A few few weeks ago, I posted something here about the findings of a study on affordable housing commissioned by Washtenaw County. The published report, as you may recall, didn’t paint a very pretty picture. Our communities, according to the study’s authors, are rapidly becoming segregated, with less-well-off people, especially people of color, quickly consolidating in Ypsilanti and Ypsilanti Township, where the poverty rate is already approaching an unsustainable 30%. [This, by the way, was recently confirmed by researchers in Toronto who, just earlier this week, ranked the greater Ann Arbor region (defined as the Washtenaw County census tract) as being the 8th most economically segregated metropolitan area in the United States.] And, if not dealt with, the authors of the Washtenaw County Affordable Housing Needs Assessment point out, it’s not just Ypsilanti that will suffer from the resulting instability. This “imbalance in income, education and opportunity between the jurisdictions, along with the segregation that goes with it,” they say, “will hamper the regional economic growth potential of the (entire) area.” And, with that in mind, they made several suggestions.
And it’s one of those suggestions in particular that we chose to discuss here a few weeks ago. The authors of the study recommended, in addition to building more affordable housing in Ann Arbor, that we “create a unified Ann Arbor – Ypsilanti School District,” the thought being that more financially stable families would consider living in Ypsilanti if our schools were under the highly-valued Ann Arbor banner. This one thing, in their opinion, would go a long way toward addressing the growing inequality that we’re seeing develop across the region. Not only would the children of Ypsilanti have access to more in the way of educational resources, but it would also lead to some degree of normalization across our communities with regard to household income, etc. So, we discussed it. And one person involved that conversation, an Annarbourite who posts on this site under the name Jcp2, then went a step further, and began researching the financial side of things, and what a merged district might mean for the individual communities involved… Here’s what he’s found.
I do not believe that any City of Ann Arbor housing policies can address the root cause of rising housing prices in Ann Arbor, as compared to neighboring communities, specifically Ypsilanti. I think that for many people, public school quality is a major driver in choice of residency, such that being within Ann Arbor Public Schools (AAPS) boundaries is very important to them. Reducing the wide discrepancy between perceived quality of public schools between AAPS and Ypsilanti Community Schools (YCS) will do a lot to alleviate housing price pressure in Ann Arbor, while benefiting housing values in Ypsilanti.
How to do this? AAPS should annex YCS. Annexation and consolidation of districts has been seen as a move of last resort in Michigan, and the typical situation is that of one failed district with the minimum foundation grant joining with another adjacent distressed district with the minimum foundation grant. This was the situation when YPS and WRPS consolidated into YCS, but would not be the situation if AAPS were to annex YCS.
One likely concern of consolidation of a relatively thriving district, like AAPS, with the maximum foundation grant with an adjacent distressed district, like YCS, with the minimum foundation grant, has been a reduction of per pupil funding for students in the extant thriving district in order to subsidize an increase in per pupil funding for students in the extant distressed district. The general assumption seems to have been that total funding is constant, and the combined district would receive a weighted average of the pre-existing foundation grants of each individual district. This was the assumption used by the consultants that prepared the impact statement for failed AAPS/Whitmore Lake annexation. It’s no surprise that voters in AAPS would not want to be the losers in a zero sum win-lose situation. Who would be?
However, the consultants are WRONG. A close reading of state educational funding formulas would indicate that consolidation of a thriving district with an adjacent distressed district could result in increased funding in the extant distressed district to the same level as that in the extant thriving district, with no impact on the thriving district whatsoever. This is a much different situation that could benefit all parties.
There is a nice presentation from Michigan Senate Fiscal Agency that explains the nuts and bolts of how school districts are funded can be found here.
In summary, the potential amount available to each school district in Michigan is calculated by a 6 mill tax on the State Equalized Value (SEV) of all property within the school district, with an additional 18 mill tax on the SEV of all non-homestead property within the school district. Then this amount is divided by the number of pupils within the school district to reach a certain per pupil amount that is then granted to the school district.
If the school district has low taxable values as compared to the number of students, then the State General Education Fund supplements that value up to a minimum per pupil amount. YCS is such a recipient district. They receive the minimum per pupil amount, about $7100/pupil plus an additional $500/pupil as a “reward” for consolidation of the former Ypsilanti and Willow Run school districts, for a total of $7600/pupil.
If the school district has high taxable values compared to the number of students, then the excess over a maximum per pupil amount is given back to the State Education Fund. AAPS is such a donor district. We receive the maximum per pupil amount, about $8800/pupil, plus an additional $300/pupil based on an additional 4 mill hold harmless tax that we are allowed to levy as a condition of accepting Proposal A many years ago.
The excess money that AAPS generates and then gives back to the State General Education Fund is substantial. How much do we wave goodbye to? Well, in an Ann Arbor Chronicle article a few years ago, it was stated by Steve Norton of Michigan Parents for School that AAPS receives only 47% of the generated educational tax revenue back into the district. In other words, AAPS generated close to $18,700/pupil. Since the maximum that the state will ever give back to AAPS under state funding formulas is $8800/pupil, AAPS could literally double enrollment without suffering any consequence in per pupil funding. Where can we find these students? In neighboring districts, like Ypsilanti.
AAPS has about 16,000 students. YCS has about 4,000 students. The combined tax value of the combined districts will more than meet the $8800/pupil maximum threshold set by the state for district funding. In addition, taxpayers in the extant YCS would need to vote to approve an additional 4 mill hold harmless millage, but if they do, their school funding would jump from $7600/pupil to $9100/pupil. Taxpayers in the extant AAPS would be unaffected.
With creative placement of attractive educational programs in schools located in the eastern half of the newly enlarged AAPS, there will be less pressure to live in Ann Arbor and more attraction to live in Ypsilanti. AAPS has already shown that they are capable of this, as evidenced by the rejuvenation of Northside Elementary with an innovative STEAM program, bringing students back to AAPS.
According to my reading of the formula, we could hypothetically extend this annexation to include all neighboring districts up to the point where total educational revenue within the district divided by the number of students within the district is equal to the maximum foundation limit per pupil as set by the state, currently $8,800/student. Why not redirect educational tax revenue that the state is already removing from AAPS to geographic neighboring school districts so that there can be tangible direct benefits to them and the realistic possibility of tangible indirect benefits to us?
So, is Jcp2 right? Would an annexation of YCS by AAPS into a larger AAPS district mean better schools for Ypsi with no additional cost to Ann Arbor taxpayers? And, if so, would the voters of either town go for it? Would Ypsi voters be prepared to cede some degree of autonomy, when we’ve fought so hard to maintain local control in the face of state takeover threats? And would Ann Arbor voters be willing to take on the challenge, even if it didn’t mean more money out of their wallets? It’ll be interesting to see whether those in positions of power have the political will to follow through on the recommendations of those consultants who recently suggested a merger, and put it before voters in both of our cities. If Jcp2 is right, though, I don’t think we can just take the word of politicians who say, “Based on the the recent Whitmore Lake annexation vote, we can’t put this in front of voters.” I think we owe it to our students to at least call together a task force and explore it in greater detail. Do you agree?
UPDATE: The following was just sent to me by someone with intimate knowledge of Michigan school funding legislation and how it works.
The person who proposed a merger is wrong about how funding is distributed. They seem to think that it is somehow tied to the total tax collections, divided by number of students. But that’s not how it works. (Plus, there are lots of things in the School Aid budget beside foundation allowance funding.)
The 6 mill State Ed Tax goes direct to Lansing in its entirety, immediately. The 18 mills on non-homestead stays here. The state calculates what the 18 mills should have raised (thus, the pressure to put it back to its full amount back in 2008 after being cut by a Headlee rollback to 17.something mills), and pays the remainder between that and the district’s official foundation allowance. Or, in our case, the state maximum. Then, we are allowed to tax local homestead property just enough to collect $1234 per pupil, which is the amount we were already above the new state maximum back in 1994.
The new foundation allowance for a consolidated district does not depend at all on local tax collections. It is either the weighted average of the two foundations plus $100, or the higher of the two original allowances, whichever is LESS.
You can find the rules for calculating a consolidated district foundation allowance in the School Aid Act here: MCL 388.1620 (8)