Fixing School Funding

Voters in forty eight school districts went to the polls this past Tuesday to vote on raising property taxes to pay for schools. Many of these referenda were asking voters to approve spending for routine school operations and maintenance.

About half of the school districts saw referenda fail – many rural school districts, locally and across the state faced a negative vote from the public. Of those referenda permanently adding money to the school budget, ninety percent failed. Many of these failed referenda have failed in the past.

Why would a school district go to the voters and ask over and over again for money to fund school operations?

The answer is the school district has no other option. Money to continue school operations is not available. The school district faces only two options: raise property taxes further or cut programs. Because of state mandates, many programs cannot be cut.

How did we get to this problem?

At the heart of the problem is a system that makes local property tax payers foot more of the bill when school enrollment declines. State money is tied to the pupil: fewer children means less money from the state.  And across the state – especially in rural areas – there a fewer children in our schools.

Years ago, when the school funding formula was developed, there were many children in school; enrollment was growing. Every year the state sent more aid to our schools.

Now, across the state, enrollment is declining.  And state aid is shifting from rural areas with fewer students to wealthy suburbs where the number of students is still growing.

In all but two of the schools in our Senate District the number of students is declining. And the decline in state aid is much faster than the decline in costs.


It costs almost as much to educate a classroom of 17 as a classroom of 20. But state aid is cut by $27,000 when three students leave the class. The local property tax payer sees no decrease in property taxes even through the school district lost $27,000.

My local school district is the state champion of declining enrollment (not that we are proud of it). Alma has lost more students faster than anywhere else in the state.  We lost a quarter of our students in the past eight years. Aid from the state has declined twenty-seven percent while local property taxes have gone up fifty-five percent.

Local people are paying more in property tax and they wonder why the school is in financial trouble.

For our school board it is an impossible situation: there is much less money and much higher costs. For example, the fuel oil bill has increased from $18,000 to $87,400 in the eight years in which we lost a quarter of our enrollment.

Although not intended, the effect of our school financing system is that rural property tax owners are picking up more of the tab for rural schools and wealthy suburban schools with growing enrollments are receiving more state aid.

It seems odd to local property tax payers – they are paying more and more – and the schools are in worse financial shape. But that is the effect of the funding formula.

For real reform, we must change this formula. Fixing the formula is a massive problem. But sometimes change happens in steps.

I was successful, during this past budget year, in adding a change to the formula to aid rural schools. I added a new category to the formula for rural schools with declining enrollment. The budget funded this new category with state money for rural schools beginning in July.

I was disturbed to hear one of my colleagues at a public forum suggest that all new additions to the budget should be eliminated as the solution to the state’s budget woes. This would include the new funding for rural schools.

The step I took in the budget was a small one – compared to the needed massive overhaul. Just changing the formula to help rural districts at the expense of suburban districts won’t get the votes to get the job done.