Public Education Finance Act

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Weighted-student funding can work for Michigan

The Thomas B. Fordham Institute

Adam Emerson

Michigan’s present system of public-school funding may have made sense when families settled in communities anchored by a General Motors plant and rarely strayed far from the neighborhood school their children attended. But that system is archaic today. GM no longer drives the state economy. The unemployment rate hovers around 8.5 percent. Most families move to different neighborhoods, and different schools—or out of Michigan entirely—as needs and circumstances change. And Michgan’s neighborhood schools now compete with more than 250 public charter schools.

Michigan’s present system of public-school funding no longer makes sense.

This is the context in which Governor Rick Snyder has proposed a new way of funding education in the Wolverine State. He would bury the State School Aid Act of 1979, which funds districts and schools based on their total enrollments, and establish a system of funding that instead follows the child.

Snyder has charged a prominent Michigan attorney named Richard McLellan with finding a constitutionally sound way of creating a cost-efficient and transparent system of funding that allows for more public-school choice. This is well-timed, even urgent, considering that revenues for the state School Aid Fund have fallen 6.5 percent over the last few years, forcing legislators to chip away at a clunky and antiquated system of school finance without solving its underlying problems (or closing the spending gap between district and charter schools).

To nobody’s surprise, however, Snyder’s plan has already met with the resistance of adult interests in Michigan that benefit from district-centered funding. Opposition will continue to mount as McLellan considers specific legislation over the next several months, so it’s worth noting some sensible ways to effect these important reforms.

The best approach is “weighted-student funding” (WSF). Taken seriously and applied comprehensively, WSF causes the amount of money available for a child’s education to vary according to his/her needs. (Some students simply cost more to educate than others.) Those dollars then accompany the child to the public school of his or her choice (including charter schools). It’s a simpler and more transparent approach to school finance that helps to reduce the spending inequities between, and sometimes within, school districts.

Such portability is a bit easier to put into practice in Michigan than in some other states because there the state government already controls most spending on public education, thanks to reforms in 1994 that transferred much of the burden from local property taxes to the state sales tax. But full operational funding should follow the child. Local taxes still make up about 28 percent of education funding in Michigan. If Snyder and McLellan seriously seek to change the balance of power to the benefit of students and families, they’ll have to find incentives for districts to make their part of the money portable, too.

What’s fair for children also needs to be even-handed from the standpoint of participating schools as well.

What’s fair for children also needs to be even-handed from the standpoint of participating schools as well. Done right, WSF assures parents that their children won’t be shortchanged when they choose a charter school—and gives that assurance to the charters, too. Today, Michigan charters receive, on average, 16.3 percent less funding per pupil than district schools. Snyder last year successfully pushed to lift the state’s cap on the number of  charter schools, but the state still treats them—and their pupils—unfairly when it comes to funding.

Teachers unions, of course, will oppose fair funding for charter students, and school boards will object to anything of the sort. But one constituency within the public-education establishment should favor WSF: principals and school-level leaders. Effective implementation of this system would give them far greater autonomy and flexibility to spend money in ways that meet the needs of the students who actually attend their schools. In other words, it puts them in command of their resources with all the responsibility that is part of genuine leadership.

So WSF is a fairer financing system for students and schools that a.) shifts more power to parents, b.) boosts the efficiency of education spending at a time of tight budgets, c.) empowers principals with control over their school resources, and d.) promote fairness among children and schools alike.

What’s not to like? Let’s roll, Michigan!