Despite strong initial concerns about budget cuts when the pandemic was first beginning, Michigan has been able to maintain the 2019-2020 fiscal year’s education revenue levels with the help of some federal stimulus dollars. However, there are still major concerns about the fiscal constraints the state could face for the 2021-2022 school year.
When considering how the state is using current stimulus dollars and the possibility of facing budget cuts in future years, Michigan policymakers must ensure fair distribution of the effects, as well as empower districts with financial flexibility for best use of every education dollar. This involves taking into account structural problems with the state’s school finance system.
This policy brief provides an overview of Michigan’s school finance system, details its primary shortcomings, and makes four recommendations for reducing funding responsibly:
- Implement 2X formula in reverse
- Eliminate or reduce selected categorical grants
- Maximize spending flexibility to leverage existing dollars
- Target at-risk dollars more effectively
Ideally, policymakers would pursue structural reforms that provide sustainable solutions to these and other problems with Michigan’s school finance system. This would include streamlining operating dollars into a true weighted student funding formula, overhauling how special education dollars are allocated, and rethinking the role of independent school districts. If more-fundamental reforms aren’t feasible in the short-term, policymakers can effectively address the budget shortfall in four practical ways that account for existing problems and help make the most out of every education dollar.
Even in a constrained fiscal environment, Michigan can improve funding equity and better empower local leaders. These recommendations are intended to help ensure that budget cuts—whenever they become necessary—aren’t disproportionately shouldered by Michigan’s most disadvantaged students, and to ensure that legislators are able to trim their budgets with a scalpel rather than an axe.