A Research Report from EPIC

Funding Michigan’s Future: Three Decades of School Finance and the Policy Questions Ahead

September 2025

Concerns over K-12 funding are well-founded. Education is the second largest area of the state budget and K-12 resources are strongly linked with student outcomes. Unfortunately, conflicting accounts around K-12 finance complicate discussions regarding the resources Michigan provides to educate its students and whether additional resources could be expected to improve student outcomes. Further complicating this issue is the fact that student enrollment and demographics have shifted markedly, which has implications for K-12 districts’ finances and how they serve their students. In this report, we examine more than three decades of K-12 finance in Michigan to track changes in the revenues districts have received and in how they use their funding to serve students. Here, we focus on funding for district operations (which includes salaries, materials, maintenance, etc.) as this is provided almost entirely through state appropriations.

Key Findings:

• The demographics of Michigan’s student body have changed in ways that make it more expensive to provide education now than in the past. Michigan has far fewer students and a student body with greater needs than in the past.
• In inflation-adjusted terms, per-pupil revenues rose into the early 2000s, fell for two decades, and have begun to recover in recent years. Along with these trends in overall funding:
  • Districts face greater restrictions on how they use their revenues now than in the past.
  • Districts are now expected to provide more services beyond instruction (e.g. universal meals, student mental health), but funding for them has been unstable.
• Per-pupil spending on basic instruction has, on net, been roughly flat in real terms for three decades. Spending to support special populations (e.g. students with disabilities, at-risk students) fell through the 2000s before rebounding in recent years.
  • However, these trends mask that required spending on mandatory benefits (e.g. retirement contributions), a significant portion of which are dictated by state law, have increased dramatically, effectively reducing the resources available for classroom instruction.