Funding Public Schools

IN a move that could have national implications, Michigan voters last week agreed to revolutionize the way they fund public schools. By 70 percent, Michiganders voted to replace the property tax as the basis for local school funding with a 2 percentage point increase in the state sales tax, and higher cigarette taxes.

The approach is a brilliant political innovation latched onto by conservative Gov. John Engler that also redresses the serious inequities among wealthy and poor districts by standardizing a minimum per-pupil expenditure ($4,200) and capping the amount wealthy districts may spend on schools. Currently in Michigan, per-pupil expenditure varies from $10,000 in some posh suburbs to $3,200 in poor districts. Mr. Engler told his core constituency of voters: I will not only cut your property taxes, but solve a civil rights problem - a classic ``win-win'' offer.

The Michigan vote will be looked at closely by other states; it may be a model. Already bills are being entertained in the New Hampshire and Wisconsin legislatures for similar types of funding. At the moment, states pay about 50 percent of schooling, the federal government pays 7 percent, local districts pay the rest.

Yet before politicians and citizens declare victory, the Michigan plan has to prove itself. What school systems most need is a balanced, stable tax system that allows districts to plan at least their mid-range spending. In the main, property taxes provide a stable income environment. In Michigan now, funding will be tied closely to the state's economic performance; revenue could shift dramatically from year to year. Unstable school-funding innovations in Texas in the 1980s created, for example, more problems than they solved. State-mandated corrections in inequities were simply put aside when the money did not show up in revenue.

Additionally, the case of Michigan is somewhat unusual in that for much of the 1980s, state spending was only 35 percent of the total, one of the five lowest in the country.

What bears watching is whether, after the initial two-year honeymoon in Michigan, the state must switch to an income-tax base for schools rather than a sales tax - as some predict.

Finally, wealthy districts should be allowed to innovate ways to keep spending high, if locals want it so.

Whether the Michigan vote was mainly a vote for better schools or lower taxes will be seen in practice.