Proposal A needs to be tweaked to preserve revenue for Michigan schools, a report released Monday concludes.
David Plank and David Arsen, co-directors of MSU's Education Policy Center, released the findings of the report Monday at the Kellogg Center. The research conducted for the report took two years to compile.
"With the current budget crisis, the number of losers under Proposal A is increasing," Plank said at the conference. "So the pressure to tweak it is real."
When it was passed by Michigan voters in 1994, Proposal A shifted the burden for school funding from local property taxes to the state sales tax. As a result, policymaking decisions that had been made by local voters and officials now are made by the Michigan Legislature.
Although the Legislature has made promises to allocate money from the School Aid Fund to Michigan's public schools, Plank and Arsen contend the money hasn't been there when it's most needed. An average of $560 million per year has been transferred from the state's general fund to the School Aid Fund, Arsen said.
"The School Aid Fund is more susceptible to economic fluctuations, so by transferring money to it from the general fund, it increases the likelihood of future cuts," Plank said.
But Plank and Arsen aren't proposing to eliminate Proposal A. Rather, they suggest the Legislature modify the way revenue is generated for schools.
The most significant proposed change is to increase the state property tax of six mills to eight. The two-mill increase would raise the average Michigan resident's yearly property tax by $200, while generating approximately $600 million in revenue for the general fund, the size of the current general fund gap.
A mill is equal to $1 of tax for each $1,000 of assessment. For example, a property with an assessed value of $50,000 located in a municipality with a mill rate of 20 mills would have a property tax bill of $1,000 per year.
"By generating revenue from other avenues, we can put money back into the general fund to eliminate the funding gap," Plank said.
Increasing the state property tax millage would bring in the necessary money but would require a lot of extra work, said Barbara McMillan, president of the East Lansing School Board.
"It would be a big burden," she said. "There would be a need for a state constitution revision."
McMillan said she values higher education because she is a product of it, and funding needs to be allocated in order to protect both K-12 and higher education.
"I hate to see higher education budgets becoming more tuition-oriented than state-supported," she said. "But if cuts have to be made, then they have to be made somewhere. We will suffer if K-12 isn't taken care of."
Arsen said he first submitted the proposal for the research to the state-supported Michigan Applied Public Policy Research Program in Spring 2001. He was on sabbatical leave in Massachusetts and said he kept seeing story after story about Michigan schools losing funding.
"I had a sense it would be an important issue a few years down the road," Arsen said.
Staff writer Joseph Montes contributed to this report.
