Clay of the Citizens Research Council of Michigan examine Michigan’s system of funding school construction and other capital spending, which is the only facet of the state’s system of school financing that remains the responsibility of local taxpayers.

Findings
In 1994, voters approved a ballot measure known as Proposal A, which changed the system of funding school operations from one based on local property taxes to one that funded schools through sales taxes and other levies. However, the new system did not include funding for school construction or repair. Those costs must be covered entirely by local property taxes that require approval by local voters. Plank and Clay found that the value of taxable property varies dramatically across school districts. In 29 of Michigan’s wealthiest districts, the per pupil value of taxable property is more than $500,000. In 75 districts, in contrast, the per pupil value of taxable property is less than $100,000. In six districts, including Detroit, the per pupil value of taxable property is less than $50,000. The residents of school districts where the value of taxable property is low must pay very high rates of property tax to raise relatively small amounts of capital. Residents in wealthier school districts can raise far more capital while paying significantly lower property tax rates. As a result, students in many poor school districts must cope with aging or inadequate educational facilities. Leaving responsibility for capital spending at the local level, the authors point out, perpetuates wide variation in the quality of educational facilities provided students. They estimate the state’s unmet capital need at $8.7 billion. They conclude by offering a series of suggestions for state policymakers to deal with the problem. Options include modifying the School Bond Loan Program, which provides assistance for school districts that are unable to finance adequate facility programs on their own, to allow longer repayment periods to ease the debt service payments on capital construction bonds. Other alternatives include having the state offer direct state financing to targeted projects by issuing bonds to raise the money needed, and even taking over most of the financing responsibilities for capital improvements.

What It Means to You
What impact has the state’s system of financing capital spending had on your school district? Would some of the authors’ suggestions allow for greater investment in maintenance and upkeep of your school district’s buildings?

For More Information
The report, Adequacy, Equity, and Capital Spending in Michigan Schools: The Unfinished Business of Proposal A, is available at the center’s Web site at www.epc.msu.edu .

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