Schools are closed, but expenses remain and revenues fall: James Hohman and Ben DeGrow
School buildings have been closed for the year, and school administrators are worried that the current pandemic will strain their resources unless they get some additional assistance. There are some strengths and weaknesses to Michigan’s method of funding schools, and schools can do some things to respond. As with so many things in the crisis, the problems are small if the pandemic is short.
Michigan’s public schools get a piece of a number of different taxes, with property taxes, sales taxes and income taxes paying for the lion’s share of their expenses.
On the positive side of school funding, property taxes are the largest source of school revenue. They won’t change much in the short term, providing around $8 billion annually for education purposes from local and intermediate school districts’ direct millages and also through the State Education Tax.
These taxes are based on the assessed value of property and the bills for the winter were sent before the pandemic. Summer property taxes likely won’t change much, either. Even if property values dip, tax assessments tend to take a while to come down. During the last recession, the assessed value of homes did not reach its trough until 2012, while the rest of the economy had already been recovering.
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