The state with the biggest education funding drop over two decades? Report says it’s Betsy DeVos’s home, Michigan.

[Sherry Warden]

Michigan, the home state of U.S. Education Secretary Betsy DeVos, ranks “dead last” among the 50 states in total education revenue growth over a two-decade period, from 1995-2015, and its funding of special education remains “unusually stingy,” according to a new report.

The Michigan State University study, titled “Michigan School Finance at the Crossroads: A Quarter Century of State Control,” offers a comprehensive look at school funding in the state since the 1994 passage of a law known as Proposal A, which largely shifted funding from local school districts to the state.

According to the report, total K-12 education funding declined by 30 percent between 2002 and 2015, with 74 percent of that drop caused by declining state support for schools. The authors, Professor David Arsen and doctoral students Tanner Delpier and Jesse Nagel, wrote:

Michigan ranks dead last among states in total education revenue growth since the passage of Proposal A. After adjusting for inflation, Michigan’s education revenue in 2015 was only 82 percent of the state’s 1995 revenue. No other state is close to a decline of this magnitude. In 48 states, 2015 education revenue was higher, often much higher, than in 1995. Michigan’s real per-pupil revenues declined by 15 percent over this same period, ranking 48th among the 50 states.

This has occurred, it says, not because the state’s economy is doing poorly but because policymakers have chosen to “cut taxes, create tax breaks, and rely on revenue sources that do not grow with the economy.” The report says:

Michigan’s extraordinary slide in K-12 education funding is all the more striking because it occurred simultaneously with the state’s establishment of ambitious curricular and achievement standards for children. The standards-based accountability movement has brought historic and fundamental changes to U.S. public schools. But while most other states have accompanied increased outcome expectations with increased resources to meet them, Michigan policymakers have reduced resources.

DeVos was born and raised in Michigan. She and her husband, Dick, spent years leveraging her family’s fortune and political activism to successfully remake Michigan into a state that embraces “school choice” with as little oversight as possible. It is an agenda she continues to promote as U.S. education secretary.

The report says 10 percent of Michigan students are enrolled in charter schools and 14.3 percent participate in a program that allows them to choose schools in districts in which they do not live. But those elements of the state’s choice funding “promote inefficiency.” For example:

By establishing an independent system of schools alongside the traditional system, charter schools may increase per-pupil overhead costs due to the duplication of administrative and instructional support services, or failure to coordinate operations (for example, transportation) across the two sectors.

Schools that receive public funds should be accountable to the public. Michigan’s charter schools submit the same financial reports to the state as local districts. However, when a charter school is managed by a private company, some financial information may not be readily available. Changes in financial reporting guidelines could improve the transparency of charter schools’ management fees, rental payments, and employee compensation.

The report also says despite Michigan’s declining enrollment overall in public schools, the number of at-risk students increased significantly, from 490,050 in 1995 to 676,483 in 2017.

In fact, nearly half of Michigan students are now classified as at-risk, and that share is much higher in many district and charter schools.

Yet even with that increase in at risk-students, state at-risk funding has dropped 60 percent since 1995, according to the report.

Meanwhile, “Michigan’s current funding system provides built-in advantages for wealthy school districts," the report said.

Spending on special education has been “unusually stingy," it says, and this has hurt special education and general education students. Today, Michigan’s state government covers less than one-third of the costs for federally required special education. That means school districts have to help cover the cost of federally mandated special education, and they take, on average, $500 per student from general education funds each year to pay for those services.

The authors make recommendations to improve the educational landscape in Michigan, including:

• Full-day preschool for all 4-year-olds and at-risk 3-year-olds, funded at $14,155 per student, with one teacher and one aide per 15 students.
• Base funding for all K-12 students in district and brick-and-mortar charter schools of $9,590, excluding transportation or capital facility costs (and it only includes employee retirement costs at 4.6 percent of wages and salaries).
• Extra money for special education students and at-risk students, with brick-and-mortar charter schools receiving the same per-pupil base funding and differential funding for special needs as district schools.

The report says:

If Michigan devoted the same fraction of its economy to state and local taxes today as in 1972, it would generate an additional $15 billion in tax revenues per year. That represents 76 percent of total K-12 education revenues from federal, state, and local sources in 2015. If Michigan’s tax effort only increased to the 2015 national average, it would generate an additional $3 billion in revenues per year, an increase of more than 15 percent above 2015 total revenue. To put this in perspective, if Michigan’s tax effort increased to the national average, the additional $3 billion in revenue would be sufficient to nearly restore real school funding to the level that prevailed in 1994.