Plans to improve Michigan’s K-12 schools depend on how the state funds public education
Revenues for Michigan’s districts have failed to keep pace with inflation and the evolving needs of today’s students.
Improved academic outcomes in Michigan's K-12 schools are largely dependent on the state's funding for public education, according to research conducted at Michigan State University's Education Policy Innovation Collaborative. Over the past few decades, the state's school finance system has become increasingly complex, with funding for education accounting for more than 25% of state spending in the 2025 fiscal year, which exceeded US$21 billion.
Research consistently shows that increased school funding leads to better academic outcomes for students, including higher attendance, educational attainment, college enrollment, higher earnings, and lower likelihoods of adult incarceration. Moreover, direct investments in classrooms, such as higher pay for educators, have the most significant impact on student achievement.
Michigan's school finance system underwent a significant shift in 1994 with the approval of Proposal A, which transferred control over day-to-day expenses to the state and provided the foundation allowance—a set amount per student enrolled. This funding, currently set at $10,300 for the 2026-27 school year, is complemented by categorical funding for specific student groups and services like transportation and security.
Yet, despite the state's increased spending on education, per-pupil funding has failed to keep pace with the rising costs of educating students. This is primarily due to demographic changes, including declining fertility rates, a higher percentage of students from economically disadvantaged backgrounds, increased numbers of students with disabilities, and a growing share of English learners. Each of these groups requires more resources to achieve equivalent educational outcomes.
As districts lose students, their costs often don't decrease proportionally with their revenues, leading to funding instability. While overall funding for Michigan's districts has risen in the past, it has not kept pace with the increased student needs or inflation. Total per-pupil funding peaked in 2002 at $16,557 in 2024 dollars, but has since been declining steadily.
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