CHICAGO -- A plan that has passed the Michigan Senate and is pending in the House would seek to narrow funding disparities among schools by redistributing a portion of wealthier districts' property tax collections to poorer districts.

Backers of the plan said it would begin to close the funding gap between rich and poor school districts -- a disparity that has encouraged one group to sue the state.

Representatives of poor school districts said the plan does not go far enough. Officials at school districts that would have to give up some of their property tax collections said it would be unfair to their students and property owners.

Per pupil expenditures in Michigan school districts range between $2,500 and $7,500.

Under the proposal, half of the future increased property tax collections from commercial and industrial property in the state's wealthiest 170 school districts would be redistributed on a per pupil basis to the remaining 390 districts in the state. Residential taxpayers are exempt from the plan.

A sponsor of the proposal, Sen. Dan DeGrow, R-Port Huron, said that in the first year the plan would raise an additional $35 million for redistribution, amounting to about $30 per pupil. In 10 years, however, that amount could grow to $400 million a year, or $278 per pupil, he said.

Property tax collections dedicated to paying off outstanding debt would be exempt, but officials at municipal bond firms in Michigan said they would continue to monitor the plan as it progresses through the Legislature to ensure that this exemption remains.

Another sponsor of the plan, Rep. James O'Neil, D-Saginaw, said the proposal will not end disparities between rich and poor districts in the state but will begin narrowing them.

"We won't be closing the gap, but it's a step in the right direction," Rep. O'Neil said. "You have to creep before you walk, walk before you run."

John Truscott, a spokesman for Gov. John Engler, said the governor supports the idea in concept but wants to see the final form of the plan if it passes the Legislature before committing himself to it.

"He could support it because of the unfair gap between rich and poor districts," Mr. Truscott said. "We wouldn't be penalizing the rich districts, we would be lifting the poor districts up."

Richard Wilson, executive director of the Informula School Caucus, a group of poor school districts pursuing litigation to change the funding formula, said the plan does not go far enough.

"Tax-base sharing is an essential part of school finance reform, but this proposal is far too modest in its returns," he said.

He added that oral arguments before the Michigan Court of Appeals are scheduled for late summer on a motion by the caucus to overturn a previous ruling which barred school districts from using public funds to sue the state. He said if the previous ruling is overturned, the previous ruling is overturned, the group would file suit against the state claiming the current funding system is unconstitutional because of the disparities between rich and poor districts.

Other opponents said the plan unfairly singles out wealthy districts, while not solving the problem of poor districts.

"It would not raise the poor districts up that much, but even to do that we're going to bleed some of the wealthier districts," said Sen. Jack Faxon, D-Farmington Hills.

William Bedell, superintendent of Romulus Community Schools in suburban Detroit, is particularly vexed by the plan. Ten years ago, his district was considered one of the poorest. But a building boom in commercial and industrial real estate in the past decade led the state to reclassify the district as one of the state's wealthiest last year.

"We're just poised for real growth here where we might be able to ease the burden on our property-tax payers and still improve our schools, and now they want to take half of it away from us," he said.

Other wild cards in Michigan's school-funding system include a freeze on property assessments in 1992 and a constitutional amendment on the ballot next year that if passed would freeze annual property tax assessment increases to 5% or the rate of inflation, whichever is lower. Republicans and Democrats in the Legislature are formulating different property tax relief plans, and some citizens' group are concocting possible voter initiatives to hold back property taxes.

Charles Moerdyk, business manager for Alma Public Schools, said all the tinkering involving property taxes and school funding simply confuses the process and does not solve funding problems. "The bottom line is that eventually someone is going to have to pay more taxes if there is to be true reform," he said. "Just taking the existing revenue sources that are around and trying to cut them up a different way is not going to do it."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.