The Skillman Foundation

Where do we go from here?

It’s something that touches every classroom, every community, and every student in Michigan, even if it feels distant or technical: school funding.

To understand where we are today, it helps to start with a simple truth: Michigan’s school funding system did not arrive here all at once. It has been shaped over decades through a series of policy decisions made in response to different circumstances at different moments in time.

For much of Michigan’s history, public schools were funded primarily through local property taxes. This meant that where a child lived played a significant role in how much funding their school received. Communities with higher property values could raise more local revenue, while others could not. By the early 1990s, those disparities were visible in districts across the state.

In 1994, voters approved Proposal A. This marked a major shift. Proposal A reduced reliance on local property taxes and moved a much larger share of responsibility for school funding to the state. A central feature of Proposal A was the creation of a statewide foundation allowance—a minimum per-pupil funding level supported through a mix of state and local dollars. This foundation allowance became the primary source of general operating funds for school districts and was designed to move the lowest-funded districts toward a more consistent funding baseline over time.

In the years immediately following Proposal A, per-pupil funding increased, particularly for districts that had previously been the most underfunded. The creation of the foundation allowance helped raise the floor, and over time, the lowest-funded districts made steady progress toward the statewide target.

That progress unfolded gradually. Nearly 30 years after Proposal A passed, in fiscal year 2022, all Michigan school districts reached at least the target foundation allowance, which was $8,700 per-pupil at that point.

At the same time, while the lowest-funded districts were catching up to that baseline, overall education funding growth slowed across the state. Between 1995 and 2015, Michigan ranked last in the nation for growth in education revenue, meaning that compared to other states, Michigan’s total investment in education increased more slowly over that 20-year period.

Think about it— nearly two generations of students moved through Michigan’s K-12 system during a period of very limited funding growth.

As a result, even as funding became more equal across districts, Michigan as a whole was falling behind nationally in how much education funding was growing over time. During that same period, Michigan also began investing a smaller share of its overall state resources in education. Since 2006, the portion of available funding devoted to K-12 education has declined, even as costs rose and student needs became more complex.

Another important part of this story is how Michigan has historically funded students with additional needs. Research shows that students from low-income backgrounds, students with disabilities, English language learners, and students facing other challenges require extra support. Those supports include specialized staff, instructional resources, and services that go beyond the base cost of education. For many years, Michigan’s funding system largely treated students as if they each cost the same to educate, regardless of need. Compared to leading education states and what research recommends, Michigan has invested less in additional funding for students who need more support.

In 2023, the state adopted the Opportunity Index—a new funding model that directs additional dollars to districts based on concentrations of students from low-income households. This marked the first time Michigan systematically built a concentration of student poverty into its core funding structure, rather than relying primarily on flat per-pupil amounts. This is an important distinction. For many years before the Opportunity Index, Michigan had a flat rate for student poverty, which was often underfunded. The Opportunity Index provided a dramatic increase in support for students from low-income backgrounds and acknowledged that not all poverty is the same; students in deep poverty need more support.

Even with that change, analyses consistently show that investment for students with greater needs remains below what research recommends and below levels seen in many other states. In that context, Michigan has also engaged in work like the Michigan Special Education Finance Reform Blueprint, a statewide, data-driven framework developed to better understand how funding aligns with student needs and how special education dollars flow within the broader school finance system.

Today, Michigan’s school funding system starts with a funding allowance of $10,050 per student. From there, additional dollars are layered on to reflect different student needs and circumstances through mechanisms like the Opportunity Index, special education reimbursements, and federal programs.

The result is a system that has changed in many ways, while still bearing the imprint of earlier decisions that continue to shape how funding shows up in schools today.

Watch our conversation with State Senator Sarah Anthony; Venessa Keesler, President & CEO of Launch Michigan; and Craig Thiel, Research Director of Citizens Research Council, from our March 2026 episode of Our State of Education below.

Find all episodes of Our State of Education here