As the November 4 election approaches, school districts across more than a dozen communities, from Wayne County to East Jordan, are reaching out to voters to seek approval for operating millages.
Operating millages, akin to sinking funds and bonds, depend on local property taxes.
These millages are a prevalent and adaptable method of school funding that voters frequently encounter on their ballots.
Funds obtained from this millage contribute to the district’s general budget, facilitating expenses such as teacher salaries, utility bills, and other operational costs.
The majority of homeowners are exempt from this tax since most districts apply it exclusively to businesses and secondary homes, such as vacation homes, rental units, and AirBnBs.
What Voters Should Know About Operating Millage Requests
Click on a question to go directly to the answer.
How much do school budgets rely on operating millages?
What happens if an operating millage proposal fails?
How do districts decide what rate to set for an operating millage?
Can some districts ask for an operating millage that does levy a tax on primary residences?
How much do school budgets rely on operating millages?
The revenue from these millages, primarily applying to non-primary residences, varies significantly depending on the local community. Typically, they do not constitute the majority of a district’s budget.
For instance, Grandville Public Schools in Ottawa and Kent Counties expects the millage renewal on this November’s ballot to generate over $18 million by 2027, accounting for roughly 20% of the district’s operating budget for that year.
Contrastingly, White Pigeon Community Schools relies on its millage for about half of its per-pupil funding, as the St. Joseph County district states. This is due to the high number of non-homestead properties like secondary homes and farmland in their service area.
What happens if an operating millage proposal fails?
Failing to pass an operating millage results in reduced funding per student for the district.
State lawmakers have set school funding at $10,050 per student in the new budget. A significant portion of this funding comes from the 6-mill rate tax on all property collected by the state.
The state withholds part of these funds, assuming districts will pass their own operating millages. If a district anticipates raising about $1,000 per student with its millage, the state only contributes $9,000 instead of the full per-pupil amount. If the millage fails, the state does not compensate for the shortfall.
Districts like Grandville Public Schools might face a more significant funding gap due to their reliance on millages for per-pupil funding.
Without successful millage approval, districts must manage the funding loss, potentially leading to layoffs, school closures, and cuts to educational services. Districts can attempt to pass the millage again to secure necessary funds.
How do districts decide what rate to set for an operating millage?
Districts have limited control over setting the millage rates.
As previously mentioned, schools must pass operating millages to fully access per-pupil funding at the state-determined rate.
The state anticipates each district will pass an operating millage set at $18 per $1,000 in taxable value. Consequently, the state provides enough funding to bridge the gap between this millage and the legally established maximum per-pupil funding.
Typically, the millage applies only to secondary residences and commercial properties, sparing most homeowners from this tax.
A 2019 report from Michigan State University described these operating millages as “effectively a state rather than local tax.”
Why do some districts propose operating millage rates above the 18-mill rate?
The Headlee Amendment of 1978 reduces millage rates post-voter approval based on property value changes. As property values rise, the millage rate decreases to prevent increased payments by property owners.
However, if property values drop, the millage does not automatically increase, and the state does not adjust its funding to account for the reduction. This leaves schools with a funding gap.
To mitigate this, districts often propose a higher rate to cushion against the Headlee reduction until the next renewal, even though state law caps schools at 18 mills regardless of voter-approved increases.
For example, East Jordan Public Schools in Antrim and Charlevoix Counties seeks voter approval to renew its operating millage until 2034. Simultaneously, it requests an increase up to 21.31 mills.
The district clarifies that even if both proposals pass, it will not receive $21.31 per $1,000 in taxable value. The maximum it would collect is $18, with the second request serving as a “safety net” against potential mill rate decreases as property values rise.
Can some districts ask for an operating millage that does tax primary residences?
Yes. Approximately 40 districts can levy a tax on primary residences due to their relative wealth in 1994, the year current operating millage laws were enacted.
As of 2023, only 21 of these districts exercise the option to tax primary residences.
No districts involved in this November’s election are imposing a homestead tax.
