Whether you like it or not, Proposal A was a landmark event in Michigan school finance.
After 25 years of futility and 12 ballot proposals, in 1994 Michigan voters approved Proposal A, which revamped the way the state funds K–12 education. Voters reduced the state’s relatively high property taxes, which had been about 35 percent above the national average before the reforms and now are about the same as the national average. Proposal A not only gave property tax relief but reduced funding disparities among school districts—spending had ranged from $3,400 to $10,300 per pupil.
Local property taxes for schools were largely replaced with new state education taxes. The reforms
- increased the state’s 4 percent sales tax to 6 percent and earmarked the increase for the School Aid Fund;
- created several new revenue sources for schools, including a 6-mill state education property tax and a 75-cent per pack cigarette tax;
limited annual property tax increases on each parcel of property to the lower of (1) the inflation rate or (2) 5 percent;
- stipulated that school districts on the low end of the funding spectrum would receive bigger annual funding increases than would the “richer” schools; and
- eliminated a number of categorical (special) grants and rolled the funds into the foundation allowance.
For more information, see Michigan K-12 Funding from Michigan-in-Brief, April 1, 2002.
School Finance Reform in Michigan – Propoal A : Retrospective, Michigan Department of Treasury, Office of Revenue and Tax Analysis, December 2002.