Issue Background

Adequacy Study

In the study, APA concluded that the total base cost for districts is $8,667 per pupil based on what they determined are “notably successful” districts. The base cost is the cost to educate a student with no identifiable special needs. The amount includes instruction, administration, support, food service, transportation, maintenance and operations, community service, adult education and other expenditures.

Notably successful districts had student performance on state assessments higher than the state average, as well as success with certain student risk factors. In all, 54 districts were considered to draw conclusions about the amount of funding needed to replicate the results in other districts.

There were a few shortfalls in the study. APA could not fully account for all special education costs for districts, nor could they be compared district to district with the information the state collects. Therefore, existing equity gaps in this funding could not be determined. It also does not address career technical education, early college programs or other opportunities outside of traditional education offerings that a district may have.

One of the more important findings, which will come as little surprise, is that Michigan’s school finance system is inequitable and in fact, has become less equitable over time. The study suggests the state explore alternatives for narrowing the wide range of per-pupil revenues and expenditures, and work toward having a single formula allowance for all districts.

Also, the state may be “falling short” in providing districts additional resources to serve their special needs populations. It goes on to say that at-risk students should receive 30% more and English Language Learners should receive an additional 40% above the base cost. The findings suggest that the formulas for determining special needs funding are not generating enough revenue and districts have to supplement the funding with local sources. However, not all districts have the means to use other revenue for these programs.

Finally, the analysis showed large variations in capital and debt service costs across districts. Because this money is raised completely through bonds, this variation is not surprising. It did show that district demographics did not appear to influence whether or not a bond passed, but instead it was the size of the bond that seemed to make the difference.

Overall, the report laid out seven recommendations:

  • The base cost expenditures for notably successful districts should be used for all districts.
  • Funding for at-risk and ELL students should be funded 30% and 40% more respectively.
  • Michigan should create a system that better tracks all special education expenditures.
  • Regional benchmarks for noninstructional expenditures should not be set at this time.
  • Regional benchmarks for capital or debt service expenditures should not be set at this time.
  • Michigan should collect targeted data to look at regional cost differences.
  • Michigan should work to create a more equitable state funding system.

On June 28, 2016, the completed Michigan Education Finance Study (adequacy study) was finally released. This study was required by Public Act 555 of 2015 as part of the package allowing for Proposal 1 and was conducted by Augenblick, Palaich and Associates.

The study was commissioned to determine the sufficient resources needed to provide a quality public education for all pupils and whether our system of funding is equitable. Among other requirements, they were also responsible for determining if school districts receive funds “in a fashion that ensures that all students have an equal opportunity” to become proficient in various subjects. 

What, if anything, the Legislature or Governor will do with the recommendations or the results of the study as a whole remains to be seen. We are hopeful the results will impact future School Aid Budget decisions and will work to keep these findings in the forefront as those discussions happen.

While the report is quite lengthy, the executive summary at the beginning is worth the read. As you review the report, please feel free to send any comments or questions you may have to MASB’s Government Relations Team

We have also created a simple one page infographic with the highlights of the report.  This can be printed and shared with your fellow board members and others.

Watch Executive Director Don Wotruba's webinar on the study with special guest Craig Thiel of the Citizens Research Council.