NCREL's Policy Seminars

Funding Crisis Forces Action in Michigan

Introduction

In response to a request by the Michigan Department of Education, NCREL provided assistance for a one-day convocation on the school finance crisis, prepared this report, and conducted an evaluation of the event. NCREL's work on this report and the evaluation of this convocation was supported by a grant from the Kellogg Foundation.

Michigan lawmakers created a $6.3 billion shortfall in school budgets when they voted last July to eliminate property tax as a source of school funding beginning with the 1994-95 school year. By enacting no replacement revenues, lawmakers have forced the Governor, the Legislature, and the public to address the school finance issue. While the whole country watches, Michigan - the first state to eliminate the sole source of funding without any solution - must now develop a new funding system for education.

The legislation, Senate Bill (S.B.) 1, includes four significant provisions:

1. All property is exempt from local school district and intermediate school district (ISD) operating millage beginning December 31, 1993. Consequently, school funding from local property tax for 1994-95 is eliminated.

2. Starting in 1994 the assessment on which taxes are levied is delayed one year. Therefore, the 1994 levy will be based on assessments as of the end of 1992 rather than the end of 1993.

3. No more than two ballot requirements for millage elections will be allowed annually, and questions of millage renewal and increase must be separate. The ballot must also state the amount of revenue to be raised by the millage.

4. Local governments are not allowed automatically to roll up "Headlee" millage rates, which are increases without voter approval, in years when assessments increase less than the rate of inflation. In 1994 millage reductions required by the constitution will permanently reduce the maximum authorized millage rates.

Supporters of S.B. 1 believe that its passage was a positive step to advance education to the 21st century, something that past attempts at reform have failed to do. Critics charge it was a political campaign maneuver engineered for the 1994 gubernatorial election. One thing is certain: the elimination of property tax funding for schools has created a crisis that must be resolved.

To address the problem, the State Board of Education called an emergency summit on school reform. Held in Lansing on September 13, 1993, "Hope for the Children - An Emergency Convocation on Educational Reform and School Finance" provided a forum for discussion on reform and finance issues facing the education community. Sponsored by the Kellogg Foundation, the Joyce Foundation, the Michigan Association of Computer and related technology Users in Learning (MACUL), the North Central Regional Educational Laboratory (NCREL), and many other contributors, the daylong event brought together both state and national experts on school reform.

National perspectives were offered in three keynote presentations, each followed by a panel of experts. James Guthrie, a professor at the University of California at Berkeley, spoke on school restructuring and design. John G. Augenblick, president of a Denver-based school finance consulting firm and vice-president of New Directions for Education Policy in the States, addressed the issue of equity in public school finance. Allan R. Odden, a University of Wisconsin professor and codirector of the Finance Center, Consortium for Policy Research in Education, spoke on public school finance reform.

The convocation also included a special town meeting, guests from the Michigan Senate and House, and the Superintendent of Public Instruction. Following the town meeting, Governor John Engler delivered concluding remarks. Approximately 800 invited guests attended the convocation in Lansing's Civic Arena. The day's proceedings also were broadcast live via satellite to sites across the country.

Michigan's current school finance crisis has resulted in part from a history of school funding reform initiatives.

Posted on March 2, 1995

URL: http://www.ncrel.org/sdrs/areas/issues/envrnmnt/go/94-wintr.htm