School funding fight turns on two visions of Michigan

Michigan political leaders and education groups have all proposed school funding plans that meet their own definition of what is more equitable for students.

That’s welcome news in a state where payments to school districts can sometimes seem confounding. Why is it that schools in DeWitt, for instance, get $7,026 per pupil from the state, while Northport gets $8,848? The Bay City Academy charter gets $7,026 while many other charters get $7,168. And Birmingham Public Schools receives $11,804 per pupil because it is among more than 50 wealthier districts that are allowed to collect millions in extra money from their local residents for schools through a quirk of the current funding law.

The problem is, each group pushing budget reforms has their own notion of what is equitable. For some, it means every district should get equal funding, no matter where it is or the challenges facing students in that community.

“Why is it some kids are worth less?” asks Gary Naeyaert, executive director at for the Great Lakes Education Project, a school choice and charter school advocacy group. GLEP favors equal state per-pupil resources for traditional public schools and charter schools, noting that schools with at-risk students qualify for additional grant funds.

Others argue equity means some districts should receive more funding to provide their students an equal opportunity at a comparable education. According to this camp, districts serving low-income urban or rural communities, for instance, often need greater resources than affluent suburban districts to provide students with access to quality education. The cost of living, transportation expenses and other issues also vary from district to district. To this group, equity means adequacy – that is, giving each district what is adequate to give their students an opportunity for success.

“Making things equal isn’t necessarily making things equitable,” said Steven Norton, executive director of Michigan Parents for Schools, a nonprofit advocacy group that takes the “adequacy” approach to school funding.

“Students need funding available to meet their needs. That applies to kids who are considered to be at-risk, and secondly, children who qualify for special education services. Not all of those costs are covered by the state or federal earmarked funds,” he said. “That’s kind of the real dilemma. Everyone wants a good education, but a lot of people don’t want to pay more for it.”

Herein lies the heart of the equity versus adequacy debate over the future of school funding – what is fair when it comes to financing schools? It’s an issue that is more than theoretical as state lawmakers and powerful education interest groups seek to change a funding system that all agree needs reform.

Money woes and mediocre test scores in Michigan’s schools are firing up the ages old debate, a debate filled with jargon and stoked by emotion from everyone who has a child, ever attended school, is looking to hire qualified graduates, or simply pays taxes. And with state legislators and the governor up for election this year, the debate over what is fair in school funding is only going to get louder.

Prop A 2.0 needed

Lawmakers on both sides of the aisle agree – the Proposal A law of 1994 did what it was supposed to do: it cut property taxes while narrowing the funding gap between the lowest and more highly-funded schools.

“(But) the promise of Proposal A has come and gone,” said Michael F. Addonizio, a researcher at Kalamazoo-based W.E. Upjohn Institute for Employment Research and co-author of “Education Reform and the Limits of Policy: Lessons from Michigan.”

Proposal A narrowed the funding gap. But it has not resulted in equal funding for all schools, nor did it even aspire to ensure that districts receive enough money to meet the needs of their particular students. It has, in short, brought neither equity nor adequacy.

"A structural overhaul of our state and local tax system is needed to adequately fund our schools,” Addonizio and co-author C. Philip Kearney concluded.

In the current school year, there are 377 school districts that get a $7,026 per pupil foundation grant from the state. Another 117 districts receive up to $8,049, while more than 50 so-called “hold-harmless” (wealthier) districts, get more than that, according to state data. The state foundation grant is only a portion of school district’s total funding, which also includes federal and local funds.

The state funding gap between the lowest- and higher-funded schools is on average about $1,000 per student per year, much narrower than the $2,300 per-student funding gap that existed in 1994-95 when Proposal A took effect.

Those that believe equity should mean equal funding for every student want state aid that ultimately means share and share alike.

Charter industry groups, including the Michigan Association of Public School Academies, say one way to achieve fiscal equality is to have the state quit handing out so much money called “categoricals” that are earmarked for special programs, such as to help “at-risk” students, schools that adopt “best practices” in academics, or robotics programs.

GLEP is pushing the legislature to dramatically reduce categorical funding and as a result give all schools – with an exemption for wealthier, hold-harmless districts – $8,250 per pupil. That would still leave billions in federal, state and local funds that are distributed to at-risk and special needs students, according to GLEP.

Naeyaert questions how the state can accurately determine what one school needs versus what another school needs. To fund schools in that manner would create another separate, unequal process similar to the wide disparities that existed in Michigan prior to Proposal A, the 1994 school funding law, he said.

“There’s no moral reason kids who could be neighbors should get different amounts of money,” he said. “We should be talking about financing children - not districts, not institutions.”

The federal government encourages equal payments to schools and offers a financial incentive grant to states that do a good job in making sure there are no wide variations in how much money they give to different school districts.

Michigan ranked in the bottom third of states in terms of equitable funding in 2012 because of the $1,000 per pupil funding gap between the state’s lowest and higher funded districts. About $3.3 billion in federal grants were awarded in 2012 to states that do a good job of investing effort and equity in school funding.

“Michigan doesn’t do particularly well on measures of equity,” said Michael Dannenberg, Director of Higher Education and Education Finance Policy at the nonpartisan Education Trust in Washington, DC.

Adequate funding for schools is a political thorn, he said. The most politically acceptable way to more fairly fund schools is to distribute targeted, new state tax dollars to districts that need help most, he said. And that typically only happens when a state’s economy is on the upswing.

“Generally, when you plus up, you plus up everyone, but the needy much, much more,” Dannenberg said. “Providing new money to low-income communities and schools is almost always a more successful financial strategy than redistributing existing aid from wealthy to needy,” Dannenberg said.

Irving Bailey, whose daughter attends Jalen Rose Leadership Academy in Detroit, which gets a $7,168 per pupil foundation grant from the state, said the charter school could use the $8,250 per pupil funding that GLEP is advocating for all schools.

As long as it means low-income students will still get the additional financial assistance they need for enrichment programs, he said.

“Everything is too expensive for the government,” he said. “But what you give a student is way more important than a lot of the things they do in government. The future is our children.”

Equal opportunity

Proponents of the adequacy approach to education, including many Democrats and some vocal education groups, want to ensure all students get an equal opportunity to achieve, citing studies showing that some children, especially low-income students and students of color, start school well behind their white, more affluent peers.

Some schools, including those in rural communities, must pay more money for transportation, others need more for security or reading specialists, depending on their location and population. Under this notion of equity, the state would provide schools per-pupil funding based on each student's needs, targeting more toward low-income and traditionally low-achieving student populations.

“Schools need to be provided with the funding to provide a proper education,” said David Hecker, president of the American Federation of Teachers-Michigan.

Rep. Brandon Dillon, D-Grand Rapids, and Rep. Ellen Cogen Lipton, D-Huntington Woods, as well as the state board of education, want the state to invest in a study that determines the true cost of educating a child in Michigan, including how much it would cost to give different student populations an equal chance of success.

When Lansing is ready to be fair – to finally address the impact that economic class and racial segregation have on educational outcomes – then the state will be able to more effectively target funding in a way that leads to better outcomes for all, they say.

“We have reached a time where education can be delivered in person or via electronic means. We also know that education is provided for early childhood programs, elementary, middle and high school students. Each of these variations comes with a different expenditure side, yet we provide revenue at a fixed amount,” the Michigan Association of School Boards wrote on the need to consider the needs of individual districts. “We must examine the costs of delivering education and adjust our school funding system accordingly.”

Making matters more difficult for “adequacy” proponents is the reality that it would cost the state nothing to distribute money equally among districts (the GLEP approach), while exploring and implementing a funding plan based on the adequacy model would be costly.

In 2013, Timothy Bartik, senior economist at the W.E. Upjohn Institute for Employment Research based in Kalamazoo, concluded that the price tag to help poor students in Michigan reach the same level of academic achievement as other students is massive: For each low-income urban student, the required spending is 2 to 2.5 times that for more affluent students. Likewise, it would cost 60 percent to 100 percent more per pupil to close the achievement gap between poor rural students and their more affluent peers, he concluded.

The only thing both sides agree on is that the status quo isn’t cutting it in Michigan.

Kevin Deegan-Krause, a parent and school board member in Ferndale, a Detroit suburb, said the way Michigan pays to educate school children should change along with the times.

He has watched his own schools trying to hold together a shrinking district budget without cutting music, art, physical education or sports. About 1,700 of Ferndale’s 3,700 students were recruited from other cities, mostly Detroit, to help Ferndale schools shore up its stressed budget.

“We’ve cut to the bone. The only way for a district to stabilize or improve its revenues is to bring students from elsewhere,” said Deegan-Krause.

And as school populations have changed, the state’s expectations for student achievement and graduation requirements have increased. It would only be fair for the state to kick in additional funding to support these higher standards, he said.

“What’s fair?” Krause-Deegan said. “You can’t just throw money at it, but it is a question of money being used right.”

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Steve K
Tue, 04/29/2014 - 8:45am
Charters should not get equal funding because they do not incur two major costs that traditional publics have and can't avoid: legacy costs (which charters don't have since they are too new to have such costs) and transportation (which most charters don't provide). Giving charters equal money actually puts them at an advantage. Naeyart works for a DeVos advocacy group that is looking to rig the rules in favor of privatization and continuing advantages for charters. I'm not saying that there aren't other interest groups trying to rig the game but treating Naeyart and the GLEP as some sort of impartial arbiter is flawed.
Tue, 04/29/2014 - 8:55am
Hi, Steve. Thanks for the response. All of the school groups mentioned in the stories are partial. None is impartial. True, most charters do not have legacy costs nor transportation costs. Nor pension costs. However, GLEP is an influential voice. To ignore it would be biased and, to some degree, a disservice to readers who want to know what's shaking (and who's shaking it) in Lansing. -cpd
Mary Kovari
Tue, 04/29/2014 - 11:05am
Schools do need more money and funding categoricals has not proven to be the best way to fund public education - metrics just don't support this kind of funding. Just look at all the SIG money sent to underperforming schools who just did not know what to do with it in any kind of tangible, meaningful way and student achievement did not rise. However, schools as organizations - be they charter or traditional - are systemically weak so additional monies are not leveraged in ways that result in higher student achievement. The money is certainly needed but the leadership needed to create strong organizations that can appropriate the money in ways that align with the needs of the community on local, regional and national levels is not being developed. As it stands now, most schools that are successful (have good student achievement data) depend on the students and parents enrolled in the school. It is a frustrating conundrum but the first step in solving the problem is recognizing the real issues. We need to talk more about developing schools as organizations(creating on line learning opportunities is NOT organizational development) that meet the needs of our students both academically and socially and how much is it going to cost to do this? One of the first steps is to index the cost of educating a student in Michigan and talk of doing this has been going on since the Granholm administration but no one has done it - really? Delivering a service with no idea of how much it should cost to develop and execute in ways that meet personal and societal needs is just crazy and is it any wonder we find ourselves in the throes of a failing system?
John R
Tue, 04/29/2014 - 11:07am
Interesting article, Chastity - and good point on the various groups you quote in the article. Steve Norton's Michigan Parents for School group is in lockstep with the MEA, but their perspective is needed, as well. It's important to know where the union is coming from. As for Steve K's assertion that charter school students shouldn't be worth as much as traditional school students, he leaves out that charter schools have to pay for their facilities out of their general fund - and traditional districts don't.
Fri, 05/16/2014 - 4:37pm
John R: In fairness to Steve Norton and all the work he does for Michigan Parents for Schools, they are not "in lock step" with the MEA. They have a unique perspective and often very different than some "parent views" legislators refer to during legislative discussions. Also, many traditional school districts do not have voter approval for bond issues or sinking fund levies and thus also have facility costs included in General Fund expenditures.
Tue, 04/29/2014 - 11:22am
Steve, while i agree that charter schools don't have legacy costs that traditional schools have, they also do not have the ability to propose millages to raise funds that traditional schools have. In general, there will never be a solution that will accommodate everyone. Unfortunately, there are some reasons for the achievement gap that can not be addressed by dollars alone. Until we as a state acknowledge and address those issues (cultural, economic, parental), no matter how much money you increase to any of the districts the gaps will remain the same
Tue, 04/29/2014 - 1:08pm
Chastity, You have talked to some smart, informed, and decent people here (not counting GLEP,). Thank you. But it is a simply inaccurate to call "Hold Harmless" a "quirk" of Prop A. Rather, Hold Harmless was the lynchpin of Prop A. Without those exemptions, Birmingham, Bloomfield, and many others -- including places that like to align themselves with notions of social justice like Okemos and AA -- never would have signed on to Proposal A in the first place. This "quirk," then, made Prop A possible at all. And, the realities of raw political and economic power aside, all polling data (including Bridge's own) show people like their schools. I would suggest beginning with these political and economic realities in the discussion rather than abstractions like Professor Addonizio's "adequacy" and "equity." While he is certainly correct, and as knowledgeable about school finance as any in the state, a more frank discussion is needed. The whole state watched OC Republicans save Pontiac in spring 2013 simply because they could, and because they were protecting the fall-out of nearby, high functioning Districts. Comparably, it makes no sense to discuss school funding in Michigan as if it can be detached from the efforts of the Obama administration to undermine much of what we know as public education.
Tue, 04/29/2014 - 4:47pm
Just make public schools stronger. Give teachers support and the necessary materials and supplies to teach.
Charles Richards
Tue, 04/29/2014 - 5:20pm
"The state funding gap between the lowest- and higher-funded schools is on average about $1,000 per student per year, much narrower than the $2,300 per-student funding gap that existed in 1994-95 when Proposal A took effect." This is not as significant and informative as it could be. It would be much more meaningful to say what the lowest school funding was as a percentage of the highest school funding. I suspect that the $2,300 gap in 1994-95 was much larger in percentage terms than the current $1,000 gap. Further, it would be useful to compare the achievement gap in 1994-95 with the current achievement gap. In other words, how much difference did the reduction in funding disparity make? "Proponents of the adequacy approach to education, including many Democrats and some vocal education groups, want to ensure all students get an equal opportunity to achieve, citing studies showing that some children, especially low-income students and students of color, start school well behind their white, more affluent peers." There is no doubt that children (black or white) from dysfunctional socioeconomic backgrounds face severe handicaps. Studies have shown that the stress such children experience significantly inhibits the growth of the pre-frontal cortex area of the brain. That makes them more impulsive and less able to exercise self-control, which cripples their ability to learn. So, it is very possible that additional resources (perhaps invested in a longer school day and year in order to keep them in a more stable, less stressful environment) would be a wise investment. But how would we ensure that those additional resources were used effectively? Highland Park was spending about $20,000 per student with abysmal results. Pontiac engaged in significant deficit spending with little or no improvement.
Chuck Jordan
Tue, 04/29/2014 - 9:54pm
Well done Ms. Dawsey. I would suggest a look at class sizes, special needs students and costs to attract the best teachers as a factor in determining costs to adequately fund education. Sure is a thorny issue and getting any kind of consensus will be next to impossible.
Wed, 04/30/2014 - 9:37am
"When Lansing is ready to be fair – to finally address the impact that economic class and racial segregation have on educational outcomes – then the state will be able to more effectively target funding in a way that leads to better outcomes for all, they say." They would rather not get into that sensitive area, among other things it would totally mess up the teacher evaluation system that they want to start.
Wed, 04/30/2014 - 1:49pm
Charter schools and public schools are not playing on a level playing field..Make them pay fair living wages, provide bussing, decent retirement plans, same accountability, then lets see how well they do.
Chuck Fellows
Wed, 04/30/2014 - 8:32pm
Equity? Fair? Wonderful concepts that are difficult to apply to learning since every learner is unique and each brings with them a unique context. But, what are the common denominators in school funding that are one cost basis fits all. Transportation is one of those and those costs should be separated out an looked at independently from learning. Bricks and motor is another, granted a square foot in detroit is different than a square foot in Bloomfield Hills, but these are concrete things with similar elements and costs can be compared on an empirical basis. Bandwidth is another that cares not about unique learning styles or socioeconomic status. Bandwidth is just bandwidth. Well, how much of our $14 billion annual school expenditure do these three consume? What are the deficiencies that need to be addressed to insure that these reources are available in an equitable manner to all? These three contain issues that need to be addressed and i bet that our business community could address them far more effectively than the academic community - as long as the academic community clearly articulates its needs. And just what does funding deficits in retirement plans have to do with children learning other than the fact that currently these costs are diminishing learning opportunities for all. Separate out these costs for all to see and focus the remaining funds on learning, not education. Finally, allocating funds based on a headcount that is derived from an age graded cohort, seat time/calendar driven, production line process is simply wrong. This appraoch works for widgets but not for human beings. It has nothing to do with the reality of learning. Why do we tolerate those that are motivated being demotivated by a process that demands wholesale conformity to a predefined learning pace. Now that's a waste of time, money and talent! Motivation and interst dies, learning stops and disruption ensues. Just ask any vice principal, AKA school cop, and they will explain how they just cannot understand how such smart kids can behave so stupidly! If you want to know how to solve that problem ask the teachers to solve it and support their recommendations. Maybe, as the Khan Academy enables teachers to do, we should empower the teachers to determine each individuals students progress in learning that is integrated with other knowledge streams just like learning in the real world is. But you must let the teachers take the lead and not let the well meaning interfere in any way. let the teachers and students be responsible for their own learning. And you will have to end standardized tests that cannot adapt to variablity in student learning rates, standardized tests that require all students progress at the same rate through the same content along the same time line. Standardized tests that by design require all students become drones and clones and all teachers delivery persons, instead of mentors, coaches and guides.
Mary Lee Ruch
Wed, 04/30/2014 - 10:51pm
What? Charter School teachers are not getting retirement benefits in Michigan? Idaho might not be on top of the deck with per pupil expeditures or salaries, but atleast our Charter School teachers are part of our state retirement system. Are they paying mega wages to make up for that?
Martha Toth
Thu, 05/01/2014 - 8:44am
Note that the driving principle behind the Finnish system, which does so well on international PISA tests, is equity. There are no private schools. All the public schools are the same, offering the same curriculum, high-quality teaching, facilities, and wraparound social supports. Equity seems to actually work -- unlike our test-and-punish status quo. Perhaps we should try it.
John S.
Thu, 05/01/2014 - 9:35am
The truth of the matter is that variations in spending across school districts are only weakly (positively) correlated with the academic performance of students and that correlation will disappear with the introduction of control variables (SEV or wealth of the district). How much of the variation in "need" across districts is wrapped up in variation in teacher salaries across districts (a factor sometimes reflecting variation in the age structure (and seniority) of their teachers)?
Scott Roelofs
Fri, 05/02/2014 - 12:18am
John, you hit on a core issue that everyone else seems to have forgotten regarding Proposal A. Before Proposal A, schools were funded primarily by local property taxes. Wealthy districts levied high taxes (or had large corporate taxpayers such as GM, Ford, Dow Chemical, Consumers Power, etc). They generally paid their teachers and administrators higher salaries, often twice as high as rural, poorer districts. Some of the poorer districts could not raise taxes due to lower income taxpayers refusing to pass millages. (Remember Kalkaska schools closing in 1993 because of 4 millage election failures?). Finances were further challenged by state requirements for local districts to pay increasing amounts into the lucrative employee pension plans. The authors of Proposal A knew that the voters in wealthy districts and the MEA would not pass the proposal to shift funding from the local level (property taxes) to the state level (increasing sales tax from 4% to 6%), UNLESS a mechanism was put in place to preserve the high teacher/admin salaries in those districts. This is why 20 years later we have districts such as Birmingham getting much higher per-student allotments than districts such as Stockbridge. People seem to have either a short memory about how Proposal A was structured, or they expected that over time those provisions would be "sunsetted." Many of today's residents and taxpayers were not even of voting age when Proposal A was passed in 1994, and so they don't know about Pre-Prop A. I don't know what the best solution is, but it seems that state control of school funding has not been the panacea that was touted in 1994. I generally favor local control and funding; but clearly there were districts pre-Prop A that were spending beyond many of the local residents' ability and willingness to pay ever-increasing property taxes. The state has certainly forced all districts to tighten their belts in recent years.
Fri, 05/02/2014 - 8:00am
What? Charter School teachers are not getting retirement benefits in Michigan? Idaho might not be on top of the deck with per pupil expeditures or salaries, but atleast our Charter School teachers are part of our state retirement system. Are they paying mega wages to make up for that? Not that I am aware of.
James McKimmy
Sun, 05/04/2014 - 4:23pm
Please remind your readers that most of the "extra" funding in the "Hold Harmless" districts is generated by local property taxes and are not from state grants. They were permitted to do this to gain their support for a mechanism to bring greater equity among the other school districts in the State of Michigan.
Patrick S
Thu, 05/15/2014 - 10:51am
Regarding public education, Michigan has a political and legal structural problem that dates prior to 1837. This state has several voices when it comes to education policy including funding; the House, the Senate, the Governor, the State Board of Education, the State Superintendent of Public Education, the Department of Education, and the local and public charter school boards. There is no true leader with authority in this state to set the compass course for the direction and the future of public education. We rely on a 19th century approach to public education in the 21st century. We can bicker all we want but until we address the structural and constitutional problems we will have a public education system just like our great great parents had prior to the civil war.