School finance reform in Michigan: Evaluating Proposal A

Michigan’s Proposal A fits within the broad school finance equalization movement. First implemented in 1995, the reform stemmed from concerns about inequities in property tax burdens and expenditures and radically changed the financing of public schools. The primary source of funding shifted from local property taxes to state sales taxes and finance became highly centralized at the state level. A modified foundation system replaced district power equalization as the mechanism for distributing basic aid to school districts. Under the foundation system, spending per pupil was sharply increased in previously low spending districts and was essentially frozen for higher spending districts. This paper describes the nature of these changes, the short-term results, and the tensions that are likely to foster future change. We also briefly touch on the school choice and accountability reforms that Michigan implemented at approximately the same time as school finance reform.