A version of this blog appeared in the Detroit News on March 10, 2021.

In a Nutshell:

• Michigan’s 1994 school finance reforms (Proposal A) did not address funding for school building and infrastructure, leaving in-tact a locally-driven financing system based on disparate property wealth.
• Without dedicated state revenue streams to help equalize local funding efforts, too many school districts are unable to provide safe, modern physical learning environments for their students.
• Governor Whitmer’s plan to provide $1 billion towards school infrastructure projects fills a long-standing void that has the potential to address large funding inequities across school districts, but it mistakenly excludes charter schools.

Governor Gretchen Whitmer is proposing to spend $1 billion of the state School Aid Fund surplus over the next six years to help Michigan schools to upgrade, improve, and modernize school buildings and classrooms. The governor’s spending request would allocate $170 million a year towards a persistent and growing fiscal challenge that, for decades, has stood in the way of providing equitable educational opportunity for too many school children in our state. 

The governor should be applauded for bringing attention and proposing the use of substantial state resources for this long standing issue. However, her proposal ignores the needs of students attending the state’s nearly 300 public charter schools and lawmakers should not let that stand. 

The governor’s exclusion is somewhat of a head-scratcher given recent bi-partisan efforts to equalize per-pupil funding for school operations and eliminate long-standing funding disparities across traditional and charter public schools. For the first time in history, ALL public schools this year will receive the same amount of base per-pupil funding – something supported by the School Finance Research Collaborative’s 2018 school funding adequacy study and a key objective of the 1994 school finance reforms under Proposal A. 

Over the last three decades, as Lansing lawmakers slowly chipped away at this funding gap, one equally pressing fiscal problem has gone unaddressed by the state. That is the provision of equitable and adequate funding for school construction – safe classrooms, clean air and water, and modern learning environments. While the per-pupil funding gaps were tackled by providing additional state dollars to low-spending schools under the Proposal A framework, these reforms did not bring additional dedicated state funding for investments in buildings and facilities. 

This omission allowed existing facility inequities to persist and grow as schools were left to “go it alone” to raise money for safe, updated school buildings. 

The reality today is that Michigan’s locally-controlled capital funding system results in inequitable and inadequate facilities for many students. Some learners attend school in brand-new buildings equipped with the most up-to-date instructional technologies and complementary, state-of-the-art facilities for art, music, and extracurricular programs. Other students are taught in buildings over 100 years old that have leaking roofs and failing infrastructure, and are ill equipped for modern technology.

These disparities are abundantly stark when you drive by or visit schools across the state, but are not surprising considering that the local property tax remains the primary funding mechanism for traditional public schools’ capital needs. Because the value of taxable property varies dramatically across these districts, Michigan’s wealthiest communities can raise far more from a mill of taxation (a mill equals one dollar of tax for every $1,000 of a property’s taxable value) than poorer districts. A stronger tax base gives these districts a distinct advantage in financing improvements to modernize facilities over time.

On the other side of the coin, charter schools don’t have access to property taxes and must finance their capital and building-related spending from a portion of the per-pupil operating dollars they receive. This creates even greater inequities across schools.

Our research has shown that the per-student capital needs in Michigan’s poorest districts ($8,172) were more than two times greater than the needs in the wealthiest districts ($3,677). While all schools have unmet needs, wealthy districts have a much easier time generating funds. We found that the per-pupil tax base of the wealthiest districts was more than four times greater ($308,000) than the tax base of the poorest districts ($69,200), many of which already tax their residents at very high rates.

Further, our research has demonstrated that improving the adequacy and equity in Michigan’s school capital funding system will require a greater state role and additional funds, similar to what was done under Proposal A. To this end, one recommended policy option is a state-funded school infrastructure grant program for all types of public schools. We recognized that charters, without access to local property taxes, have limited means to address their unmet capital needs. Our suggested approach is also consistent with the findings and recommendations of the School Finance Research Collaborative.

So, we were happy to see the governor’s proposal to use a portion of the estimated $3.6 billion School Aid Fund surplus to capitalize a $1 billion school infrastructure fund and to use this funding to provide up to $170 million annually in grants to eligible school districts over the next six years. These grants would be appropriately targeted to those communities with lower tax bases, higher proportions of economically disadvantaged students, and the least ability to afford raising property taxes. 

But, the proposal falls short by excluding charter schools and the nearly 150,000 students that attend these public schools. Over 75 percent of these students qualify for free/reduced-priced lunch and attend schools located in the very same communities targeted in the governor’s plan. But, her exclusion of charters means that a large swath of the state’s economically disadvantaged students would not benefit from this funding, exacerbating existing funding inequities.

Charter schools have been politically contentious. Some advocates for traditional public schools argue their existence pulls students and resources away from traditional schools. But this is an issue about equity within the existing system of public schools – traditional and public. Charters are now a permanent part of Michigan’s public education fabric and policymakers need to ensure they are able to deliver high-quality education in safe buildings and employ modern technology. This is supported by our research, as well as others.

Lawmakers have an opportunity to build upon the governor’s request to make sure ALL students benefit from the proposed grant program. Doing so would build upon the recent momentum from equalizing per-student funding for school operations.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the Citizens Research Council of Michigan is properly cited.