Some Background on Proposal “A”

Before Proposal “A” went into effect for the 1994-1995 school year, school operations were funded primarily through voter-approved local taxes. Generally, districts with high property values were better able to fund schools than districts with low property values.  Prior to the passage of Proposal “A”, there were significant disparities in per-pupil funding among districts (the lowest around $3160 and the highest around $10,300, a gap of $7140). Also, many residents felt their property taxes were too high and property assessments were rising too quickly.

In March of 1994, voters approved Proposal “A” in hopes of addressing these problems.  The main features of school funding under Proposal “A” are:

  • Limit homestead property tax for school funding to 6 mills.
  • Increase the state sales tax by 2% with the increase dedicated to school funding.
  • Limit property assessment increases for tax purposes.
  • Local municipalities collect homestead school taxes and send the collections to the State of Michigan to be included in the State School Aid Fund. (The State School Aid Fund also includes a portion of the sales tax, income tax, use tax, real estate transfer tax, and cigarette tax.)
  • Primary source of school operating funds for all districts is State School Aid Fund.
  • Districts keep local non-homestead school taxes; but as local non-homestead collections increase for a given district, the State School Aid Fund money allocated to that district decreases.
  • Base each district’s funding on its funding level for the 1993-1994 school year. Greater annual increases for lower-spending districts in the first few years of Proposal “A” in order to reduce spending disparities.
  • Allow high-funded districts to levy a “hold-harmless millage” with voter approval. (However, the absolute dollar amount per-pupil that can be raised cannot exceed the absolute dollar amount determined from 93-94 spending. If a hold-harmless district’s property values increase yielding more than that absolute dollar amount, the district must give the difference back to the taxpayers.)
  • Allow districts within an intermediate school district to levy (with voter approval) a maximum of 3 mills for operations to be shared by participating districts. Districts have the option of participating in the levy.


Has the Spending Gap Closed?

For the 1999-2000 school year, per-pupil spending varies from about $5638 to about $11,150, a gap of $5,512. The legislature has already determined spending for 2000-2001. Spending will vary from about $5,866 to about $11,320, a gap of $5,454.