Funded: State Policy Analysis

A Detailed Look at Each State's Funding Policies

Below, see summaries of the state’s education funding policy in each issue area. Click the Expand icon next to any summary to see more detail, if available, about that state’s policy regarding that issue area. Click the Citation icon
next to any summary to see the sources of the information regarding that issue area.
Funding Basics
Formula Type

Michigan has a primarily student-based funding formula. It assigns a cost to the education of a student with no special needs or services, called a base amount. It then accounts for the additional cost of educating specific categories of students both through program-specific allocations and by applying multipliers to the base amount to generate supplemental funding for certain students.

Low-income students generate supplemental funding in Michigan.  Services for English language learners, students with disabilities, and students enrolled in career and technical education programs are funded through program-specific allocations.


State School Aid Act, 1979 PA 94, as amended

Base Amount

The state of Michigan’s per-student base funding amount was generally $8,169 for FY2016, though there was some variation based on historical district funding levels.

$8,169 was the state’s target base amount for the year, and that figure served as the base amount for most districts. However, some districts—those that were funded at particularly low levels prior to the state’s last major funding reform—may currently receive funding below the base amount.  These districts may not be funded below a minimum level, which was set at $7,391 in FY2016.

The target base amount is increased each year by an increment specified in legislation.  According to statute, districts whose funding levels fall at the minimum level receive increases at double this increment so that their funding approaches the target base amount, and eventually reaches it. Districts whose funding levels fall between the minimum level and the target base amount receive increases on a sliding scale.


Source 1
Personal communication from Phil Boone, State Aid and School Finance, Michigan Department of Education, on 10/28/16
Personal communication from Christopher May, Financial Analyst, Michigan Department of Education, on 5/27/16

Expected Local Share

Michigan expects school districts to contribute revenue to the funding of public schools. The amount each district is expected to raise for its education costs is based on its property values: each district is expected to contribute $18.00 for every thousand dollars of assessed local property wealth (excluding the value of homesteads) for the purpose of funding its schools.

Once the state calculates the total amount of funding necessary to educate students within a district, it subtracts the expected local contribution and provides the difference in the form of state education aid.  School districts in Michigan may generally raise neither more nor less money locally than the expected amount. However, a district that had a lower property tax rate in FY1994 than the current expected rate, when the state last modified its revenue collection rules, must continue to tax its property at that lower rate. Additionally, certain school districts whose property values have risen faster than the rate of inflation may be required to reduce their tax rates to compensate for this increase.

In calculating the amount of funding necessary for each district, the state considers the number of students enrolled in the district excluding students with disabilities. The cost of educating these students is covered entirely by the state and is not subject to the local contribution requirement.


Source 1
Mich. Comp. Laws Ann. § 388.1620
Personal communication from Christopher May and Daniel Hanrahan, Office of State Aid and School Finance, Michigan Department of Education, on 6/10/16

Student Characteristics
Grade Level

Michigan does not differentiate funding based on students’ grade levels.

English-Language Learner

Michigan provides increased funding for English language learners (ELLs). It does so through a reimbursement system, in which districts are partially reimbursed for the added cost of educating these students.

Districts receive a proportional share of the total amount of state money appropriated for this purpose ($1.2 million in FY16) in accordance with the number of ELL students they serve. Pupils may only be counted for this purpose for 3 years.

Additionally, in FY16, the state distributed $12.2 million in federal funding, provided through language acquisition state grants, to be spent on English instruction for ELL students.


Mich. Comp. Laws § 388.1639a and § 388.1641

Student Poverty

Michigan provides increased funding for students from low-income households.  It does so by applying a multiplier of 1.115 to the base per-pupil amount for these students. However, the amount can be reduced if the state does not appropriate sufficient funding to cover the allocation.

Students are eligible for this supplemental funding if they qualify for free lunch (but not reduced-price lunch) under the National School Lunch Program. The stated purpose of this funding is to ensure that students are proficient in reading by grade 3 and that high school graduates are college- and career-ready.  

This supplemental funding may only be used for specified purposes, including instructional programs and direct non-instructional services such as health and counseling services. It cannot be used for administrative costs.


Michigan State statute 388.1631a
Personal communication, Michigan Department of Education Office of Field Services, November 2, 2015

Special Education

Michigan funds special education using a partial reimbursement system, in which districts report their special education expenses to the state and receive reimbursement for a portion of those expenses.

By statute, the state reimburses districts for 28.6138% of total approved costs for special education, including salaries for special education personnel, and 70.4165% of total approved costs for special education transportation. If these proportions amount to less than the full per-student base amount times the number of students with disabilities, then the state must provide at least that number. (This is because the entire base amount for special education students is covered by the state, with no required contribution from the district.) However, the reimbursement may not exceed 75% of total approved costs.

The remainder of state special education funding is distributed through specific program-based allocations, including funds to cover the base amount for students receiving special education services in a residential institution setting and to pay tuition for those enrolled at the Michigan School for the Deaf and the Michigan School for the Blind.


Mich. Code Ann. § 388-1651 through § 388-1654.


Michigan does not provide additional resources for gifted and talented students.

Career and Technical Education

Michigan provides specific funding for career and technical education (CTE) programs. It does so through a reimbursement system, in which districts are partially reimbursed for the added cost of providing these programs.

Districts receive a proportional share of the total amount of state money appropriated for this purpose ($36.6 million in FY2016) in accordance with their CTE program costs, not to exceed 75% of the added cost of any program.

The state also appropriated $10 million in FY2016 to partially reimburse intermediate districts serving as fiscal agents for CTE-focused early and middle college programs, and $9.2 million to partially reimburse intermediate districts imposing special taxes for CTE.


Source 1

Community Characteristics
District Poverty

Michigan does not provide increased funding based on the concentration of students from low-income households in a particular district.

Sparsity and/or Small Size

Michigan provides increased funding for sparse districts, small and remote districts, and districts with low and decreasing enrollment.  It does so in three ways: by providing supplemental funding for small and remote districts; by providing supplemental funding for sparse districts that are not small and remote; and by modestly inflating the student count for sparse districts with low and decreasing enrollment.

Small and remote districts are those that serve grades K-12; enroll fewer than 250 pupils; and whose schools are located either on the state’s Upper Peninsula at least 30 miles from any other public school or on islands that are not accessible by bridge. These districts receive supplemental funding in accordance with plans that are based on their needs and financial circumstances. Sparse districts, defined as those with 7.3 pupils or fewer per square mile that are not eligible for small and remote funding, receive a share of the funding allocated for this purpose in proportion to their enrollment.

Sparse districts with low enrollment, defined as those with fewer than 1,550 students and 4.5 pupils or fewer per square mile that are not eligible for small and remote funding, receive funding in accordance with an adjusted student count equal to the greater of its actual student count or its average student count over the previous three years. This adjustment compensates somewhat for declining enrollment.


Mich. Comp. Laws Ann. § 388.1606 and § 388.1622d