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A Presentation on School Funding and Current Legislative Matters

A Presentation on School Funding and Current Legislative Matters. Scott Menzel, Superintendent of LESA Electronic version available at: www.livingstonesa.org. Agenda . School Funding Basics Property Taxes The School Aid Fund Funding Equity. School Funding: Pre-Proposal A.

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A Presentation on School Funding and Current Legislative Matters

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  1. A Presentation on School Funding and Current Legislative Matters Scott Menzel, Superintendent of LESA Electronic version available at: www.livingstonesa.org

  2. Agenda • School Funding Basics • Property Taxes • The School Aid Fund • Funding Equity

  3. School Funding: Pre-Proposal A • In 1963 the State Constitution reinforced the tradition of maintaining local control over schools and school financing. • Local elections set the millage rate for property tax that was the primary funding source for schools. • Michigan property owners were paying about 35% more than the national average to support their schools. • During the 1980’s and 1990’s large groups of citizens became increasingly active in reducing the amount of taxation on property owners. • In March of 1994 voters approved by a 2:1 margin what is now known as Proposal A.

  4. School Funding: After Proposal A • All property (homestead and non-homestead) is taxed at 6 mills. • Non-homestead property is taxed an additional 18 mills (for a total of 24 mills). • Cap on Taxable Value of 5% or the rate of inflation, whichever is less per year. • Sales tax was increased from 4% to 6%. • SEV goes from taxable value to true value when property is sold. • Local district can no longer request millage increases for operations (*). (*) Exception: Enhancement Mills. Educational Service Agencies may request the enhancement millage, which is up to 3 additional mills for operating purposes.

  5. School Funding: Effect of Proposal A • Limited ability of local schools to raise operating dollars. • Lowered property taxes for property owners. • Did not address issues such as Headlee Rollbacks on 18 mills. • Created cash flow issues due to the reliance on the new State payment system. • Did not address school districts needs in the areas of upgrading facilities. • Provided for two student counts in a school year that are averaged to determine revenues. The current blended count is 25% of the February count (prior year) and 75% of the September count (current year).

  6. School Funding: Foundation Allowance • Each district must levy 18 mills on non-homestead to get the full foundation allowance. • State calculates local revenue from the 18 mills on a per pupil basis. • State deducts per pupil local revenue from the lesser of foundation allowance or maximum per pupil amount. • Districts above maximum (hold-harmless districts) are allowed, by law, to levy additional mills (with voter approval) to achieve their prescribed foundation allowance. • This was determined at the time Proposal A was enacted.

  7. Millions of Dollars FY 2007-08 School Aid Fund Revenue Source: January 2008 Revenue Estimating Conference.

  8. GF/GP Portion of School Aid Revenue GF/GP will contribute an almost $35 million to the School Aid budget in FY 2007-08.

  9. School Aid Major Spending Categories FY 2007-08 Total = $13,006,025,100 * Does not include local revenue.

  10. Highest State Maximum Basic Minimum Funding Equity In FY 2007-08 the basic was increased to the state-guaranteed maximum foundation allowance. Note: The foundation allowance of all districts below the minimum foundation were immediately increased to the minimum foundation for FY95.

  11. x = Foundation Per Pupil Funding Equity:FY 2007-08 Pupil Distribution • 69% of pupils are concentrated in districtswith a foundation revenue per pupil of less than $7,704. • There are 1.65 million public school pupils in Michigan, 1% = 16,500 pupils

  12. Funding Equity:Foundation Allowance Trends Note/1: Districts with a per pupil foundation of less than $6,500 in FY 2002 received an equity payment per pupil equal to $6,500 minus their per pupil foundation. The per pupil equity payment was “rolled up” into the district’s per pupil foundation beginning in FY 2003. Note/2: If the minimum foundation was less than $5,170 the increase was to $5,170. Note/3: The Livingston County Foundations were adjusted for the 2003 and 2004 pro-ration of state aid.

  13. Credits Thanks to Mary Ann Cleary, Associate Director of the House Fiscal Agency, for her contributions to this presentation.

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