School Funding and Taxes

School Funding and Taxes

Berrien County’s superintendents agree that future decisions relative to school funding should follow the guidance that is suggested in the School Finance Research Collaborative Study and is mirrored in the recent Michigan State University policy report (January 2019) called Michigan School Finance at the Crossroads. The reports outline how schools are coping with funding that has never truly caught up with previous deductions, the increased cost of business and the special supports and services that are needed by many of our students. In fact, total state funding for school operations is at the same level today as it was in 2007, without any adjustment for inflation. (Governor’s FY 2020 Discussion points printed March 5, 2019.)

As a collective, we strongly agree that school aid funding be restored and stabilized. Additionally, the fund should be held harmless when future budgetary decisions are being discussed.

Call to Action

  • Review and implement the recommendations of the School Finance Research Collaborative. Students come to school with varying abilities and levels of preparedness. It is important that schools have flexibility in their funding to meet the needs of each individual child.
  • Protect the School Aid Fund and local revenues from state tax policy changes. Schools are impacted by tax policy shifts (business tax, internet sales tax, gas tax, personal property tax, road improvement and environmental cleanup transfers, etc.). The school aid fund should be held harmless when any changes are made.
  • Specify that the School Aid Fund is only for Pre-K to 12 public education in Michigan’s Constitution. Vouchers, funding for private institutions and funding for higher education should be prohibited.
  • Continue to adopt the state’s budget by June 1, allowing schools the ability to properly plan for the upcoming school year (which begins on July 1 of every year).
  • Work to offset inflationary pressures derived from increases to fixed costs (e.g. MPSERS).
  • When drafting legislation, consider unintended consequences of new laws, such as unfunded mandates. Review the current mandated expectations and either eliminate the unfunded expectations or provide funding to cover the unforeseen costs.

The School Finance Research Collaborative (SFRC) is supported by:

  • Michigan Association of School Boards
  • Michigan Association of Superintendent and Administrators
  • Michigan Association of Intermediate School Administrators
  • Many other education associations

According to the SFRC, all 56 Michigan Intermediate School Districts have passed resolutions of support, contributed financially to the project, or both.

Did you know:

Michigan’s one-size-fits-all school funding system fails to provide the resources necessary to meet the unique learning needs of each student. The SFRC report clearly demonstrates the need for a new, fairer school funding system that serves all students. Here are a few examples:

Guidance counselors

-Current ratio: 729 students to 1 counselor
-Collaborative recommendation: 200 students to 1 counselor

School psychologists

-Current ratio: 4,800 students to 1 psychologist
-Collaborative recommendation: 400 students to 1 psychologist

Media library specialists

-Current ratio: 3,343 students to 1 library specialist
-Collaborative recommendation: 1 library specialist per school building

According to the SFRC, the base per-pupil cost to educate a general education K-12 student in Michigan is $9,590, which does not include transportation, food service or capital costs, and only includes pension costs at percent of wages. In addition to the base per-pupil cost, a percentage of the base cost should be provided for special education, English language learners, students living in poverty and programs to provide Career and Technical Education.

Michigan ranks 50th out of the 50 states in school funding growth since 1995, according to Michigan School Finance at the Crossroads: A Quarter Century of State Control. The report also said the state under funds special education, forcing districts to redirect $500 per general education student to make up the difference. (Source: School Finance Research Collaborative media kit and the Michigan School Finance at the Crossroads report.)

Current Legislation

Bill Number
 Description
SJR A and C
Revises the permissible uses of school aid funds.
SJR B
Equalizes per pupil funding.
SB 13 and 17
Eliminates income tax on retirement or pension benefits based on taxpayer’s age.
SB 43 and 44
Provides for a use/sales tax exemption for the purchase of contact lenses.
SB 47 and 48
Exempts alternative energy from the collection personal property taxes.
SB 59
Provides for the freezing of taxable value for primary residences of certain senior citizens.
SB 146 and HB 4242
Provides for 2019-20 fiscal year K-12 school aid budget.
SB 154 and HB 4248
Provides for 2018-19 K-12 school aid supplemental appropriations.
SB 206 and HB 4347
School Aid omnibus budget.
 SB 315 Provides an individual income tax credit for expenditures by certain school teachers for certain supplies.
 SB 380 Creates a student loan forgiveness program for teachers in at-risk schools.
 SB 436 Allows funding for, and use of, the Michigan Education Corps.
 SB 455 Allows an eligible data center property located in a renaissance zone to be exempt from certain property taxes relating to bonds, school sinking fund obligations and special assessments levied by the local tax collecting unit in which the property is located.
 SB 473-476 Changes various statutes to modify the references to basic foundation allowance to instead be target foundation allowance.
 SB 541 Provides funding to reimburse school districts for board member training.
HB 4006
Eliminates the income tax on retirement or pension benefits based on a taxpayers age.
HB 4050
Allows for the transfer of residential real property under the ownership of a limited or general partnership to certain specified transferees without subjecting the property to the reset in taxable value to 50 percent of the State Equalized Value (SEV).
HB 4069 and 4465
Revises the tax treatment of alternative energy systems and provides for tax exemptions.
HB 4070
Creates a fund-raising registration plate for “I Support Public Schools” and earmarks revenue into the school aid fund.
HB 4075
Expands use of Sinking Funds for school buses.
HB 4125
Modifies the earmark for School Aid Fund and the Michigan transportation fund, and eliminates the earmark for the Renew Michigan Fund.
HB 4232  Provides 2019-2020 bduget for Michigan Department of Education.
HB 4287
Eliminates three-tier limitations and restrictions on a deduction for retirement or pension benefits based on taxpayer’s age.
HB 4311
Creates the Lawful Internet Gaming Act which promulgates rules as well as imposes a tax on online gaming.
 HB 4540 and HB 4541 Defines marketplace facilitators and revises the use tax act. 
 HB 4542 and HB4543 Requires out-of-state retailers to remit sales tax and use tax.
 HB 4582 Provides an income tax credit for expenditures by certain school teachers for certain supplies.
 HB 4694 Allows a retiree to be employed at a reporting unit under certain conditions without forfeiting retirement allowance or health care coverage. 
 HB 4823 Revises regional enhancement millage ballot language so that every district name is not required to be listed.
 HB 4824 and 4825 Provides a sales tax holiday for back-to-school supplies.
 HB 4887 Modifies certain requirements related to allocations for special education funding or reimbursements.
 HB 4888 Modifies certain permitted millage rates for intermediate school districts.
 HB 4926 Will remove an enhancement millage from the eligible millage cap calculation for ISD operating millages.
 HB 4927 Clarifies the calculation of the PPT reimbursements for school operating loss not reimbursed by the school aid fund.
 HB 4929 Includes school district and ISD debt millage, school district hold harmless millage, and the state education tax millage in the calculation of the TIFA's PPT reimbursement.

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