ELK RAPIDS: School district braces for out-of-formula funding model

Oct. 29—ELK RAPIDS — The Elk Rapids Schools district will be facing a significant change this time next year.

With the number of residential students declining, school district officials are looking at the inevitable: Going from an in-formula to an out-of-formula funding model.

The reasons for it, Superintendent Bryan McKenna said, are the slow decline of students, compounded by an increase of taxable values in the residential areas that Elk Rapids schools serves.

Most school districts receive a mix of local and state dollars to cover the costs of operation.

"It's your taxable value that pays for your district," said the district's Director of Finance Laurie McCann.

But this change, which will go into affect for the 2024-2025 academic year, will mean fewer state funds for the district.

As an in-formula district, Elk Rapids Schools is guaranteed a dollar amount from the state for each mill levied. As an out-of-formula district, it will no longer receive that state aid in the form of what is called a foundation allowance.

According the the Mackinaw Center for Public Policy, in 2020, 39 districts in the state disproportionately represent less populated vacation destinations with high property values — and were subject to the $18 million tax on non-homestead property.

But these districts raise more than enough local funds to cover their entire foundation allowance.

Yet these out-of-formula districts, combined, educate fewer than 1% of Michigan public school students.

It's not just the school officials in Elk Rapids noticing these trends, McCann said. Communities around Michigan, and beyond, are dealing with these changes. "The whole state is changing,"

People are having fewer children, she pointed out. "It's happening across the country."

McKenna added, "We're letting the community know this is not a decision, or something we consider, it's something that is determined by the state."

He credits the previous administration for preparing the current board and providing board members with the ability to make the right decisions for the district, moving forward. "Through their being fiscally responsible, they have bought us a year as we identify the shift that will most likely happen next year.

"And our district is truly trying to be as proactive and transparent as we can and looking at all options to help the transition that would inevitably take place next year as we move out of formula."

As far as where the district is in that process, McKenna said, "We're just in that educational stage right now. The concept of going out of formula is somewhat known in this region. Every district that is out of formula has its own story behind it, and how it's impacting them.

"Any time you talk about concepts that are new, there's a period of analysis — maybe of questioning what's happening and why it's happening. Now that the community realizes this is not a choice, and they're ready to say, 'What is next?' and we're ready to work and make that transition with them."