Michigan policymakers placed a lower priority on funding for elementary and secondary education in recent years compared to the early 2000s. The trend towards lower priority has been quite consistent, although not completely smooth, from 2002 through the budget for 2010. This disturbing conclusion flows from a comparison of educational expenditures to the resources of the state.

The resources of the state are commonly measured by state personal income. Economists use this measure as a benchmark, e.g., the consensus revenue reports used in budget planning incorporate this measure. Policymakers use it, e.g., state personal income is embedded in the State Constitution in Article IX, Section 26, which specifies a limit on state revenue.

Expenditures from the State School Aid Fund constitute the overwhelming majority of state support for K-12 education. The state contribution to the School Aid Fund (SAF) is calculated by subtracting the federal aid portion from the total, which yields school aid from state sources.

School aid from state sources has declined as a percent of state personal income from an average of 3.66 percent in fiscal years 2001 through 2003 to a projected 3.06 percent in FY 2010. The percentage for FY 2011 will likely fall further. Note that the decline of this relative measure – a percentage – cannot be explained by problems in the general economy. If policymakers had not changed the priority of K-12 education since 2001-2003, the percentage of our state’s resources devoted to it would have remained constant. That is, school aid from state sources would have suffered a slowdown in its growth rate at the same pace as the slowdown in income. What actually occurred was a slowdown in state support for education at a faster pace than the slowdown in the state’s economy, that is, a decrease in the priority given to K-12 education.

The consequences of the declining priority are very large. If today’s state policymakers were to give the same priority to K-12 education as their predecessors in 2001-2003 and thereby appropriate 3.66 percent of state personal income to K-12 education, the appropriation for FY 2010 would be $2.06 billion larger than the $10.51 billion likely to appropriated by current lawmakers. This would be an increase of 20 percent in the support of K-12 education from state sources. Expressing this in different terms, a return to the priority of 2001-2003 would equate to an increase of about $1,050 per student in FY 2010 from FY 2009 for every student in Michigan public school districts and charter schools.

The accompanying table provides detailed figures and documentation of sources.

Note on calculations in the above paragraph beginning “The consequences of the declining …”: $2.06 billion is the product of the changed percent and personal income, i.e., [(3.66 – 3.06)/100]*344 billion. With regard to the increase of about $1,050 per student, the projected expenditure from the SAF of $12.748 billion in FY 2010 is consistent with a cut of $247 per student from FY 2009, as shown in detail in “State School Aid Fund Budget Continues To Worsen,” a companion piece in the Data Bank. The addition of $2.06 billion to the SAF in FY 2010 would be sufficient to raise per student funding by $1,294 from the level consistent with $12.748 billion. The net change relative to current FY 2009 funding is $1,294 minus $247, which equals $1,047 per student.