When Michigan voters overwhelmingly approved the school finance constitutional amendment known as Proposal A in 1994, they thought they were going to get several important things: a sales tax hike in exchange for significant property tax relief, less disparity in spending among school districts and substantially more per-pupil funding.
The plan has delivered on those promises, but there's a rising chorus for giving school districts renewed authority to seek higher local property taxes. For schools that need extra money and can make a good case for it, there's a much better way than undoing what the voters endorsed seven years ago. We would like to suggest the broad outlines of what should become known as "Proposal A+."
First, it's important to take account of just how much Proposal A has accomplished for Michigan. Prior to 1994, our property tax burden was 35 percent above the national average and driving residents and businesses elsewhere. Today, that burden is much closer to the national average and one of the reasons for the state's impressive economic progress of recent years.
Proposal A has been good news for schools, too. Since 1994, the minimum per-pupil foundation allowance that school districts are guaranteed by the state has risen almost 43 percent, two and a half times the inflation rate. In 1993-94, the 10 lowest-spending districts spent $3,476 per pupil while the top 10 spent $9,726. Today, the lowest 10 spend almost twice as much-$6,500-and the highest 10 spend $11,189. Even the National Education Association admits that Michigan outspends 43 other states, per-pupil.
One report based on Michigan Treasury Department figures claims that during the past five years, Proposal A generated $58 billion for Michigan schools compared with $60 billion if the former finance formulas had remained in place, "short-changing" schools by $2 billion. But those numbers assume that extracting an additional $2 billion from the Michigan economy would have had no impact on economic growth, that voters would have approved further millage hikes and that the courts would not have ordered some new finance structure to address equity issues. All are heroic if not impossible assumptions.
We know that paperwork, reporting requirements and special education costs that Michigan schools are forced to bear are among the highest in the country and ought to be reduced. We also know that school districts could get more bang for the taxpayer buck if they engaged in more competitive contracting for ancillary services and weren't encumbered by so many costly union rules and government mandates. Exempting school construction from the state's onerous Prevailing Wage Act, as Ohio did in 1997, would save the state's schools, by some estimates, a minimum of $150 million per year alone.
Nonetheless, if there are schools that can't or don't want to effect cost savings to improve their bottom lines and can make a convincing case that they need more money to do their job, they could do so under our Proposal A+. This is not another tax hike opportunity. Rather, it's a chance to encourage greater financial support on a voluntary basis for all schools, public and private, at the same time.
The proposal would amend the Michigan Constitution to allow a "universal" tax credit for educational expenses and for contributions to scholarship funds. The credit could be claimed by parents, friends, family members and even businesses against such levies as the state's personal income tax, 6-mill statewide property tax and the Single Business Tax.
The maximum credit need not be high. Arizona's $500 tax credit has generated tens of millions of dollars in scholarship funds for students from low-income families, and millions more for use in the public schools.
Our Proposal A+ plan would apply toward contributions to public as well as private schools. It would mean that public schools would not have to mount expensive and uncertain ballot efforts to get voter approval for a tax increase. If they made their case persuasively, they could entice individuals and businesses to make voluntary contributions. Up to the maximum credit allowed, those contributions would not cost the donor a penny, and nobody's taxes would increase as a result of it.
By allowing even a small tax credit for private education, our proposal would strengthen local influence in the financial investment in our children's education. That's good for everybody, and it's only fair. Parents who choose private options, particularly low-income parents in our inner cities, are often securing excellent educations for their children at a savings to the taxpayer and at great sacrifice of their own resources. They deserve a break. Parents who want to help their local public schools will also have the opportunity to do so.
Proposal A+ is not a voucher. Voters spoke convincingly and finally on that question in defeating a voucher plan in November 2000. The much more palatable and familiar vehicle of a tax credit would encourage contributions to schools, public and private, that make the best case that their fellow citizens should do more to support education.
Large numbers of Michiganians don't want higher taxes. But some of them want more money for education, and most of them support the concepts of fairness, choice, accountability and local control. Our Proposal A+ is a starting point for a discussion that could lead to a clear win for all concerned.
Republican Congressman Peter Hoekstra represents Michigan's 2nd District in the U.S. House of Representatives. Lawrence Reed is president of the Midland, Mich.-based Mackinac Center for Public Policy, a nonprofit, nonpartisan research and educational institute. The preceding article originally appeared in The Detroit News Dec. 7, 2001.