Respected Michigan Research Group Finds School Spending Up Since 1995

A new study from the Citizens Research Council of Michigan paints a more positive picture of public school funding than a study released by Michigan State University in January.

While the two publications use similar sets of data, they approach it differently, resulting in very different impressions of the financial status of Michigan’s K-12 public schools.

The CRC study, called Michigan’s Leaky Teacher Pipeline, uses figures from the state’s Senate Fiscal Agency to calculate changes in funding since the 1994-95 school year. The authors found that school funding in 1994-95 was the equivalent of $7,790 per student when stated in 2018 dollars. As of the 2017-18 school year, per-student funding had risen to $8,724, an 11.9 percent increase.

In other words, per-pupil funding in the state has increased faster than the rate of inflation, which the study credits to school funding levels going up even as the number of K-12 students here has gone down. That is, public schools are getting more dollars to educate a smaller number of students.

The study also shows that the state of Michigan’s two main budget accounts, the General Fund and the School Aid Fund, are up from a combined $18.5 billion in fiscal year 2010 to $24.2 billion in fiscal year 2018. It then notes:

“Michigan budget writers have dedicated some of these additional resources to public education. With fewer public school students each year, per-pupil funding has increased at a faster clip than the increase in state resources following the Great Recession. Per-pupil revenue growth has exceeded inflation since.”

The Citizens Research Council describes itself as a nonprofit public affairs research organization, founded in 1916, that provides factual, unbiased, independent information on significant issues concerning state and local government organization and finance. Its studies and reports are widely read by policy analysts inside state government and elsewhere.

Craig Thiel, research director at the council, suggested that his organization’s assessment of K-12 school finance differs from that of the recent MSU study because each study is looking at different aspects of the budget.

“It’s likely the fact that I’m looking at a different school funding data set, excluding revenue that does not roll through the state budget, whether it’s revenue raised at the district level or the ISD level,” Thiel said. “The other key difference would be how we’ve made the [dollar figure] adjustment. We use the Detroit Consumer Price Index as a benchmark.”

The MSU authors did not base their inflation adjustments on the familiar CPI, which is produced by the Bureau of Labor Statistics, a unit of the U.S. Labor Department. They instead used an inflation benchmark called the “GDP price deflator for state and local government purchases.”

Thiel continued: “We are trying to paint a picture of what’s going on with the dollars that are rolling through the school budget. ... I should also mention, our numbers are scaled to a per- pupil basis and not total.”

According to Thiel, the CPI and GDP price deflator are both appropriate tools, and he added that the research council has no position regarding the use of the price index in the MSU study.

The study that was released in January by Michigan State University’s College of Education, titled “Michigan School Finance At the Crossroads,” looks at total education funding in Michigan, instead of just the funding influenced by legislators in Lansing.

“There is no doubt that total [non-inflation adjusted] revenues to support Michigan’s K-12 school have increased substantially since 1994,” the MSU study reads. “The relevant question, however, is how much schools can purchase with that money. That is, how have real revenues changed?”

The MSU study goes on to state that, using an inflation index based on changes in prices paid by government, between 2002 and 2015, total revenue for Michigan public schools fell from $28.1 billion to $19.7 billion.

This conclusion is based on inflation adjustments made using the GDP price deflator, an index produced by the U.S. Commerce Department. (The CPI is produced by the Bureau of Labor Statistics, a unit of the U.S. Labor Department.) Had the MSU authors used the much more common CPI to measure inflation, they would have come up with a figure that shows modest gains in inflation-adjusted school revenue, not a decline, according to the Mackinac Center's analysis.

David Arsen, lead author of the MSU study, did not respond to an email and phone call requesting comment.