A study recommends higher spending level in Michigan public schools.

DALLAS -- Michigan needs to increase funding to adequately meet the state's education needs, a new research report warns.

The study presented to the State Board of Education Tuesday recommends a "base cost expenditure" of $8,667 per student for Michigan schools and further recommends that schools receive additional funding for impoverished students at 30% of base funding and for English language learners at 40%.

For the upcoming school year, local school districts will be receiving a base amount of between $7,511 and $8,229 per pupil.

"The study reinforces the direction for change needed in our school funding system if we are to rejoin the ranks of high-performing states – investing more in our low-income students, English language learners, and those with special needs," said State Board of Education President John Austin.

Research firm Augenblick, Palaich and Associates prepared the state-commissioned study, which provides an analysis of revenues and expenditures for Michigan's public school districts. It did not examine the growing charter school presence in the state.

Michigan's formula for school funding has come under heightened attention as school districts across the state struggle to make up for a loss of state funding – a result of decreasing student enrolment and an increase in school choice via charter schools.

Detroit Public Schools is an extreme example of the troubles facing Michigan school districts. A June Citizens research Council for Michigan report found that the number of Detroit resident children enrolled in schools has been declining. In the last five years that number has fallen to about 110,000 from 144,000. The district has lost close to 30% of its public school enrollment. During the same time the number of school districts that are enrolling Detroit students grew to 233, from 151.

DPS is being restructured under a $617 million rescue package approved this summer by state legislators that pays off $467 million of the district's operating debt and provides $150 million to start a new, debt free district.

Other school districts is the state are experiencing the same problems of student decline coupled with charter school expansion, albeit on a smaller scale than DPS.

The Michigan Treasury implemented an early-warning and intervention law in 2015 to address financial problems in school districts before they become emergencies. The law requires that school districts, intermediate school districts and charter schools with reserve funds of less than 5% of their general fund budget send their budgetary assumptions to the state. They must choose between working with the Intermediate School District or the state to build their reserves.

The legislation is intended to allow school districts to receive assistance from their Intermediate School District and the Department of Treasury prior to facing a financial emergency. Currently 17 districts are under state oversight.

Michigan substantially altered the way public school districts are financed beginning in 1994 with its Proposal A legislation. Prop A limits the taxable value of a property. It can only increase by the rate of inflation or 5%, whichever is less. Under the Proposal A cap there are two ways taxable value can exceed the inflation cap: new or improved property or the sale of existing property. A property's value can decrease, however, which places taxing entities in a precarious position as the amount of money they can assess goes down.

The limited revenue raising options for these districts means their operating revenue is dependent on its individual foundational allowance, which is determined by the state on a per-pupil basis. Falling enrollment challenges the amount of funding the district's receive.

Michigan has increased the minimum per-pupil basic funding allowance for five consecutive budget cycles since it was reduced by $450 in fiscal 2010. The latest increase came In June when lawmakers approved a $54.9 billion fiscal year 2017 budget that adds $150 million for K-12 public education for a total of nearly $12.1 billion in state funding. That's an increase of $1.4 billion since fiscal year 2011.

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