Chicago - Michigan voters on Monday passed most of the property tax millages school districts need to qualify for a per-pupil spending grant from the state.
Tom White, director of government relations for the Michigan School Boards Association, said that 95% of the districts' request for 18 property tax mills on non-residential property were approved. School districts need the mills to participate in the state's foundation grant program.
The program guarantees school districts a maximum annual finding level of $6,500 per pupil, which includes what the districts would raise from 18 mills of property taxes on non-residential property. If voters in school districts failed to pass the 18 mills, the districts' grants would be cut proportionately
Some of the 226 school districts on Monday's ballot also sought voter approval for more than 18 mills, to put their per pupil spending above the state grant. Voters approved only about 50% of those so-called enhancement mills, White said.
The Southfield Public School System in suburban Detroit was successful in getting voter approval for 21.884 mills, triggering rating reviews. In April, voters rejected 23.884 mills, resulting in a rating downgrade by Moody's Investors Service to A from Aa. At the same time, Standard & Poor's Corp. placed the system's AA rating on CreditWatch with negative implications.
Michael Forrester, a director at Standard & Poor's, said yesterday that the rating agency expects to decide the district's rating and outlook early next week.
Charles Kishpaugh, an assistand vice president at Moody's, said with the millage's being passed, the level of risk for the Southfield school district "is not as great," and Moody's will be reviewing the rating.
Monday's millage referendums for the 226 districts marked the first big wave of school millage requests since voters state-wide approved shifting the predominant burden for funding primary and secondary education to the state from local property taxes. In March, Michigan residents approved an increase in the state sales and other taxes to raise $6.8 billion for education in the wake of the elimination of school operating property taxes by the state legislature last summer.
However, under the state's new funding program, districts are required to levy six mills of property taxes and seek voter approval for the 18 mills on business property.
Education officials in Michigan had been concerned that voters would turn down many of the millage requests because of confusion over the new school funding system.
"I think we're well over the hump now," said Allen Short, director of governmental affairs for the Michigan Education Association. Districts like Southfield ran campaigns to inform voters why they needed to approve the millages, Short said.
Much of the school debt in Michigan is qualified under the state's school bond loan fund, which carries the state's ratings of A1 by Moody's and AA by Standard & Poor's. However, rating agency officials had been concerned about districts whose debt is rated above that level or districts that have debt that is not qualified under the program.
The 18 school districts that Moody's rates above the state's rating or that are outside of the school bond loan fund won voter approval for the 18 mills on non-residential property, although some requests for enhancement mills were defeated. The results "remove the short-term concerns for many districts," Kishpaugh said.
Standard & Poor's will be reviewing the referendum results for the schools it rates, and the agency "expects the ratings most likely will be retained," Forrester said.