From St. Joseph to Houghton, there are dozens of school funding questions on ballots across Michigan. And these can be a lot to take in and figure out, especially when some districts have multiple measures on the same ballot.
There are three different types of proposals Michiganders might see from their local district.
They all rely on millages, but in different ways for different reasons.
Operating millages
These are the most common type of school funding request voters will see on ballots this election cycle. It’s also the most flexible in purpose.
Money from this millage goes to the district’s general budget to pay for things like teacher salaries, utilities and other operational expenses.
The majority of homeowners don’t have to pay this tax, because most districts can only apply this tax to businesses and secondary homes, like vacation homes, rental units and AirBnBs.
There is a lot more to an operating millage because of state law. Click here or scroll down for more.
Bonds & sinking funds
The other two school funding initiatives Michiganders might see on their ballots are bonds and sinking funds. These funding methods have more use restrictions than operating millages.
For the most part, they can only be used for capital projects. So they can’t be used to give schools funds to hire more teachers, for example.
Examples of capital projects include buying new buildings or renovating and maintaining old ones. Schools could also use these methods to buy new gym equipment, technology or buses.
The difference between a bond and a sinking fund is primarily the speed at which schools get the money and where it comes from.
- Bond: This is basically a loan that allows districts to get all the money needed for large projects at once, allowing them to start and finish those projects faster. A millage is used to pay back the loan over time. Bonds are not allowed to be used for smaller maintenance needs.
- Sinking fund: This gives districts smaller amounts of money over time instead of a big chunk of change all at once like a bond. So this funding method is not a great way to pay for big renovations or purchases. However, it does help schools make small improvements and take on long-term maintenance needs without getting a loan or taking money out of the operating budget.
Both of these funding tools require property taxes to either pay off the bond or fill the sinking fund. So districts have to ask voters to approve a millage proposal.
That ends up being an opportunity for school leaders and community members to decide what a district’s priorities should be, said David Arsen. He’s a professor emeritus in education policy at Michigan State University who has studied the state’s school finance system.
“These proposals actually get a lot of vetting,” Arsen said. “These don't get on the ballot without a lot of discussion in local communities.”
While bonds and sinking funds can’t directly be used to pay salaries and electricity bills, Arsen said some districts end up having to use operating budget money for the sorts of things that bonds and sinking funds can pay for.
“They're taking money that could be used to reduce class size, that could be used to increase teacher salaries,” he said. “So in those situations, passing a facility bond could help. It's not a direct funding of those sorts of things, but it reduces the amount the district has to otherwise spend on those things too.”
Questions and answers to help you decide which bubble to fill in for school funding requests on your ballot:
Click on a question to go directly to the answer.
Operating millage questions:
How much do school budgets rely on operating millages?
What happens if an operating millage proposal fails?
How do districts decide what rate to set for an operating millage?
Can some districts ask for an operating millage that does levy a tax on primary residences?
Sinking fund & bond questions:
Where can I learn about what a bond or sinking fund will be used for?
How can I make sure a district uses funds appropriately?
Can bonds or sinking funds be paid with existing taxes?
Is it a big deal when bond or sinking fund proposals fail?
Operating millage questions:
How much do school budgets rely on operating millages?
Because these millages primarily apply to non-primary residences, the amount of money a district gets can vary greatly based on the community surrounding it. Usually, it is not a majority of their budgets.
Dollar Bay-Tamarack Area Schools in Houghton County, for example, says the millage it's trying to get renewed this election cycle makes up about 12% of the operating budget.
But about half of the per-pupil funding for Traverse City Public Schools comes from its millage. According to the Traverse City Record Eagle, that’s partly because of the higher value rental or second homes and commercial properties in the district’s area.
What happens if an operating millage proposal fails?
The district gets less money per student.
The state has set funding at $9,849 per pupil for the 2024-25 school year. For most districts, a big chunk of that comes from the state’s collection of a 6 mill rate tax on all property.
But the state holds back a portion of its funding based on the expectation that districts will propose and pass their own operating millages.
So if a district’s operating millage is expected to bring in about $1,000 per student, the state only gives that district $8,849 instead of the full per pupil amount. If the district then fails to pass its millage, the state doesn’t add an extra thousand dollars to its contribution.
For a district like Traverse City that gets such a large portion of per pupil funding from its millage, the funding cut would be even more drastic.
In the case of a failure, the district just has to deal with the loss — potentially leading to layoffs, building closures, transportation cuts and other reductions in educational services — until it can try to pass the millage again.
How do districts decide what rate to set for an operating millage?
They kind of don’t get to decide that.
As described in the previous question, schools have to pass their operating millage to get full access to per-pupil funding at the rate set by the state.
The state bases its contribution to the school based on the expectation that the district will pass an operating millage set at $18 per $1,000 in taxable value. Again, for most districts, the millage only applies to secondary residences and commercial properties, so most homeowners don’t pay this tax.
A 2019 report from Michigan State University called these operating millages “effectively a state rather than local tax.”
But why do some districts set their operating millage proposals above the 18 mill rate?
A 1978 state law, the Headlee Amendment, reduces millage rates after voters approve them based on property values. As the values go up, the millage rate automatically goes down to avoid making property owners pay more.
But if the values start going down again, the millage does not automatically go back up. And the state does not increase its contribution to per-pupil funding based on the mill rate reduction. Schools are left with no way to close the gap.
So districts are trying to give themselves a cushion that accounts for the Headlee reduction until the millage can be renewed again. But that doesn’t mean property owners pay more, as state law caps the amount schools can get at 18 mills even if voters approve more.
For example, Walled Lake Consolidated School District in Oakland County is asking for a 21 mill increase for its operational millage this November. But in the language on the ballot, the district acknowledges that it won't get $21 per $1,000 dollars in taxable value, just $18.
Can some districts ask for an operating millage that does tax primary residences?
Yes. 43 districts are allowed to levy a tax on those residences based on the fact that they were wealthier than most other districts in 1994. That’s the year the law that governs operating millages today was passed.
As of 2023, only 21 of those districts actually use their ability to tax those primary residences.
One of those districts, Farmington Public Schools in Oakland County, has a millage renewal on the November ballot. It’s asking for about $12 per $1,000 of taxable value on primary residences.
That’s on top of the regular operating millage that most other districts can use, which only impacts businesses and secondary residences. That’s set at the required 18 mill rate.
Sinking fund & bond questions:
Where can I learn about what a bond or sinking fund will be used for?
Districts often have informational web pages that contain details of the proposal, including project details, timelines, budgets, pay off schedules (for bonds) and more. Some will even include images of the exact areas that need upgrades, replacements or repairs.
“You don't have to take hours, you know, ten minutes of searching on the website, you get a pretty good idea of what's being planned,” MSU professor emeritus David Arsen said. “And I think that's .. a good opportunity for citizens to get involved with things that matter in their communities.”
Arsen said there are typically a lot of opportunities for communities to get engaged around these proposals through school board meetings and informational town halls as well as social media posts and videos.
“This is one area where we have local control and the proposals actually get a lot of vetting,” he said. “These don't get on the ballot without a lot of discussion in local communities … about what we need, what it should look like, where it should be.”
Local news outlets are also a great place to learn about these proposals, Arsen said.
How can I make sure a district uses funds appropriately?
The vetting process isn’t limited to community preferences, Arsen said. For bonds, that includes an application to the state treasurer that includes cost analyses, detailed construction plans, estimates of how many kids will use the new infrastructure and more.
In order to get approved, schools must show the state treasury department evidence that “the cost per square foot … will be reasonable in light of economic conditions” in the district’s area.
And the districts have to show that they will be able to pay the loan off in time. Districts also often detail efforts to find cheaper or more effective alternatives in information shared with the community.
After a bond is completed, there is an audit of how the funds are used to ensure that money was used in a way that fulfills the proposal’s promises and follows state law. You can find those audits on the state treasury website to review how funds were handled by your district in the past.
Can bonds or sinking funds be paid with existing taxes?
Yes and no. Districts can’t use their operating millage on a bond or sinking fund.
But, districts have been relying on bonds and sinking funds to handle facility needs for years. So, in some cases they can just ask voters to renew or extend an existing millage that was used to pay off a past bond or fill a lapsed sinking fund.
Ravenna Public Schools in Ottawa County is asking voters to extend a millage for 15 years at the current rate of 7.6 with no increase to cover a nearly $11 million bond proposal after failing to pass a bond with a smaller increase earlier this year. The money would go to replace outdated boilers, improve parking lots, upgrade classrooms and more.
Sometimes districts are asking for a new millage or an increase to an existing one.
Mason County Eastern District, for example, is asking for a five-year sinking fund with a new millage of 75 cents per $1,000 in taxable value to maintain and purchase buses that have “significant wear and tear” as a result of having to transport kids across the 210 square mile county.
Is it a big deal when bond or sinking fund proposals fail?
Bonds are failing more often in Michigan, according to an analysis by Bridge Michigan and Gongwer News Service, with half failing in recent years.
“The fact that a bond fails is not a disaster. It means that there needs to be more discussion,” Arsen said. “Typically there'll be a reassessment … to try to get an idea of how can we focus this in a way that will win community approval and have a clearer idea of what the community needs are. And sometimes that means scaling back a project.”
Plainwell Community Schools is a good example of that process. Its $39.8 million bond proposal is one of the biggest this election cycle.
The district already has a tax for a previously approved bond at a 10.55 mill rate. That existing bond only needs 9.05 mills to make its 2024 debt payment and then much less will be needed to pay off the remaining debt in the years after.
So the district is asking voters to renew and extend the existing bond millage at the original rate of $10.55 per $1,000 in taxable value so that the money which isn’t being used to pay off the old bond can start going to a new one.
The district expects to pay off both bonds by 2053, with a final combined rate under 5 mills.
Voters rejected a version of this proposal in May this year. The new version asks for less money. Among other things, the district says the funds are needed to build a new preschool.
