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Published: June 27, 2011

Full-state assumption

A policy whereby the state government assumes all funding for public schools. Attempted for the first time in Michigan in 1994, full-state assumption ended reliance for school funding on local property taxes, which produced funding inequities between rich and poor school districts. Although full-state assumption was first proposed in New York State in 1972, it remained only an interesting theory until the mid-1980s, when two populist revolts converged: opposition to soaring property taxes and outrage over what was perceived as a decline in the performance of public schools. Nearly half the funding for public school education in the United States is derived from property taxes, with most of the other half provided by the state and about 7% provided by the federal government. But per student spending ranges from less than $2,000 in the poorest districts, with the lowest property values, to almost $50,000 in the richest districts, with the national average just over $6,000 in 2000.
Such inadequacies provoked lawsuits by civil libertarians in more than half the states during the 1980s. They were joined by taxpayers from the richest school districts, where some 70% of property owners had no children and protested excessive taxation to provide what they deemed to be luxurious facilities for children from a relatively small group of families. Both groups were joined by educational reformers who saw full-state assumption as a way for the state to establish higher, statewide educational standards and strip local district bureaucracies and elected school boards of control over education. By the end of 1993, courts in eight states had ruled that unconstitutional inequality did indeed exist in public school funding between wealthy areas, with high property values, and poor areas, with needier people and low property values.
To avoid costly court battles, Michigan’s legislature agreed to provide more than two-thirds of all public school funds from higher state sales and cigarette taxes, leaving local property owners responsible for providing less than one-third of school costs through property taxes. (The situation had been reversed.) Moreover, the state agreed to guarantee every district in the state the same amount of annual funding per student, with a minimum guarantee of $5,000 per student, regardless of the flow of revenues into state coffers. Despite the high hopes of its originators, full-state assumption did not eliminate discrepancies between rich and poor districts in spending per pupil, although it did improve the lot of some poor school districts. While average spending per pupil across the state climbed to about $7,000, or about 13% above the national average, the dollar gap between the richest and poorest districts in Michigan remained at an astonishingly high $2,500 per pupil after five years of full-state assumption.