A common complaint about public school funding is that large financial gaps exist between school districts. These charges are partly rooted in historical fact: For most of the 20th century, the majority of America’s school revenues came from local property taxes. In many states, including Michigan, large disparities between districts’ local property values and methods of assessing taxes led to substantial funding variations between urban, rural and suburban districts. With the growth of the suburbs, particularly in the latter half of the century, suburban districts could often raise more local revenue per pupil than rural and urban districts.
The view that large disparities exist between urban, rural and suburban school districts was most notably popularized by the work of author Jonathon Kozol, who primarily blamed a lack of resources for the struggles of urban schools. In his book “Savage Inequalities: Children in America’s Schools,” Kozol argues that unfair tax distribution systems led to enormous educational inequalities between urban and suburban districts. His work has been required reading in education and social science schools in American universities for years, and it is heavily cited in popular literature.
Even before Kozol’s book was published, many state governments had begun a process of centralizing school funding by increasing the use of state taxes in financing public schools. This increased reliance on state taxes provided a means for reducing the school district funding disparities that had arisen because of differences in districts’ ability to generate local property tax revenues. Michigan’s Proposal A, passed by the state’s voters in 1994, was a notable example of the shift toward increased state funding and equalization of school district revenues.
Additionally, the federal government’s role in funding local school districts has grown dramatically over the past two decades. Federal revenue per student more than doubled in inflation-adjusted terms from 1988 to 2007. A significant component of this federal money involves supplemental funding for children from low-income families, and this funding has tended to direct additional revenue to inner-city and rural school districts.
The following report compares the revenue streams and spending patterns of urban, suburban, town and rural school districts in Michigan. The analysis is meant to provide context for public education spending discussions; it is not meant to provide answers about the “correct” levels of spending and revenue.
The findings should be of interest to school officials, education researchers, education reporters and state residents monitoring the funding of the state’s public education system. The results should also provide a helpful perspective to state officials whenever they discuss changes to Michigan’s school funding model or to regulations of school district expenditures.
 Jonathon Kozol, Savage Inequalities: Children in America’s Schools (New York: Harper Perennial, 1992).
 James Guthrie and Arthur Peng, “The Phony Funding Crisis,” Education Next 10, no. 1 (2010) http://educationnext.org/the-phony-funding-crisis/ (accessed Oct. 7, 2010).
 “Table 172: Revenues for Public Elementary and Secondary Schools, by Source of Funds: Selected Years, 1919-20 through 2006-07,” in Digest of Education Statistics (Washington, D.C.: National Center for Education Statistics, 2009), http://nces.ed.gov/programs/digest/d09/tables/dt09_172.asp (accessed Feb. 23, 2011).