I recently read the reflections of Bill DeFrance, Superintendent from Eaton Rapids Publics Schools in reference to an article by Don Wotruba, an executive at our Michigan Association of School Boards. I found the article very interesting and informative when in comes to school funding.
What was the primary source of revenue for local school districts prior to 1994?
Property tax revenues that were determined by wealth (property values) and effort (millage that voters levied upon themselves).
What are our revenue sources for local school districts under Proposal A, our funding mechanism for the last 15 years?
A breakdown of revenue for schools is 45 percent from sales tax, 20 percent from state income tax, 20 percent from property taxes that are now collected by the state, and 15 percent from tax sources like the lottery, Michigan business tax, tobacco taxes, the real estate transfer tax, and other state use taxes. All these monies go into the School Aid Fund (SAF).
Do school districts have other revenue sources besides the School Aid Fund?
Yes, on average, school districts receive 10% of their monies from state and federal programs that have designated uses like funding for students who are “at risk,” special reading programs, and early childhood programming. Ovid-Elsie Area Schools receives a little less than that amount (5%) in its funding mix.
Can the state add monies to the School Aid Fund (SAF)?
It can if it has a surplus after meeting requirements to cover all of its other program expenses. The State of Michigan has not been able to do this in recent years. In fact, the School Aid Fund has supported additional monies given to Michigan community colleges.
What is the status of the School Aid Fund (SAF)?
People are still seeing reductions in their property tax bills. But, sales tax revenues and state income tax revenues are increasing slightly. We believe that the School Aid Fund has bottomed and will grow slowly in the next couple of years.
How does the local property tax collection work?
Residential (homeowners) taxes are 7.8 mills while commercial (non homestead) property taxes are levied at 17.46 mills. But this rate of 18 mills must be renewed every 10 years. If not renewed, the rate drops to six mills for businesses. This is typically referred to as Headlee.
What happens if the district does not restore this levy?
Loss of this millage will reduce our school revenue by more than $18,000 annually until it expires.
What happens if the district does not pass this renewal levy?
Loss of this millage will reduce our school revenues by more than $600,000 a year.
What is the important point about this property tax millage?
We have been collecting this millage for nearly 20 years. It was originally put in the Michigan Constitution in 1963. It is a renewal levy. And homeowners do not pay the tax.
What will the ballot look like in November?
The November ballot is expected to have the largest amount of questions on it in recent history. For this millage, it will come in the form of one question. The question will ask voters to restore the current millage to 18.0 mills (an increase of 0.53 mills) – the maximum amount allowable at this point. The district will ask voters to levy the millage for another ten years at a later time since it is set to expire in 2013.
Bottom Line?
Ovid-Elsie Area Schools will not be able to overcome the loss of funding if this millage continues to fail. Our school would see drastic cuts to programs, staffing, etc. Property taxes and values are lower than in previous years. The continuation of this millage (or the addition of other small millages) may in fact keep your tax level lower than what you may have paid five or ten years ago.
(Source: Lansing State Journal, July 15, 2012)
