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In a Nutshell:
Michigan’s local governments primarily rely on property tax revenues and state revenue sharing payments to fund the public services they provide. However, an overreliance on property taxes is problematic, and state revenue sharing has historically been somewhat undependable.
State lawmakers approved a welcome increase in state revenue sharing payments for the upcoming fiscal year. However, future years’ revenue sharing commitments and their distribution between counties, cities, villages, and townships remain uncertain.
It is time to take a step back to evaluate how Michigan’s revenue sharing program fits into the broader local government fiscal landscape. A comprehensive review of how Michigan’s local governments are funded would be a worthwhile task for the state legislature. Clarifying the state government’s objectives for revenue sharing, aligning the funding levels and distribution formula with those goals, and potentially resetting the options for local governments to generate revenue would help local governments safeguard their future fiscal health.
Michigan’s counties, cities, villages, and townships are breathing a sigh of relief with the passage of next year’s state budget. In Fiscal Year 2025 (FY2025 runs October 2024-September 2025), revenue sharing payments – the sum of those obliged by the state constitution and those approved in the state budget – will increase overall by 11.5 percent over last year. With positive growth in state revenue sharing, and the anticipation that state legislators will establish a trust fund to earmark future revenue sharing resources, local governments have a cheerful outlook for the upcoming year.
With these latest commitments, one might conclude that the challenges facing local government finances are fading. Governments generally seek stable annual revenues that grow with an improving economy and increased financial support for additional public services. However, given the history of the inconsistent funding of the state’s discretionary revenue sharing program, and the constraints on raising revenues at the local level, it is not yet time for local governments to claim the win.
As we, and others, have advised, a comprehensive look at the state’s local government finance system is warranted if policymakers aim to improve local fiscal health in the future. Michigan’s local governments deliver a range of government services with significant constitutional and statutory restrictions on how to fund them. Taking a step back and investigating feasible alternative systems for local government funding and state revenue sharing’s role, will go far in changing this ongoing annual tussle between the state and its partner local governments.
State Revenue Sharing – Two Types of Funding
Michigan’s bipartite local government revenue sharing program has two components, referred to as constitutional and statutory. We will be focusing on statutory revenue sharing, the component subject to annual legislative approval, here.
Constitutional Revenue Sharing
Article IX, Section 10, of the Michigan Constitution earmarks 10 percent of total state sales tax revenues[1] to be shared with cities, villages, and townships on a per-capita basis. Michigan counties do not receive any constitutional revenue sharing payments.
Statutory Revenue Sharing
Non-constitutional revenue sharing is subject to the annual state appropriations process. Currently, during each budget cycle, state policymakers determine the total amount of discretionary revenue sharing as well as its distribution. The components of the formula for distribution of these discretionary revenue sharing payments among cities, townships, villages, and also to counties, have changed over the years. For many years, the distribution formula was established in law. Some years, the allocation of payments was approved with the adopted budget. Between 1998 and 2007, both the total funding and distribution formula was provided for in appropriation bills.
Statutory Revenue Sharing Ups and Downs
Revenue sharing has been a part of Michigan’s fiscal history since 1933. Over the decades, the program has expanded and changed. Initially, unrestricted payments were made to local governments to compensate for tax revenues lost when certain types of property were exempted from the tax base. During some years, payments were also contingent on fulfilling certain fiscal accountability tasks.
Changes over time to the allocation of the annual statutory revenue sharing appropriation among cities, villages, townships, and counties reflect the changing objectives for the revenue sharing program. This calculation of which local units get how much has become increasingly complicated. Starting in the early 1970s, population was weighted by tax effort to recognize the greater service responsibilities of densely-populated urban cities.
In the late 1990s, the allocation formula was changed to focus more on mitigating the fiscal disparity between jurisdictions, by addressing the relative tax yield and population density. In 1998, after almost two years of deliberation and study, the state legislature agreed upon the total allocation of state tax revenues for local governments, changed the source of funding, and adopted a new formula for distributing statutory revenue sharing payments. This revised program made Sales Tax revenues the sole source of revenue sharing funding (prior payments were from revenues raised by the Intangibles, Income, Single Business, and Sales taxes). The distribution of payments shifted and modified the dependence on tax effort. The legislature anticipated phasing in the components of the new formula over ten years. Implementation of this reform progressed for a few years and the legislature appropriated the full statutory amount of Sales Tax revenue to the program in FY2001.
By the early 2000s, the state’s economy fell into a recession and cuts were made to statutory revenue sharing payments as the budget focused on other statewide priorities. In the end, the 1998 revisions were never fully implemented. Many local units of government ended up not receiving any statutory revenue sharing because of reductions in the overall program funding level, and the impact of the changing distribution formula.
In 2012, the revenue sharing program was rebranded as the Economic Vitality Incentive Program (EVIP), and redesigned. Local governments were encouraged to adopt best practices relating to fiscal accountability, transparency, consolidation/collaboration on service delivery, and pension reforms. This rebranding was short-lived as once again state budgetary pressures arose. Local units also had challenges in meeting the new good-government requirements.
After a few years, there was no interest in continuing the EVIP concept. The 1998 statute had expired in 2007, and the state’s discretionary revenue sharing program was once again negotiated during annual state budget deliberations – for both the full program funding and how those funds were to be allocated amongst local governments. By 2021, with the onset of the pandemic, it seemed that the 1998 reforms were not ever going to be realized. However, in the most recent budget adopted, lawmakers committed more funding for revenue sharing (and publicly announced support for a trust fund) and reinstated a distribution formula very similar to the 1998 reforms.
For local government fiscal managers, the added uncertainty of how the state will distribute its statutory revenue sharing program dollars only exacerbates the ongoing unpredictability of the level of funding for the revenue sharing program overall.
Michigan’s 2025 Revenue Sharing Program
In returning to a revenue sharing distribution formula similar to what was adopted in 1998, current lawmakers have implied those objectives of 26 years ago are still worth pursuing. The 1998 reforms had changed a fundamental premise of what had been part of the revenue sharing program since 1971—that state shared revenues would be distributed on relative tax effort.
There was some concern at the time that using relative tax effort would reward those local units with higher tax rates and encourage more public spending.[2] With a higher tax rate, a local government would not only raise more tax revenues to support local services, it would also benefit from a greater revenue sharing distribution from the state. The 1998 distribution formula changed the emphasis to addressing the fiscal disparities across local governments and accounting for the differences in public service delivery for different types of jurisdictions.
The components of the 1998 distribution formula included the following:
Unit Type
One-third of payments were based on a population-weighting scheme that depended on the unit type – whether the local governmental unit was a city, township, village, or county, and its population size. The objective was to recognize that higher per-capita payments should be made to the more complex forms of government and the greater the population of the unit.
Inverse Taxable Value
One-third of the payments were computed by dividing the state-wide taxable value (TV) per-capita by each unit’s TV per-capita and multiplying the result by the unit’s population. The objective was to provide greater state aid for local governments with less taxing capacity, as measured by TV per-capita.
Yield Equalization
One-third of the payments were based on a calculation that made up the difference between the amount a local unit receives for each mill of tax rate (up to 20 mills) and a guaranteed minimum determined by the total amount of money available to distribute statewide. This formula was intended to provide greater state payments for local governments with lower taxing capacity and higher tax effort. Only units with TV per-capita below the state-defined minimum received allocations under this part of the formula.
Moving Forward
Given Michigan’s tradition of home rule and taxation limits placed on local governments, revenue sharing will continue to be an ongoing and significant budgetary issue. The yearly debate reflects the doubt local governments have that state policymakers will honor the state’s commitment to share revenues. From a local government’s perspective, revenue sharing compensates for the revenue raising restrictions as well as for some public services they deliver to provide for the health and welfare of their residents. Adoption of the proposed revenue sharing trust fund is one way to ensure that funding for state revenue sharing payments is set aside, but as we have noted in other commentaries, earmarking is not necessarily the best long-term solution especially since, unless constitutionally established, legislators may amend the statute at their whim.
And it is only one part of the picture. Policymakers should view the state revenue sharing expenditure in context of the entire local government’s fiscal structure. From a historical perspective it is clear the intent of the program has shifted. The goals of the program have changed from compensating to local governments for revenues lost due to state tax law changes, to an effort to equalize local tax yields, to a program that encouraged greater accountability and improved fiscal management, and back again.
Here are some areas to examine that would benefit from a comprehensive assessment of past performance and economic impacts of the state’s revenue sharing program. By studying why these components of the local government finance system are not meeting the goals of local governments and policymakers, state and local decisionmakers can identify forward-looking policy solutions that will accomplish their overall objectives.
Reaffirming the state’s objectives for revenue sharing payments to local governments
Just over 50 percent of Michigan’s state revenues are shared with local governments, school districts, and community colleges. This intergovernmental fiscal partnership demonstrates the dependence between state and local governments. What initially began as compensation for foregone tax revenue, the state revenue sharing program now supports several critical public services such as elections, county correction facilities, hospitals, and road maintenance. These are public services the residents of Michigan expect to be provided. State revenue sharing ensures that all areas of the state have access to those public services. State payments to local governments can also provide for a redistribution of resources to address varying tax capacity and density of demand. A first step to assessing the state’s revenue sharing program will be to reaffirm the state’s objectives, however broad they may be.
Distribution of State Revenue Sharing Payments
With a clearer understanding of the goals by both local and state policymakers about what the modern objectives for revenue sharing, it will be easier to help land on an appropriate distribution schedule. Explicitly outlining the objectives and distribution formula in state statute rather than through budget implementation instructions would add clarity to revenue sharing policy objectives and provide greater certainty to local governments.
Local Option Taxes
Current Michigan law restricts the taxes available to local governments to primarily the property tax, the income tax for cities, several minor taxes for counties, and some economic-development-related taxes. The restrictions on the types of taxes available, coupled with the limitations on tax rates (and growth of the property tax base), leave local governments few options for raising revenues. Exploring the potential of permitting local governments to levy local taxes would expand revenue options for many local governments. As this area is explored, it is important to consider the tax design and administration process to effectively evaluate the benefits and costs of levying new local taxes. Some local option taxes to consider include sales taxes, tourism taxes, or entertainment taxes.
Tax Limitations
The contemporary landscape and long-term impact of constitutional and statutory tax limits should be evaluated. In addition, because tax limitations have been adopted at separate times and addressed different issues, the interaction of these limits may have resulted in unintended effects over the long term. Tax limitations, especially those voter-initiated, should not be dismissed, but an understanding of how these provisions have affected local government’s fiscal management should be understood as potential policy solutions are explored.
The fiscal stability of local governments is an important public policy issue for state policymakers. With the significant reliance on state revenue sharing, and the upper bounds placed on property tax revenues, local governments have few alternatives to pursue to raise revenues to fund the services they provide at a level their residents want. The most recent budget allocation that increased state revenue sharing is an indication that state policymakers know that local government funding is a priority. A comprehensive review of how Michigan’s local governments are funded would be a worthwhile task for the state legislature. Clarifying the objectives of revenue sharing, and perhaps resetting the options for local governments to generate revenue would help local governments safeguard their future fiscal health.
[1] Article IX, Section 10 of the Michigan Constitution states that cities, villages, and townships will receive 15 percent of the state sales tax levied at four percent of the state sales tax; 100 percent of the additional two percent of the state sales tax levied is dedicated to the State School Aid Fund.
[2] Michigan’s Fiscal and Economic Structure, State-Local Fiscal Relations: Counties, Cities, Villages and Townships, Wolfram, p. 389.

Let’s Reevaluate the Purpose of State Revenue Sharing as Part of Municipal Finance Reform

Michigan’s Transportation Funding Law Hinders Efficient Use of Road Funding
In A Nutshell:
State revenue for locally-owned roads is distributed to 614 local government road agencies, including 83 counties and 531 cities and villages.
Analysis of allocation data shows that while dense urban counties receive the highest share of funding, sparsely populated rural counties receive much more funding per resident.
These results suggest a need to evaluate the efficacy of Michigan’s road funding distribution formula. Michigan’s current road funding law, Public Act 51 of 1951, should be repealed and replaced with a distribution formula that better reflects the needs of road agencies and the priorities of Michigan residents.
Recent research has shown that Michigan has road funding levels similar to peer states such as Indiana and Ohio, but is challenged to achieve similar levels of pavement quality. One potential explanatory factor for Michigan’s challenges is that the state’s public road network is notably decentralized and fragmented. This imposes challenges to distributing funding to where it can most benefit the state and its residents.
Only 7.9 percent of Michigan’s public road network (by route miles) is under the authority of the Michigan Department of Transportation (MDOT). Only two states have a lower percentage of roads owned by the state DOT. The remainder of the road network is owned and operated mainly by local governments. Michigan’s locally-owned public road network is distributed among 614 individual road agencies, representing 83 counties and 531 cities/villages.
It is widely agreed that Michigan’s transportation infrastructure is inadequately funded. Local governments have limited options to raise their own-source transportation revenue and federal funding is inconsistent. This means that local road agencies are highly dependent on state revenue sharing. As we pursue options to increase road funding, we should also evaluate the system through which funding is allocated and distributed.
Our analysis of funding distributions to local governments suggests that Michigan could make better use of existing road funding by updating the framework that allocates road ownership and funding across agencies.
Michigan’s local public road network is distributed among 614 individual road agencies, representing 83 counties and 531 cities & villages.
The majority of Michigan road funding comes from state revenue earmarked for transportation purposes. This revenue is distributed and allocated according to our transportation funding law, Public Act (PA) 51 of 1951. Public Act 51 dictates that, after various statutory deductions, the Michigan Transportation Fund (MTF) is distributed to state and local road agencies according to the percentages displayed in Table 1.
Table 1
PA 51 Michigan Transportation Fund Distribution
– MDOT State Trunkline Fund (39.1%)
– County Road Agencies (39.1%)
– Cities and Villages (21.8%)
Public Act 51 further establishes how the percentages dedicated to counties and cities/villages are distributed among the many individual local governments.
Distribution to Counties
In Fiscal Year (FY)2023, Michigan’s county road agencies received about $1.24 billion in state funding. A small fraction of this (about half a percent) was received as payment for mileage transfers – former state trunkline segments that a county has taken ownership of and received state payment to mitigate additional cost burdens. The remainder is distributed according to the following formula:
Table 2
Factors Determining Allocations of Michigan Transportation Fund to Counties
– Share of Resident Vehicle Registrations (47.90%)
– Share of County Local Road Mileage (16.41%)
– Share of County Road Mileage in Urban Areas (9.90%)
– Equally among the 83 counties (9.58%)
– Share of Population outside of Incorporated Municipalities (8.84%)
– Share of County Primary Road Mileage (6.39%)
– Using Snow Formula (1.00%)
– Each county receives $10,000 before the formula is applied.
In FY2023, distributions to Michigan’s 83 county road commissions ranged from $124.2 million (Oakland County) to $2.1 million (Keweenaw County). The average distribution was $14.8 million. The median distribution was $8.1 million. (These figures include the Local Program Fund (LPF) but omit distributions from the snow formula and mileage transfers.)
Distribution to Cities and Villages
In FY2023, cities and villages received just over $714 million in PA51 state revenue sharing. About 0.8 percent of this was received as compensation for assuming ownership of former state trunkline routes. The remainder is distributed according to the following formula:
Table 3
Factors Determining Allocations of Michigan Transportation Fund to Counties
– Share of City/Village Resident Population (59.58%)
– Share of City/Village Major Street Mileage with population multiplier (29.79%)
– Share of City/Village Local Street Mileage with population multiplier (9.93%)
– Using Snow Formula (0.70%)
In FY2023, PA51 distributions to Michigan’s 531 cities and villages ranged from $99.8 million (Detroit) to $22,388 (Village of Allen in Hillsdale County). The average distribution was $1.3 million. The median distribution was about $282,000. Nearly 100 city/village agencies received less than $100,000 for the year.
All Local Distributions by County
To better understand how state revenue sharing for local road funding is distributed geographically across Michigan, we have aggregated distributions from the MTF and LPF by county (excluding snow funding and mileage transfers). The data provided below includes PA 51 funding of all cities and villages within a county, as well as PA 51 funds county road commissions received in FY2023.
Map 1
PA 51 MTF+LPF Local Distributions by County, Including City/Village Distributions
(FY2023, $1,000s)
As would be expected, road funding allocations vary substantially. Highly populated urban counties receive more state revenue. Wayne County and the cities and villages therein collectively received over $315 million. Oakland County ranks second, followed by Macomb, Kent, and Genesee.
We can also visualize this data based on funding relative to the size of the population. Map 2 shows FY2023 PA 51 distributions from the MTF and LPF normalized to 2020 county populations.
Map 2
PA 51 MTF+LPF Local Distributions by Resident Population by County, Including City/Village Distributions
(FY2023, $s)
When we look at PA 51 road funding distributions per capita, the trend is very different from the raw distribution data. Low-population rural counties are typically much better funded on a per-capita basis. Keweenaw County receives the most PA51 funding per population, with $1,070 per resident. Washtenaw County ranks last, receiving only $154 per resident in FY2023. The average county received $296 per resident. The median county received $268.
When interpreting these maps, it is important to note that this does not include all road funding within each county. Additional funding may come from local property tax revenue, carve-outs in the PA 51 formula, one-time grants and earmarks, or federal aid.
Low-population rural counties are typically much better funded on a per-capita basis.
It is tempting to conclude from this analysis that the PA51 local road funding formula is biased against urban counties. This is possible (and perhaps likely), but cannot be concluded from this data alone. Even a brief read of the state’s transportation funding law reveals that any discussion involving the allocation of state dollars is much more complicated.
The amount of funding that local jurisdictions ‘should’ receive depends on the priorities of the Michigan Legislature as the chief architect of the funding formula. State laws are generally reflective of the values and priorities of the citizens when they are enacted and subsequently amended.
Public Act 51 was adopted in 1951, over 70 years ago. This was in the midst of a drastic reorganization of American society around the use of the automobile. In crafting Michigan’s primary transportation funding law, the legislature prioritized constructing a robust statewide network of high speed roads. In the intervening years, the law has been amended several times to transition from a formula that emphasizes building roads to one that emphasizes maintaining them. Yet many aspects embedded in the original formula remain.
Public Act 51 today is a result of historical inertia. Distribution of road funding remains subject to the same allocation factors written into the law in 1951. Road ownership and related funding levels were established not according to an assessment of current needs, but by outdated priorities and political compromises negotiated decades ago.
For counties, the most governing allocation factor is the number of registered vehicles within a county. Another factor is the population living in that county, but outside of an incorporated municipality. Also emphasized are miles of “county primary” and “county local” roads.
For cities and villages, the most governing allocation factor is population. The miles of “major” and “local” city streets are also factored in, yet these too are subject to a multiplication factor based on population.
These factors – vehicle registrations, population, and road miles – were a reasonable proxy for estimating funding needs in 1951. The number of resident vehicle registrations and population counts may help to estimate traffic demand. But these registered vehicles and residents frequently travel to other jurisdictions. The mileage of a local system provides a good first estimate of funding needs, but assumes that construction and maintenance costs are equivalent across the state.
In 2024, we have much better methods of estimating road funding needs. In addition to decades of research on asset management, we have abilities in data collection and analysis that could not have been anticipated in 1951.
Let’s consider what determines the life-cycle cost of a road.
Mileage by Road Type. The PA 51 distribution formula is largely based on the system mileage owned by each authority. Yet all roads are not created equal; a major thoroughfare has more demanding design and maintenance requirements than a low traffic residential street. PA 51 allocates funding, in part, based on road type. County roads are divided into “primary” and “local” roads. City/village streets are divided into “major” and “local” streets. But the law does not dictate how these classifications are assigned. It is up to each individual jurisdiction to propose what roads in their network are “primary” or “major,” on the basis of “general greatest importance.” It is unclear if there is a consistent logic in classification of streets. As an alternative, the National Functional Classification system provides a consistent approach to distinguish road types based on their importance to the nation, state, region, and community. The distribution of federal aid from the Highway Trust Fund considers National Functional Classifications, and this should be adopted into the state distribution formula as well.
Pavement Area. Regardless of functional classification, road construction and maintenance costs increase as pavement area increases. Features such as multiple lanes, wide lanes, bike lanes, and paved shoulders significantly impact the life-cycle costs of a road. An ideal distribution formula would compensate agencies for these additional costs without incentivizing unnecessary road-widening projects.
Traffic Volume. Unlike in 1951, we now have the technology to accurately estimate various metrics related to traffic demand. Commonly used metrics include average daily traffic (ADT) and peak hour traffic. Traffic engineers use such metrics to determine design elements such as the number and width of lanes. A distribution formula may use such traffic volume factors in addition to, or as an alternative to, considerations based on pavement area.
Commercial Traffic Load. Traffic volume metrics such as ADT are correlated to funding requirements to the extent that they justify additional pavement area. However, ADT alone cannot provide reliable data on the pavement damage imposed by traffic. A typical passenger vehicle or light truck imposes negligible pavement damage. Traffic-related pavement damage is related almost entirely to commercial vehicle traffic (heavy trucks). Routes with high volumes of truck traffic require higher standards of design and maintenance, or they will deteriorate rapidly. Commercial vehicle traffic metrics are available and should be a meaningful factor in a funding distribution formula to assure that road agencies that accommodate high volumes of truck traffic are fairly compensated for the additional costs imposed by that traffic.
Drainage Requirements. Drainage is critical in preventing pavement damage. A paved road is ideally engineered to prevent water from infiltrating beneath the pavement surface, and to remove any water that does infiltrate beneath the pavement surface. When the base beneath a pavement surface is saturated, rapid and severe pavement damage can result, either from the expansion of that water into ice during freeze cycles, or simply from decreased load-bearing capacity. Removing water from beneath the pavement is much more difficult in regions where the subbase (native soil) is slow-draining, such as heavy clay soils. Roads in such regions may require additional drainage features, and incur related construction and maintenance costs. Such geological factors would ideally be considered in a distribution formula.
Bridge Features. Bridges are very expensive. Bridge costs are incorporated into Act 51 through various carve-outs before the MTF is allocated to agencies. However, the dedicated bridge funding is an insufficient remedy for the primary malady: the distribution formula does not consider bridge costs. This omission is becoming increasingly detrimental as recent environmental regulations are compelling many road agencies to construct new bridges where once a low-cost culvert was considered sufficient. The state maintains a database including all public bridges in the state, including attributes like deck area and traffic load. This data should be factored into a distribution formula.
Climate. Michigan is a large state with variable weather and climate in different regions. MDOT pavement engineers have divided the state into two regions (north and south) as southern Michigan is typically subject to more damaging freeze-thaw cycling. These freeze-thaw cycles impose pavement damage and additional costs that could be factored into a distribution formula. This could be based simply on the north/south regions. A preferable alternative may be to distribute a portion of funding based on actual freeze-thaw cycles experiences in a region in the preceding winter. This would help agencies with maintenance costs that may not have been anticipated.
Construction Costs. The cost of labor and materials involved in road construction can vary significantly in different regions in Michigan. PA 51 embeds an assumption that a road funding dollar sent to every road agency will purchase an equivalent amount of road work. This is not the case. We have data on regionally variable construction costs, and this should be incorporated into a distribution formula so that agencies in high cost regions are not disproportionately challenged to maintain their systems in a state of good repair.
If we were to create a road funding formula from scratch in 2024, these are the kinds of allocation factors we would use.
PA 51 allocates funding by factors established over 70 years ago. In 2024, we have much better methods of estimating road funding needs.
In past decades, Michigan has had many policy initiatives to increase road funding. Yet it is rare that anyone thinks about how our existing funding is allocated or why. PA 51 was once scheduled to sunset, but the sunset provision was repealed in 2000 after multiple extensions. Legislative attempts to rationalize the funding formula to better meet needs have only resulted in an overly complex law that is practically impossible to understand or audit.
The bottom line is that PA 51 is obsolete.
Again, there are ongoing efforts to find more funding to repair and maintain Michigan’s roads. What is missing is an earnest effort to evaluate how the distribution formula has undercut Michigan’s ability to allocate funding to where it would most benefit the state, local agencies, and all Michigan residents. Specifically, we should consider the following:
An evaluation of road ownership across state and local agencies and potential processes of redistributing ownership according to the importance to each jurisdiction.
Including charter townships to be certified as recipients of MTF revenue sharing.
Potential costs and benefits involved with consolidating road agencies.
How to allocate funding so that it is distributed fairly among road agencies to support the priorities and values of the state, local governments, and all residents.
How to incorporate principles of asset management into the distribution formula as to incentivize road agencies to utilize funding as efficiently and effectively as is practicable.
Potential to allow local governments additional revenue options for road funding.
Addressing Michigan’s road funding issues must include a serious conversation about allocation. Act 51 has stood in the way of rational road funding and efficient asset management of the statewide public road network for too long. It is past time to repeal Public Act 51 and replace it with a distribution formula that reflects the costs to road agencies and the priorities of Michigan residents.

Michigan’s Transportation Funding Law Hinders Efficient Use of Road Funding

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In a Nutshell:
Health care providers are beginning to use artificial intelligence (AI) tools in their practice, largely without federal or state regulation.
AI has the potential to improve efficiency, drive down costs, and improve patient outcomes, but the technology presents significant safety and privacy risks.
The role of government in the oversight and regulation of AI in health care should be considered by the state, and the state should not wait to engage in those deliberations.
Artificial intelligence (AI) is “technology that enables computers and machines to simulate human intelligence and problem-solving capabilities.” While AI has been around for decades, a recent wave of developments in generative AI – AI that can generate text, images, video, and other kinds of data – has brought the utilization of AI into the mainstream, particularly following the release of user-friendly generative AI programs (e.g., ChatGPT). Governments, businesses, and individuals are utilizing these modern AI tools in countless ways, with a major focus on searching for information and preparing written responses (e.g., chatbots, essays, etc.).
Mainstream AI utilization is touching every aspect of life, but health care is an area where the stakes are particularly high. Many of AI’s current applications across all fields involve substituting technology for human labor in the name of efficiency. In health care, AI has the potential to create efficiencies that save time and drive down costs. AI utilization may also improve patient outcomes through enhanced research, diagnosis, and treatment. It is important to balance the risks that come with using AI with the implications of this emerging technology to ensure its utilization serves the public interest.
AI Utilization in Health Care
Many potential avenues for the use of AI in health care exist and are being evaluated. The ability of AI to scan large swaths of information and search for patterns has significant potential for medical diagnosis, treatment, and self-care, as well as aiding health professionals’ knowledge and improving clinical trials and studies. For instance, providers or patients could enter symptoms into an AI platform and receive information about the most likely diagnoses or the preferred tests to administer. Similarly, AI platforms could answer patient questions about procedures or conditions. AI could also be used as a force multiplier in areas with a lack of access to certain specialties.
The benefits of AI utilization in health care are straightforward. Health care is expensive and labor intensive, so replacing human time with automation has value in terms of cost and in making up for provider shortages. Beyond efficiency, AI has the potential to improve diagnosis and treatment by aiding (or even outperforming) the average clinician at a variety of tasks. Even in cases where highly trained providers perform better than existing AI in complex health care settings, AI can be used to supplement provider expertise, getting the best of both worlds at very little additional cost.
As the technology develops, it is likely that the best AI tools will meet or exceed the diagnostic accuracy of many providers, which if used properly, would improve average diagnostic accuracy overall. Similarly, making medical advice and expertise more accessible via chatbots could improve health outcomes for people who cannot afford or access medical care. Many entities are working diligently to capitalize on this potential. For instance, Michigan Medicine is working to implement AI tools in administrative and clinical contexts while also setting policies around patient privacy and safety.
While AI has the potential to be extremely valuable, two major categories of risk come with its utilization in health care. The first centers around data privacy, as utilizing AI in many of the proposed contexts would require giving personal health information to some form of AI software that inherently learns from every bit of information it receives. Existing laws and regulations – primarily those that contemplate medical records being housed in siloed records management systems – may not be sufficient to ensure that confidential medical information shared with an AI software is not inadvertently disclosed to those without authorization.
The second category of risk is accuracy. While human decision-making is also imperfect, many examples exist of AI tools presenting wrong, nonsensical, and/or dangerous results. Many different AI tools already exist with varying levels of performance on different tasks. Some AI tools may far exceed the average clinician’s diagnostic accuracy, while others may perform worse, even if they avoid blatantly flawed results. AI functionality depends both on the operation of the code and on the data it learns from, meaning any particular AI platform may do better or worse for a variety of different reasons.
It is important that providers do not have incentives to utilize AI in a manner where doing so could lead to less accurate results than relying only on human expertise. Similarly, providers will likely have a choice of AI tools and should be incentivized to use the tools that maximize accuracy rather than speed, cost savings, or other variables not directly related to patient outcomes. Related to broader concerns about accuracy, AI has the potential to exacerbate discrimination if the technology was trained on data with underlying biases.
Questions about health care AI accuracy need to be analyzed and debated as a matter of public policy. Given the potential benefits AI could bring to health care, governments should prepare for increased AI utilization with an eye on improving efficiency and health outcomes, while also protecting providers and patients from potential pitfalls.
Government Response to Technological Advances
Governments are often slow to respond to new technologies, both in terms of utilization and regulation. Laws and regulations do not always contain the flexibility needed to address novel technologies and it takes time to enact and implement necessary changes. Rather than waiting for the AI landscape to unfold, policymakers should engage early with the implications of AI on modern life, both in terms of promoting the value of AI and in establishing appropriate safeguards.
Governments, including the State of Michigan, are starting to think about how they might deploy AI to carry out its functions. As part of the State of Michigan’s FY2025 budget, $10 million was appropriated to explore “strategy, platforms, and tools for the integration of artificial intelligence and develop[ment of] pilot projects that capitalize on the potential of this new generative technology to transform the provision of government service.” While this is a worthwhile step, it only covers one part of the government’s role in the emerging AI landscape.
The government is unlikely to be a leader in the development and deployment of AI tools. Improvement in the technology’s capabilities and implementation will flow from the private sector and research community, and it is important that the government avoid getting in the way of advancements in AI.
The goal for the government should be to support an environment in which AI development and utilization can flourish, while also ensuring proper guardrails are in place to protect people from intentional misuse and unintended negative consequences. The government does have a role in regulating the utilization of AI in all walks of life. The extent of those regulations are very much up for debate, but in health care alone, AI has implications for the workforce, individual privacy, patient safety, and costs, not to mention research and development. Policymakers should grapple with the implications of AI before it is fully enmeshed within the industry and consider whether any laws or regulations need to be put in place.
Existing Policies and Proposals on AI in Health Care
The emergence of mainstream generative AI platforms over the last few years has moved the discussion of AI utilization and regulation into the public consciousness, but policy action on AI in health care has been limited thus far. Federal agencies have engaged with the implications of AI for health care through executive actions such as establishing task forces and issuing guidance, but there have not been major legislative or rulemaking actions. In fact, proposing regulations at all has been challenging because the government usually regulates specific drugs, devices, and procedures. AI cannot necessarily fit into the existing authorization framework because the software changes over time.
While the European Union has responded to these challenges by enacting a new regulatory framework specifically for AI, the U.S. Congress has not embraced policy discussions related to health care and AI in earnest. Some legislation has been introduced related to relatively minor aspects, like allowing AI to prescribe medication if it is authorized at the state level, setting guidance for Medicare payments for the use of specific AI monitoring devices, and authorizing the use of AI in certain government-funded health research.
Broadly, many have taken note of Congress’ lack of action on AI generally and the role states are playing in filling the void. Some recent examples include an Illinois bill that would require AI programs used to diagnose patients to be certified and shown to be accurate. Legislation in Georgia would prohibit making insurance coverage or health care decisions solely with AI. A proposal in Massachusetts would regulate the use of AI in mental health treatment, including requiring the provider to seek approval from their licensing board, use an AI system that prioritizes patient safety, and inform patients of their use of AI and receive their consent. Similar legislation was proposed in Texas and Rhode Island. States have also pursued and enacted broader legislation related to AI, with some of that legislation including data collection and opt-out requirements that could have some impact on health care even if health data is not the specific focus of the laws.
While a case can clearly be made for the federal government to take the lead on AI, both generally and as it relates to health care, the lack of action in Washington, D.C. has prompted states to engage in their own policymaking process.
Michigan’s Next Steps
The novelty of mainstream AI technology leaves policymakers with no easy answers about when and how to regulate its use in health care. However, there are a variety of key questions for policymakers to consider when deciding what kinds of laws and rules might be necessary.
Who, What, When
The core regulatory questions for policymakers to consider are which providers can use AI tools, what AI tools they can use, and when they can use them for patient care. Policy around notifying and receiving consent from patients to utilize AI tools as part of their care is also a key aspect of patient choice.
The state should consider whether it should set criteria around which AI tools meet accuracy and safety thresholds. Within the context of regulating which tools meet the necessary criteria, the state should consider whether it is necessary to set transparency standards about the operation of an AI tool and its training data.
Additionally, while AI tools are supposed to be easy to use, using them well is a skill and the state should consider whether it needs to set additional licensing requirements on providers who want to utilize AI in their practice. The state should also consider whether it is appropriate to set guidelines on intended use. While it is challenging to envision every scenario in which AI could or will be used, the state could give providers direction on the manner in which AI should fit into the scope of practice.
Other Considerations
Beyond the core questions of using AI for patient care, the state should also engage with a variety of other policy-related questions, including:
Data Privacy: Whether in the context of broader data privacy laws or in a specific health care context, the state should assure patients their data is safe from disclosure even if AI is involved in their treatment.
Discrimination: The state must ensure it can police health care discrimination when AI is involved, but that may look different than the existing framework.
Cost: Health care providers will certainly bill for services provided by AI, but patients should expect to share in any efficiencies, either through better or cheaper care.
Liability: Existing liability law may need to be adjusted to clearly delineate who is at fault if health care that was delivered or augmented by AI leads to some sort of adverse outcome, or if a patient suffers when a provider ignores AI.
Labor Protections: Laws may need to specify whether individual clinicians can be subjected to employment sanctions if they decline to use and/or overrule recommendations made by AI tools.
The specific provisions of any of these policies, and the extent to which these issues can be addressed under existing law, are very much open for debate. The state has a variety of interests to balance and lacks concrete data to inform best practices, but it has an interest in making sure that existing protections within health care can be applied as AI becomes more commonplace.
AI is coming to health care and the state should be thinking about answering all of these questions now. That is not to say that the state should pursue an overly strict regulatory framework at the outset, but that it should be actively considering the merits of each of these questions. It is easy to fall into the trap of waiting to see how things shake out before taking action, but waiting too long could have significant consequences in terms of patient privacy and safety.
Conclusion
Mainstream AI utilization is likely to transform health care over the next decade and the stakes of properly managing that transition are high. More efficient, cheaper, and more accurate health care is a noble goal that AI can help achieve, but there are significant risks to allowing the unregulated use of AI in health care.
With the federal government largely absent from the arena, states are beginning to pursue AI regulations. While the implications for health care are huge, very few laws and rules on AI in health care have been enacted. Rather than following the usual pattern of waiting for the technology to mature and establish itself, policymakers in Michigan should actively engage with a series of key questions surrounding the use of AI in health care to ensure that the state’s residents get the most out of this technology without opening the door to major downside risks.

Putting the Use of AI in Health Care on Policymakers’ Radar

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In a Nutshell:
Due to a changing climate, regions across the state may face more frequent and severe weather potentially causing hazardous events such as floods, tornadoes, or other natural disasters. Communities should actively monitor and update their hazard mitigation plans to retain eligibility for federal emergency management programs.
Michigan’s 14 Planning and Development Regions continue to be an important and essential facilitator for member counties. Regional coordination will improve the effectiveness of hazard mitigation planning and bring greater access to federal funding for Michigan communities.
State policymakers should consider funding for planning, help in navigating federal emergency management grant opportunities, and access to technical assistance.
Introduction
The science community has highlighted how the Earth’s increasing atmospheric temperature is affecting our natural systems and the climate. Much of the effort to address a changing climate has focused on reducing heat-trapping greenhouse gas emissions, such as carbon dioxide and methane. While many climate mitigation strategies have been launched – for example, a greater reliance on renewable energy and the electrification of automobiles – less emphasis has been placed on preparing and shoring up communities and infrastructure in anticipation of the impacts from more frequent and extreme weather patterns.
Communities of all sizes should be preparing for the greater probability that natural hazards[1] will occur. Not doing so leaves communities more vulnerable to property damage and loss from severe floods, tornadoes, hail, and highly intense storms as well as the societal challenges inherent in disaster recovery.
The federal and state government encourage local and tribal governments to establish plans for emergency response and consider the impacts of natural hazards to both prepare for disaster response, and to remain eligible for federal support. Establishing and updating these plans requires expertise, resources, and time. To improve the effectiveness of the state’s emergency management program, Michigan’s Planning and Development Regions should play a leadership role in identifying climate adaption strategies, offering technical expertise, and in facilitating local hazard mitigation planning.
[1] The 2024 Michigan Hazard Analysis correlates natural hazards with “short term extreme weather events or prolonged abnormal weather patterns.”
Michigan’s Climate: Increasing Frequency and Intensity of Natural Hazards
In the 2024 Michigan Hazard Mitigation Plan (MHMP), climate experts said that they expect Michigan to face an increase in frequency and severity of natural hazards state-wide (MHMP, p. 79). From 1996 to 2023, the most severe natural hazards in Michigan – those with a $1 million threshold in damages – were floods, high winds, tornadoes, hail, freezing rain/sleet, and drought (MHMP, pp. 24-25). As recently as June and July of 2024, several Michigan communities were subject to damaging floods and tornadoes.
An analysis of data from the National Atmospheric Administration’s National Center for Environmental Information shows that Michigan temperatures have become warmer (MHMP, p. 73), reducing the probability for cold-related hazards but increasing the risk for drought, wildfires, and heat islands in urban areas. This increase in temperatures also reinforces the threat that high winds and tornadoes will remain significant natural hazard risks in Michigan.
Given the anticipation of increased intensity and frequency of natural hazards it is imperative for local and tribal governments to prioritize planning for these events and the emergency response.
Hazard Mitigation Planning in Michigan
The Robert T. Stafford Disaster Relief and Emergency Assistance Act (1988) established a process for delivering federal natural disaster assistance to state and local governments. After evaluating this disaster relief program, Congress determined that proactive planning and preparation for future disasters, natural or man-made, was a key component in dealing with potential disasters. In 2000, Congress adopted the Disaster Mitigation Act requiring state, local, and tribal governments to assess their risks and comply with the Federal Emergency Management Agency’s (FEMA) hazard mitigation planning regulations to be eligible for FEMA grant funding.
In Michigan, pursuant to the Emergency Management Act, the state’s emergency manager oversees the state-wide hazard mitigation plan and facilitates hazard mitigation planning at the county level. Through these planning efforts, communities assess their vulnerability to natural hazards, identify actions and activities to reduce or prevent the impacts of those hazards, and pursue a continuous process to mitigate future natural hazards.
Hazard mitigation plans have been beneficial to the local governments that have implemented them. Local plans (HMP) provide policymakers with a guide for planning and development decisions while also giving the state a basis for strategic assistance and prioritized funding. State and local policymakers can find the current status of an HMP by accessing FEMA’s national status map.
Weather patterns or natural disasters, of course, do not follow jurisdictional boundaries. In addition, counties – the most common entity overseeing hazard mitigation plans – may be at various stages in developing or amending their plans or have different effective dates for approved plans. For those counties sharing borders, this variation may not be critical; however, coordination in areas where counties might experience similar vulnerability to a hazard at any one time could be advantageous and reduce the fiscal and social impacts of these hazards.
Regional Natural Hazard Mitigation Planning
A regional perspective in hazard mitigation planning will not only support counties, tribes, and other municipal governments with technical expertise, it will match the geographical impact of natural hazards more closely and help Michigan communities gain better access to FEMA assistance.
Michigan has 14 Planning and Development Regions (Region). These organizations assist on planning issues from a broader geographical perspective than individual counties or local units of government. While each of the state’s Planning and Development Regions may not share the same capabilities to support local hazard mitigation planning, their participation, technical assistance, and cooperative mission plays a significant role in bringing planning and funding resources to a region.
The map below shows the status (as of January 2024) of each county’s HMP and its assigned Planning and Development Region.
Status of County Hazard Mitigation Planning by Planning and Development Region
Several counties across Michigan have expired, at-risk, or no plans for hazard mitigation. Some regions have more coverage than others in hazard mitigation planning. Of the 14 regions, only two have all counties with approved and operational county HMPs. These are the Tri-County Regional Planning Commission (Region 6) and the Eastern Upper Peninsula Regional Planning and Development Commission (Region 11) (MHMP, p. 40). Every other region has one or more counties not yet approved for HMP requirements by FEMA.
The counties in the Southeast Michigan Council of Governments (SEMCOG, Region 1) show significant variation in plan status. Of the seven counties in Region 1, two have expired plans, one is expired with a planning grant, two have approved plans but they each expire in mid-2026, and only two have approved operating HMPs (MHMP, p. 40). The complexity of planning for the number of entities involved creates a challenging range of issues for one regional organization to coordinate in southeast Michigan. By providing advice, expertise, and acknowledging the limitations of authority for any one of the participating authorities in the region, SEMCOG nonetheless provides a useful role.
In another region, such as the Eastern Michigan Council of Governments (EMCOG), the EMCOG staff can offer more straightforward collaboration with their member county and tribal governments to develop HMPs.
In addition to the differences in status of a county’s HMP within a Planning and Development Region, the costs of natural hazards differ as well. Data from the National Centers for Environmental Information (NCEI) and the MHA ranks Region 1 (SEMCOG) first in annualized cost for damages from flood, high wind, tornado, freezing rain/sleet, and drought impacts (MHMP, pp. 24-25). Several factors such as geography, population, and urbanization may explain why Region 1 is prone to more costly natural hazard impacts.
Successful Regional Collaboration
There can be challenges to collaborating on HMPs at the regional level. However, considering FEMA’s requirement for integral planning between the local, regional, and state levels, Michigan should look for ways to facilitate more regional coordination.
An example of intentional integrated planning between local and regional levels can be found in California’s hazard mitigation plan (CSHMP, 2023). One of the goals of California’s HMP is to “Explore, create, and implement regional-scale and long-term multi-benefit programs for planning, implementation, and long-term management that include single purpose projects as needed consistent with, and supportive of, broader regional actions to leverage funding sources and align program priorities” (CSHMP, p. 889). A goal like this would align with the purpose of the Planning and Development Regions in Michigan as these regions are eligible for special grants and one-time payments.
California’s Regional Forest and Fire Capacity Program is just one of many regional-based initiatives. The program requires “regional leadership to build local and regional capacity and develop, prioritize, and implement strategies and projects that create fire adapted communities and landscapes by improving watershed health, forest health, community wildfire preparedness, and fire resilience” (CSHMP p. 878). Such initiatives could be effective through Planning and Development Regions in Michigan. With participation from all counties, a region can gather full support for programs to mitigate natural hazards experiences affecting the Region rather than just one county.
Resources for Planning
Many Michigan counties with HMPs have dedicated planning departments, mitigation specialists, or the external assistance needed to meet FEMA requirements. They have funding and staffing resources for these activities. Less populated areas, or those with lower tax revenues, may have part-time management planners or may need to share resources with other counties to prepare FEMA-eligible HMPs (MHMP, p. 37). Furthermore, because all HMPs are held to the same FEMA standards, smaller and rural communities may have a more challenging time securing grants to implement HMPs. These communities also may struggle to secure the non-federal matching funds or meet the administrative requirements to apply for HMP grants (MHMP, p. 37).
In some specific grant programs, FEMA has offered additional assistance to areas with fewer resources to support hazard mitigation planning. Certain communities can get extra time to access their planning grant. While this funding can help areas with fewer financial resources, it does not offer the technical support needed to establish a plan within the given time limit. Such counties may be more likely to succeed with this extension if nearby counties share their expertise and data, especially given nearby counties experience the same or similar natural hazards.
Limitations for Planning Regions
There are limitations to how successful Planning and Development Regions will be in improving hazard mitigation given that coordinated hazard mitigation planning (either at the regional level or in support of the MHMP) entails that each participating jurisdiction has an HMP approved by its governing body. Each of these regions has a mix of county and municipal governments, as well as private and public stakeholders who participate in the planning process. These participants may or may not work well together. They also range in technical expertise, capacity, and budget for hazard mitigation planning. Moreover, some regions are more vulnerable to or subject to more hazards than others, creating capacity constraints.
Some counties within a region may be secure with the status of their hazard mitigation plan and be unwilling to share resources or participate in a region-wide collaborative. Others may be facing more pressing priorities that intercept attention to hazard mitigation.
With challenges like these in mind regional collaboration may be difficult to achieve given the fact that individual counties cannot make policy decisions on behalf of other counties (MHMP, p. 37). Since these Planning and Development Regions have representatives from each county within them, incentives may pave the way for full participation in mitigation efforts.
Requirements and Incentives for Regional Collaboration
The Michigan Hazard Mitigation Plan offers a general overview of the state’s natural hazard concerns. The state HMP cannot qualify as a multi-jurisdictional plan to protect all the local communities within it because every jurisdiction covered in an HMP must have participated in the process and officially adopted the plan. Michigan would see greater coverage for natural hazard mitigation across the state if more local governments had an eligible HMP in place.
FEMA requirements for local HMPs add additional requirements to local governments that participate in multi-jurisdictional plans. First, in addition to accounting for shared natural hazards across county lines, regional plans must individually assess each jurisdiction’s risks that differ from the general planning area. Second, the multi-jurisdictional plan’s mitigation strategy must include how actions specific to each county will be prioritized, implemented, and administered. This requirement ensures adequate accountability for each county and the entire region in the mitigation process. Similarly, each participating jurisdiction must document that the plan has been formally adopted.
Limitations such as resource availability and willingness to cooperate make it difficult for Planning and Development Regions to gain unanimous participation for multi-jurisdictional hazard mitigation plans. Encouragement for counties to voluntarily opt into these plans with their regional neighbors is necessary. Moreover, such regional collaboration will better match how severe weather is experienced and could take advantage of regional expertise. Planning and Development Regions may be able to secure additional state, federal, public, and private sector funding for the process. With such financial incentives, and promotion of Planning and Development Regions by the state, counties may be persuaded to establish either their own HMP or partake in a region-wide multi-jurisdictional plan. State level incentives could include help in navigating FEMA grant opportunities, technical assistance, or state-funded grants.
Conclusion
Given that Michigan’s climate experts foresee higher temperatures and greater precipitation across the state bringing more frequent and intense weather patterns, the state and its local and tribal governments should prioritize collaborating across regions and updating hazard mitigation plans. Natural hazards do not follow county lines. Regional coordination and collaboration will improve the effectiveness of hazard mitigation planning and bring greater access to federal funding for Michigan communities. Policymakers should consider offering funding for regional hazard mitigation planning, help in navigating FEMA’s grant opportunities, and access to technical assistance.
This article was written in collaboration with Leah Zeman. As a senior at the University of Wisconsin-Madison, Leah is pursuing a bachelor’s degree in political science with minors in public policy, health policy, and educational policy studies.

Regions Should Play a Greater Role in Natural Hazard Mitigation Planning and Climate Adaption

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In a Nutshell
Michigan public schools rely on age-old centralized staff-based budgeting systems to allocate resources (primarily staff positions) to schools; these models don’t guarantee that greater sums of per-pupil resources will be directed to the highest-need schools.
Changing or modifying current district-level budgeting policies, strategies, and practices to ensure low-income schools are properly resourced may be fertile ground for addressing Michigan’s early-literacy challenges and the per-student funding inequities found in several large districts and documented by our previous research.
Weighted-student funding budgeting models use student need, rather than staff positions, as the guiding principle for school-level resource allocation; the use of this school budgeting approach in several U.S. cities has been shown to drive additional resources to higher-need schools, helping them to improve academic outcomes, especially among low-income students.
Despite skyrocketing state K-12 school funding, early literacy test scores continue to tank. One solution to address this persistent decline is for districts to change how they allocate dollars to individual schools, moving away from staff-based to student-need-based budgeting systems. In cities across the country that implemented student-centered budgeting, research found that financial resources were distributed more equitably to schools, driving higher academic achievement for the most disadvantaged students.
If state policymakers are serious about addressing students’ early literacy challenges and eliminating educational opportunity gaps, it is critically important that state investments get to the students and schools with the highest needs.
The Case for District Budgeting Reform
Recently released K-12 student test scores for the 2023-24 school year again revealed the widespread and harmful effects that the COVID-19 pandemic had on the education of Michigan’s youngest learners. Fewer than four in ten third-grade students taking M-STEP tests last spring tested proficient in reading and writing. Notably, this cohort of early learners began kindergarten in the fall of 2020 when many schools were still remote and instruction quality suffered.
But, the pandemic is not all to blame for student struggles as the slide in early-grade reading scores predates the pandemic. Michigan has been ranked in the bottom of states on the national fourth-grade reading test for years, falling from 39 in the nation in 2019 to 43 on the 2022 National Assessment for Educational Progress.
This sustained academic slide has prompted calls by school leaders across the state for Lansing officials to change Michigan’s early literacy policies on several fronts in recent years, including modifications to the state’s third-grade reading law. More changes are likely as state lawmakers are currently considering additional policy interventions targeting struggling readers, including those with dyslexia. Suffice to say, Michigan’s early literacy policy landscape continues to shift in response to falling test scores.
Notably, the stubborn downward trend in third-grade reading scores comes at a time when Michigan public school funding is at an all-time high. Ongoing state K-12 education funding is way up compared to before the pandemic, while school districts have shared in roughly $6 billion in federal pandemic relief since early 2020. Relevantly, there have been sizable new state budget investments for district literacy coaches, evidence-based teacher professional development, additional instructional time for struggling readers, and expanded tuition-free pre-school services. These new investments, along with $1 billion per year in state “at-risk” student funding to support third-grade reading initiatives, demonstrate that districts are receiving resources to tackle Michigan’s early literacy crisis.
Whether these additional financial resources are reaching the individual schools and classrooms with the greatest proportions of struggling readers is an open question. That is because state and federal school funding flows to the district entity, not the district’s individual schools. The problem is that Michigan public schools rely on age-old centralized staff-based budgeting systems to allocate resources (primarily staff positions) to schools. Staff-based budgeting models don’t guarantee that greater sums of per-pupil resources will be directed to the highest-need schools.
Changing or modifying current district-level budgeting policies, strategies, and practices to ensure low-income schools are properly resourced may be fertile ground to address Michigan’s early-literacy challenges, as well as the per-student funding inequities found within several large districts. One popular reform to school budgeting practices adopted by many large districts across the country is a “student-based” or “weighted-student funding (WSF)” model. The use of WSF to allocate resources across schools has been shown to drive additional resources to higher-need schools, helping them to improve academic outcomes, especially among low-income students.
Staffing-Based School Budgeting Drives Funding Inequities
For the layperson, public school finances can be an extremely complicated topic to understand for several reasons. First, three different levels of government control the purse strings. Second, public funds flow to districts through several unique and often complex formulas. Finally, the fact that no two states fund their schools the same way adds further to the confusion surrounding these technical aspects of school funding. Beyond all these factors lies a general lack of transparency and meaningful public reporting of school finance information.
While complexity abounds, there is one simple concept to bear in mind for this current discussion: the central role played by the local school district in K-12 finances, especially as it relates to turning revenues into expenditures. Districts, not the federal or state governments, make myriad decisions on how to spend the dollars they receive, how to allocate funds to each school, and how to balance competing priorities.
For most of their history, K-12 school districts across the country have employed centralized staff-based budgeting systems to allocate resources – staffing, programs, and services – across the schools they operate. These budgeting systems convert the various funding streams districts receive (federal, state, and local) into classroom and non-instructional “positions” within the various schools they operate.
Resourcing specific classrooms this way is primarily driven by using a district-wide enrollment-based staffing formula. For example, schools might receive a teaching position for every 26 students, a vice principal for every 350 students. Additional, non-formula staff positions are then added to address the needs of specific students (e.g., special education, English learners) or to deliver special programs (e.g., STEM class). For budgeting purposes, the number of full-time positions are totaled and then converted to dollars using district-wide average salaries for each type of staff, not the actual salaries of school staff. Over time, these staffing rules become “hard-wired” into a district’s annual budget development process.
While using staffing-based formulas to drive school-level allocations seems to make sense on its face given that K-12 spending is very heavily concentrated in “people” costs (salaries, benefits, deferred compensation), these systems only provide a false appearance of equity. That is because they tend to allow higher-priced resources – better-paid teachers – to be allocated to higher-performing schools. A low-income school might receive the same number of teachers with the same staffing ratios as higher-income schools within the same district. And yet, the actual spending patterns can vary widely.
This often leaves schools with the highest concentrations of high-need students with the newest and least-experienced teachers. This presents a serious challenge for students attending high-poverty schools because they need access to the very best teachers the districts have to offer. Extensive research has spotlighted inequities that emerge when lower-income and minority students are taught by less experienced teachers, including wide achievement gaps in early literacy.
The unfortunate truth is that these teacher quality gaps are common in staffing-based funding models and can be a major factor fueling inequitable spending disparities among schools within the same district. The fiscal result is that higher-poverty schools do not receive proportionately more per-pupil funding relative to their lower-poverty school counterparts. That is exactly what we found in our school-level spending analysis from earlier this year.
Using a novel approach to examine variations in school-level per-pupil spending within Michigan districts, while accounting for the concentration of “at-risk” students enrolled in each school, our findings suggest that several large school districts do not always budget the funding they receive in an equitable manner. Our research shows that districts are not allocating more resources per student to the schools that enroll higher percentages of low-income students. Just over one-half of the schools operated by the 15 largest “high-poverty” districts showed equitable per-pupil spending; greater spending to reflect the higher concentrations of “at-risk” students relative to the parent district’s average.
This finding is relevant to discussions about student outcomes because research has established the importance of money, and how it is used, to drive academic success. This is especially salient when it comes to discussions around early literacy funding and outcomes. While third-grade reading proficiency statewide was less than 40 percent in 2023-24, wide achievement gaps exist among several student cohorts. Specifically, high-income students had a proficiency rate more than double (57 percent) that of low-income students (27 percent) on the M-STEP third-grade reading test in 2023-24. If state policymakers are serious about addressing students’ early literacy challenges and eliminating educational opportunity gaps, it is critically important that state investments get to the students and schools with the highest needs.
Weighted-Student Funding
Recognizing the within-district funding inequities that can result from staff-based budgeting systems, several large school districts in the United States have adopted alternative budget models that use student need, rather than staff positions, as the guiding principle for school-level resource allocation. These systems are often referred to as “weighted-student funding (WSF)” or “student-based funding” models.
Generally with WSF budgeting, school-level funding allocations are based on per-student allotments using a “base” allocation for every student enrolled. Schools then receive additional “weighted” per-student allocations based on counts of different student types (e.g., economically disadvantaged, special education). In this way, districts allocate financial resources, not specific staffing positions, to staff classrooms and pay for other services to meet the specific student needs within each school (figure below).
Figure 1
School-Level Budgeting Models
Studies of WSF budgeting systems implemented across several major U.S. cities have found that they distribute resources more equitably to schools by better linking dollars to student needs. Specifically, in districts using WSF, low-income students on average attend schools receiving more per-pupil funding than all other students in the district. In a study of 20 districts using WSF, 18 districts exhibited more “progressive” school funding, driving an average of 3.9 percent more per-pupil dollars to low-income schools. This research also shows that, over time, the use of WSF budgeting increases the progressivity of a district’s school-level resource allocations.
Beyond the research evidence that suggests districts’ use of WSF results in more equitable funding across schools, these student-centered budgeting models have shown to be associated with increased math and reading scores, as well as declines in racial achievement gaps. These academic outcomes are attributed to the additional needs-based funding schools receive, but also the budgetary autonomy provided to principals that accompanies WSF implementation. School-level leaders, as opposed to central district officials, have the ability and know-how to purchase the appropriate mix of educational resources (e.g., staff, curriculum) for students.
While WSF budgeting may be a novel concept for many of Michigan’s 840 local school districts (traditional public and charter schools), it is worth noting that it is not entirely new to discussions around K-12 funding in the Mitten State. Since the adoption of the Proposal A school finance reforms in the mid-1990s, the state K-12 School Aid budget has employed several WSF-like components to allocate state funds across districts. This includes the distribution of state “at-risk” student funding to provide higher-need districts (i.e., those with greater proportions of economically disadvantaged students) with additional state aid.
Michigan’s flagging early-grade reading scores, coupled with persistent achievement gaps across socio-economic and racial dimensions, has prompted state leaders in recent years to provide school districts with hundreds of millions of new dollars for literacy-based investments. In order for the new investments to be most effective at helping struggling readers, they need to get into the budgets of the specific schools and classrooms these students attend. Traditional staff-based budgeting systems can lead some districts to allocate fewer resources to disadvantaged students. Alternatively, WSF models have shown promise for improving equitable school-level funding and driving higher academic achievement.

School Districts Should Consider Student-Based Budgeting to Address Ongoing Literacy Challenges

In a Nutshell:
A truck weight-distance fee is used in several states as a source of road funding. These fees help ensure that heavy trucks more fully pay for the damage they impose on pavements and typically provide three to six percent of transportation fund revenue in the states that have adopted them.
A modest weight distance fee in Michigan could generate over $100 million annually. This revenue could then be rationally distributed to routes subject to the most damage from heavy trucks.
Michigan should direct and fund a study evaluating the costs, benefits, and impacts of the potential adoption of a truck weight-distance fee.
Michigan has long struggled to adequately fund the repair and maintenance of roads and bridges. Michigan ranks 30th nationally in road funding, below the median state. Meanwhile, road revenue from fuel taxes is expected to decrease in coming years as drivers of electric vehicles, hybrids, and increasingly fuel-efficient vehicles purchase less fuel, decreasing the revenue available from fuel taxes. Complicating the issue, unprecedented construction cost inflation has reduced the expected purchasing power of Michigan’s road funding budget by over $700 million each year.
In anticipation of ongoing and future revenue shortfalls, Michigan has been exploring ways to maintain or increase road funding without raising fuel taxes. The legislature has directed studies exploring instituting a highway tolling program and adopting a Road Usage Charge (RUC) on light vehicles.
An additional option that Michigan should consider is a road use fee on heavy trucks. A few states have imposed such a fee for several decades under various names. For our purposes, we will refer to them collectively as weight-distance fees.
Implementation of a modest weight-distance fee in Michigan could generate over $100 million in new revenue each year. Such fees promote the principle of road users paying their ‘fair share’ into the system; heavy trucks typically do not generate enough revenue to fund the damage done to pavements. Michigan could improve its road funding situation and pavement conditions by adopting a truck weight-distance fee that derives and distributes revenue in proportion to the damage imposed by trucks on the public road network.
Existing Weight-Distance Fees
States with an active weight-distance fee include Connecticut, Kentucky, Oregon, New Mexico, and New York. Some details of each program are provided below.
Map 1
States with Existing Weight-Distance Fee (2024)
Connecticut Highway Use Fee
Connecticut adopted a weight-distance fee in 2023. Described in statute as a highway use fee, Connecticut requires trucking companies that operate heavy tractor-trailer combinations (vehicle class 8 and greater) within the state to register with the state Department of Revenue Services and pay the fee on a quarterly basis.
The fee is determined by the loaded weight and mileage that each truck travels within the state. The per-mile rate ranges from 2.5 cents per mile to 17.5 cents per mile, depending on the loaded weight during each trip.
Connecticut’s Highway Use Fee is projected to provide $65 million in 2024, increasing the state transportation fund by about three percent.
Kentucky Weight Distance Tax
Kentucky has had a weight-distance fee since 1996. Kentucky’s fee schedule is relatively simple; any truck with a “combined licensed weight” of greater than 60,000 pounds must pay 2.85 cents per mile, regardless of the loaded weight of those miles.
Trucking companies that operate trucks licensed to carry more than 60,000 pounds must register with the state and submit the per-mile fee quarterly to the state Department of Revenue. Kentucky’s truck weight-mileage fee provided about $90 million in revenue in 2023, about five percent of the state road fund.
Oregon Weight-Mile Tax
Oregon has had some form of truck weight-distance fee since 1933. Currently, all trucks with a maximum operating weight of over 26,000 pounds must submit fees based on the potential maximum operating weight of the truck and miles traveled in the state. For trucks with a maximum operating weight of greater than 80,000 pounds the per-mile fee is based on both the maximum operating weight and the number of axles.
Oregon’s weight-distance fee ranges from 7.64 cents per mile to 24.11 cents per mile. While this is much higher than the per-mile rate in other states, trucks that are subject to Oregon’s weight-mile tax are exempt from state fuel taxes. Oregon adopted this approach both to derive revenue relative to the road damage that trucks impose, and to incentivize trucking companies to adopt weight-axle combinations that impose less pavement damage.
The weight-mile tax contributed about $470 million in revenue in 2023, about 18 percent of the state transportation fund.
In addition to the weight-distance fee paid to the state, trucking companies that operate within the city of Portland must pay a “heavy vehicle use tax” annually to the city equal to at least $100 or 1.3 percent of the state weight-mile tax (whichever is greater), regardless of miles traveled within the city limits. Carriers whose mileage traveled within Portland is greater than one percent of the total mileage traveled within the state must pay a use tax to the city which is 2.6 percent of the state weight-mile tax. This tax provides about $2.6 million per year in road funding to Portland.
New Mexico Weight Distance Tax
New Mexico adopted a weight-distance fee in 1988 and last updated the fee schedule in 2004. Trucks with a gross vehicle weight greater than 26,000 pounds pay a per-mile fee ranging from 1.101 cents to 2.919 cents. Trucks that operate without a load for at least 45 percent of miles traveled within the state are eligible for a 33 percent rate reduction. Trucks that operate exclusively within 10 miles of the border with Mexico are exempt.
New Mexico’s weight-distance fee provided about $110 million in revenue in 2023, about five percent of the state road fund.
New York Highway Use Tax
New York State adopted a truck weight-distance fee in 1951. The current incarnation of New York’s Highway Use tax is relatively complicated. Payment of the fee is generally required for all trucks with a gross vehicle weight of 18,000 pounds or more. Truckers have multiple options for how to calculate and submit their fees, which range from 0.56 cents per mile for an unloaded tractor to 5.74 cents per mile for an 80,000-pound combination truck (with additional fees for trucks weighing more than 80,000 pounds). Miles traveled on New York’s tolled highways are exempt from the fee.
New York’s weight-distance fee provided about $144 million in 2023. This is about six percent of the state’s road funding revenue.
Potential for a Truck Weight-Distance Fee in Michigan
A review of existing state weight-distance fees shows many differences between approaches. While state weight-distance fees remain relatively rare, a few states have successfully used them to derive road revenue for decades. Oregon, for example, has had some form of weight-distance fee since 1933 and currently derives about 18 percent of its state road revenue from the fee. Oregon is unique because trucks that pay the weight-distance fee are exempt from fuel taxes. States that impose the fee, in addition to fuel taxes, derive about three to six percent of state road funding from the fee.
In 2022, trucks drove about 6.45 billion miles in Michigan. Not all of these miles would necessarily be driven by vehicles subject to a weight-distance fee. For example, most states exempt certain vehicles, such as lighter trucks, recreational vehicles, buses, etc. Assuming that 80 percent of truck mileage would be subject to a fee (5.16 billion miles), a one-cent fee applied to each mile would derive over $50 million each year in revenue. An average fee of three cents per mile (similar to Kentucky’s flat rate) would raise about $160 million annually, nearly a four percent increase in state-restricted road funding revenue.
Further, a truck weight-distance fee can improve the extent to which road users pay their ‘fair share’ of road funding. Trucks are responsible for the majority of pavement damage. It has long been established that revenue derived from heavy trucks typically is not sufficient to cover the costs imposed on the road system.
A weight-distance fee can also be used to understand better the costs that truck traffic imposes to roads on a segment-by-segment basis. Connecticut, for example, requires trucking companies to report loaded weights and routes taken for every trip covered by the weight-distance fee. As previously written, state revenue sharing for road funding could be made more effective by considering factors such as truck traffic. The data collected through a weight-distance fee could be used to rationalize Michigan’s road funding distribution formula. Additionally, road agencies, from MDOT to local municipalities, could use this data to design and maintain road segments subject to heavy truck traffic more effectively.
As shown in Map 2, Michigan’s truck traffic is not evenly distributed. Map 2 shows commercial average annual daily traffic (CAADT) – the estimated mean daily traffic volume of trucks (vehicle classes 4 through 13) that used a road in 2023.
MDOT and other road agencies use data such as average annual daily truck traffic to inform design and investment decisions. However, this data does not include the loaded weights of trucks. Some roads and streets on specific freight routes may be subject to additional costs not captured by any existing data. Adopting a truck weight-distance program that includes reporting such data would allow Michigan not only to increase revenue but also enable the distribution of that revenue equitably based on the costs imposed.
Map 2
Commercial Average Annual Daily Traffic (CAADT), 2023
(Trucks Class 4 and Higher)
Next Step: A State-led Study
Similar to how it has approached studying highway tolling and road usage charges (RUC), the Michigan Legislature should fund a study on the potential of adopting a truck weight-distance fee in Michigan. This revenue option should be considered carefully with sufficient information. A state-funded study should include the following elements:
Road User Cost Allocation Study
The USDOT and some states (e.g., Indiana, North Carolina, Texas, and Oregon) have assessed the costs imposed on roads and bridges by various vehicle classes. Despite decades-long concerns over the impact of Michigan’s unique truck weight laws, the state has never conducted such a study. Any exploration of truck weight-distance fees in Michigan should include such a study as to inform appropriate and equitable setting of fees. Even if the legislature chooses not to pursue weight-distance fees as a revenue option, a road user cost allocation study would provide valuable data on the statewide public road network that would be valuable for planning, programming, and operation of the transportation system.
Evaluation of Multiple Fee Structures
A weight-mileage fee may be as simple as a flat per-mile fee, as is the case in Kentucky. However, it is more typical to adopt a graduated fee schedule based on truck weight. The fee schedule may be rather complex – incorporating factors like vehicle class and number of axles. Further, most states have adopted special rates or exemptions for certain vehicles, such as buses, government-owned trucks, alternative-fuel trucks, and trucks used for agriculture. A study on the adoption of a truck weight-distance fee should assess the revenue generating potential and equity of multiple fee structures.
Economic Impact Assessment
Exploration of a truck weight-distance fee should consider the impacts on the trucking industry and the economic activities that the industry supports. A weight-distance fee would increase the cost of operating many trucks in Michigan. These costs would likely be passed on to the customers of truck operators and, ultimately, Michigan consumers. An economic impact assessment of multiple fee schedules would help ensure that the benefits of the revenue derived from the program justify any costs imposed on industry and consumers.
Potential Unintended Consequences
A weight-distance fee study should include thoughtful policy analysis to identify potential unintended consequences of a new fee. Certain fee schedules could unfairly impose costs on certain carriers. For example, Connecticut’s Highway Use Fee has been applied only to trucks classified as Class 8 or higher; this had the consequence of benefitting companies that use Class 7 vehicles that are of similar weights and used for similar purposes. Michigan must also take care to adopt a fee that is applied fairly as not to violate the dormant commerce clause. Idaho imposed a weight distance fee that was struck down in court, as it was found to unfairly disadvantage interstate carriers. Other concerns include fee evasion; complicated administrative requirements or weak enforcement mechanisms could promote non-payment by some carriers.
Conclusion
Michigan is continually seeking new revenue to ‘fix the damn roads.’ A truck weight-distance fee is a proven tool to increase road funding and to do so equitably, as it would promote heavy trucks paying their ‘fair share’ of costs proportional to the damage done to roadway pavements. The revenue from a truck-weight fee could further be directed to the roads that carry the most loaded truck weight, improving maintenance and asset management of the transportation system.
Michigan’s legislature should direct and fund a study to evaluate the potential of a truck weight-distance fee. The study should evaluate multiple fee schedules with subsequent revenue-generating potential, as well as costs and benefits to Michigan’s economy and residents. Even if the legislature chooses not to pursue such an option, a road user cost allocation assessment could benefit the legislature and road agencies through better understanding of the costs imposed on the system by heavy trucks.
The successful adoption of a truck weight-distance fee would provide a reliable and equitable source of road funding.
Related Posts
Michigan’s Transportation Funding Law Hinders Efficient Use of Road Funding (August 2024)
Michigan Ranks 30th in Road Funding Assessment (June 2024)
Michigan’s Highway Funding is Undermined by Recent Construction Cost Inflation (May 2024)
Road Usage Charging is a Fraught Strategy to Fund Michigan’s Roads (January 2023)
The Michigan Tolling Study Relies on Questionable Assumptions (February 2023)
Fix the Damn Road Funding Formula (February 2022)

Michigan Could Increase Road Funding with a Truck Weight-Distance Fee

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In a Nutshell
Parents in the United States report higher levels of stress than non-parents, even when controlling for factors like income and race.
Stress has significant negative health effects on both parents and their children, but it also has downstream consequences for society.
Many different policies are likely to contribute to a reduction in parenting stress, including ones that decrease financial burdens, improve flexibility in taking time off, promote social connection, and improve mental health care.
In late August, the U.S. Surgeon General published an advisory highlighting the mental health challenges facing parents across the country and calling for better support for parents, caregivers, and families. The reality that parents experience higher levels of stress than non-parents is not new, but the share of parents reporting stress has been on the rise in the last few years. This has drawn attention to a significant public health problem affecting individuals and the wider public.
High levels of parenting stress should be of particular interest to policymakers in Michigan. This stress has direct health impacts on parents and caregivers, frequently leads to health and development problems for children, and negatively affects the broader economy through lost productivity and higher health care utilization. All of these consequences are worth addressing in the present, but they are also relevant in the context of Michigan’s stagnant population growth. From 2000 to 2020, only one state’s population grew more slowly than Michigan’s and projections show that the state’s demographic issues are likely to continue over the next few decades. If Michigan aims to reverse this trajectory, it will need people – both existing residents and newcomers – to start and grow families in the state. Making parenting less stressful is central to this goal, as the factors that contribute to parenting stress are closely aligned with the reasons people offer about why they are hesitant to have children.
While part of the solution is likely to be shifting cultural norms and values, policymakers have a variety of different options to enact policies that are likely to decrease the stress felt by parents. Among these options are ones that decrease financial burdens of parenthood, improve flexibility in taking time off, promote social connection, and improve mental health care. No single policy is likely to solve the problem, but making the reduction of parenting stress a consideration in many different policy areas can lead to progress.
American Parents are Stressed Out
Around 60 million parents in the United States are living with children under 18, and while a host of socioeconomic and demographic factors beyond having children contribute to the stress felt by parents, it is clear that parents are under more stress than their non-parent counterparts. The advisory cites an American Psychological Association survey in which 33 percent of parents reported high levels of stress in 2023, compared to 20 percent of non-parents. Over the last decade, 15 to 20 percent of non-parents have reported high stress levels, while 24 to 34 percent of parents have reported high stress levels.Other survey data supports this finding. The Centers of Disease Control and Prevention’s (CDC) monthly Behavioral Risk Factor Surveillance System survey found that 42 percent of people in households with children reported high stress levels in 2023, compared to 32 percent in households without children. Interestingly, the CDC data shows stress levels are not affected by the number of children in the household. Stress is higher among parents than non-parents across all income levels, although the gap narrows for the highest earning households, indicating that poverty plays a key role.
Share Reporting Stress, by Households With and Without Children, by Income Group, 2023
Source: BRFFS Data, CDC. https://www.cdc.gov/brfss/annual_data/annual_2023.html (Calculations and groupings by ParentData https://parentdata.org/are-parents-really-more-stressed/)
White and Black parents are more stressed than their non-parent counterparts, although the gap is slightly larger for White parents. Hispanic/Latino parents report slightly less stress than their non-parent counterparts. (Black and Hispanic/Latino respondents report higher levels of stress overall than their White counterparts in both the parent and non-parent categories.) The CDC’s “stress” question was new in 2023, but the survey has asked about poor mental health days for many years. This metric also shows parents with consistently worse mental health than non-parents, with a largely proportional uptick in the share of people in both categories reporting poor mental health over the last several years.
Stress is Bad for Individual Health and the Public
Stress, particularly prolonged stress, can have significant health effects, including anxiety, depression, digestive issues, headaches, muscle tension and pain, heart disease, heart attack, high blood pressure, stroke, sleep problems, weight gain, and memory and concentration impairment, and worse immune performance. Further, research consistently shows that children of parents with mental health conditions are at greater risk of depression, anxiety, and other mental health conditions. All of these negative health effects are individually undesirable, but also have downstream impacts on society through higher health care utilization, lost economic output, and crime, among other pathways. More broadly, one of the goals of civil society is the welfare of its people and it should be striving for good mental health as an end in and of itself, not just as a route to physical health and better productivity.
Parenting Stress is Worth Addressing
The idea that being a parent is stressful is certainly not a novel one. Along with the general caregiving demands and challenges, the Surgeon General calls attention to stressors such as “financial strain and economic instability, time demands, concerns about children’s health and safety, parental isolation and loneliness, difficulty managing technology and social media, and cultural pressures.” The impact of these stressors on parents is illustrated by their responses to more detailed survey questions. For instance, 48 percent of parents said their stress is completely overwhelming, compared to 26 percent of non-parents. Similarly, 41 percent of parents said most days they are so stressed that they cannot function, compared to just 20 percent of non-parents. Sixty-six percent of parents felt consumed by worries regarding money, while only 39 percent of non-parents said the same.
The stress of parenting is something worth reducing for the sake of those affected by the stress in the present, but it is also important to make sure that people do not opt out of becoming parents because of the stress and deleterious mental health impact. This is again important because of the downstream effects of Michigan’s stagnant population growth, but also because the state has an interest in people living fulfilling and meaningful lives. Policy and culture should be oriented around making these kinds of choices about what people want out of life and not only questions of whether they can handle or afford the costliness of parenthood. Michigan policymakers should be particularly attuned to these concerns, as the state’s population trajectory requires it to take every opportunity to do better than the national average over the next few decades.
Making Life Less Stressful on Parents
Reducing the stress felt by parents is a complicated social problem that cannot be easily solved with a couple of simple policy fixes, but policy change is part of the equation, as are efforts to shift cultural norms and values. The Surgeon General’s advisory points to a series of high-level goals that different stakeholders can pursue, including policymakers at all levels, employers, communities and schools, health and social service professionals, researchers, families and friends, and parents and caregivers.
Direct Policy Action
Policymakers can contribute to reducing parenting stress in several tangible ways, according to the advisory. One stream of policy options for states includes promoting and expanding funding for programs that support parents and caregivers and their families. Potential policies include increased funding for childcare, larger child tax credits, universal pre-kindergarten, and early childhood education programs, among others. This set of policy options focuses on the underlying financial stressors of parenthood, although broader policies that foster better economic outcomes for everyone would also put a dent in the financial stress felt by parents.
Another policy option is paid family and medical leave, both for new parent leave and for traditional sick time. The time after birth can be incredibly stressful and demanding, but the difficulty of juggling illness and work during the early years of a child’s life also takes its toll. Certainly, the new parent component of the policy would be specific to parents, but broader sick leave policy impacts the rest of the population as well. The advisory puts forward the idea of a national program, but many states have adopted their own versions.
Building social infrastructure that fosters community support is a way in which local government policymakers can contribute. Parenthood is often isolating, and it can be difficult to identify sources of support. Better and more accessible public places and community programs that allow for parents to make connections and receive support are a key component of parental well-being.
Finally, policymakers have a role in ensuring parents have access to quality mental health care. This includes ensuring access to health care coverage, establishing mental health coverage parity, and developing a large enough mental health care workforce to meet the demands of the population.
Michigan has not been ignoring these important issues, but addressing parenting stress through policy requires ongoing and continued efforts. In recent years, the state has made childcare investments, expanded tax credits, and added funding to work towards universal pre-K, although much of these efforts will require reauthorization and continued investment. The state is also on the cusp of implementing an expanded sick leave law, although new parent leave – which is guaranteed in about one-third of states – remains at the discretion of employers in Michigan. Overall, Michigan has reasonably high health care coverage rates compared to the national average, but many people remain without coverage. Mental health parity legislation was recently enacted, although the full benefits will require continued efforts to grow the workforce in the state.
In addition to the direct policy levers, policymakers can also play a role in supporting other stakeholders in their efforts to alleviate parenting stress. Short of mandating new parent leave, the state may be able to foster or incentivize businesses to adopt policies that make taking leave easier and more affordable. Similarly, engaging in policies that push employers to offer more generous health care benefits could be an effective tool. Community organizations and schools offer support to parents in many ways, and policymakers can provide funding and other assistance for these efforts. The government may also be able to make it easier for health and social service providers to address parent mental health. It is also likely that policymakers can promote better research through funding and improved data collection initiatives.
The question for policymakers should be less about the exact policy changes or initiatives and more about considering all of the different avenues to making a dent in the problem of parenting stress. Many of the options detailed above have independent constituencies. Universal pre-K is talked about as education policy, but it has an impact on parent mental health. Tax credits are thought of as economic growth tools but are also about parent mental health. In places where policy can make a difference on the stress levels faced by parents, it should be part of the cost-benefit analysis.
Shifting Norms and Values
While parenting stress is something that can be addressed with tangible policies, cultural norms and values are also a major factor. Policy change can often shape culture, but it should not be lost on policymakers or the broader public that some of the work will need to focus on shaping our understanding of parenthood and the role of parents in society.
A society that values the time spent parenting equally to the time spent working, talks openly about the challenges of parenting, and seeks to foster a connection among isolated parents is likely one that will see lower levels of parenting stress. Those efforts are not necessarily things that can be achieved with direct policy actions, but policymakers and those working on these issues certainly have the ability to set the tone about norms and values and should think about how they can shape the way the public sees parenthood.
Conclusion
Parents in the United States are under more stress than similarly situated non-parents. This is not a new problem, but increased levels of stress and alarming responses to surveys about parent mental health have led to increased attention to the problem.
Policymakers and the public should prioritize reducing parenting stress, not just for the well-being of parents and caregivers, but also for the downstream effects that this stress can have on individuals and society. This includes the potential that parenting stress will decrease the number of people who choose to become parents, which should be a significant concern to those concerned about Michigan’s stagnant population growth.
Policy is only part of the solution, but many avenues exist toward reducing parenting stress, including policies that make the economics of parenthood easier, increase the availability of time off, promote better and more accessible mental health care, and aid in social connection. While it is not the government’s role to push people into parenthood, we should strive for a society that makes the decision to become parents about individual preferences rather than the structural impediments.

Reducing the Stresses of Parenting Belongs on the Policy Agenda

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In a Nutshell:
The primary sources of revenue for Michigan’s cities, villages, townships, and counties – property tax revenue and state revenue sharing payments – do not offer the growth and stability needed to address local governments’ future fiscal needs.
A proposal to dedicate future state sales tax revenues for state revenue sharing payments may assure local governments in the short-term, but such earmarks erode the efficacy of the state’s annual budgetary process.
To address sustainable funding for Michigan’s local governments, state policymakers should consider expanding local government’s revenue-raising alternatives by exploring local-option taxes.
During the 2023-24 legislative session, Michigan’s local government representatives have been advocating to secure annual state discretionary funding for payments to counties, cities, townships, and villages in a new Revenue Sharing Trust Fund.
Cities, villages, and townships are guaranteed a portion of the state’s annual sales tax revenue. And while not consistently, the state legislature has also granted local governments (counties included) additional revenue sharing funding through an appropriation in the annual state budget usually referred to as statutory state revenue sharing. While these discretionary payments[1] are not protected, there have been past efforts to shield these payments from annual cuts.
After struggling to stabilize finances and raise sufficient revenue to meet ongoing demands for local services, local governments are looking for ways to address their ongoing challenge for sustainable funding. Earmarking state sales tax revenues for all unrestricted state revenue sharing payments is one option, but there may be other revenue raising alternatives to explore at either the state or local level, such as local-option taxes. Evaluating these alternative approaches to sustainable funding for local governments is complex because of the interplay between Michigan’s constitutional tax and revenue limitations. It is important to assess these options thoroughly as their impact on both state and local finances may not be so evident.
[1] From 1971 until December 2002, discretionary revenue sharing payments were to be budgeted and distributed based on a statutory formula. However, that formula sunset in 2007. The distribution formula was updated in 1998. Its application was short-lived when across-the-board cuts to all local governments’ payments were made during and after the 2002 recession. A new formula, referred to as the Economic Vitality Incentive Program, was put into place in FY 2012, but by FY 2015, this program too was abandoned. After FY 2015, the total funding and distribution for state revenue sharing payments continued to change to what it is today, an annual appropriation that includes a specific distribution schedule adopted in each year’s state budget.
Constraints on Revenue Raising Options for Michigan’s Local Governments
Property tax revenues and state revenue sharing payments are the primary sources of revenue for Michigan’s local governments.[2] With state revenue sharing cuts over the past decade, local governments have had to rely even more heavily on property tax revenues to fund public services. However, given Michigan’s constitutional and statutory limitations on tax levies, the tax rate, and the tax base, local governments have struggled to maintain sufficient operating balances to pay for the services they provide.
A levy limit restricts how much total tax revenue a government can collect annually. A tax rate limit restricts the millage rate that a government can levy. An assessment limit caps how much the value of property (the tax base) can rise from one year to the next. Michigan local governments face all three limitations. These limitations, coupled with the challenge of gaining voter approval for tax increases, leave local governments with few options to replace local revenue when faced when state revenue sharing payments are not what were anticipated.
State policymakers have historically considered the purpose of revenue sharing to both compensate local governments for revenues lost when local taxes were either repealed or preempted, and to also take advantage of efficiencies in administration and collection of taxes.
Local governments currently face both constitutional and statutory restrictions on local revenue options. Given this history, it seems that local governments’ quandary, is to either continue to advocate for stable revenue sharing payments, request greater restricted state aid for services, or to reduce their costs of providing expected or required local services.
[2] While local governments do have authorization to levy other excise taxes and a local income tax, here we focus solely on property taxes due to their overriding significance in local government revenues.
Local Governments Dependence on State Revenue Sharing
Revenue sharing has been a part of Michigan’s fiscal history since 1933. Initially, unrestricted payments were made to local governments to compensate for tax revenues lost when certain types of property were exempted from the tax base. During the past several decades, Michigan’s revenue sharing program has also attempted to distribute payments by addressing the variable taxing capacities and service demands across the state’s local governments.
Cities, villages, and townships annually receive 10 percent of the total state sales tax revenues[3] on a per-capita basis; Michigan counties do not receive any constitutional revenue sharing payments. In addition, through the annual budget process, counties, cities, villages, and townships receive statutory funding.
Discretionary state revenue sharing payments – statutory revenue sharing – have not been consistent over time due to fluctuating state revenues and other pressures on the state’s annual budget. In addition, in some years, due to overall program funding variability, programmatic changes, and fiscal management requirements, some local units became ineligible for statutory state revenue sharing payments entirely.
In the budget adopted for Fiscal Year(FY) 2025, state revenue sharing payments will be increased 11.5 percent overall. A new three-factor distribution formula was adopted to address inequities in the tax base and service delivery burden across the state for a portion of the statutory payments.
Michigan’s local governments’ dependence on state revenue sharing payments may seem counterintuitive given the state’s tradition of home rule. While local governments are authorized to levy certain excise taxes, property taxes, and income taxes, the constraints imposed on those taxes challenge the capacity of some local governments to raise sufficient revenue to fund the local services they provide. Economists have noted that “Michigan has a very centralized government structure for collecting revenue, but a very decentralized structure for providing services.[4]
Counties, cities, villages, and townships receive state payments for both specific programs and for general revenue support. State aid payments for court administration and road funding are governed by specific formulas and are restricted for those uses. General revenue sharing payments – both constitutional and statutory – are provided to local payments on an unrestricted basis. Local governments rely on these payments for general operations and local services. It is no surprise that local governments seek to ensure and stabilize state revenue sharing payments for the future, especially given the few options available to raise revenues locally for funding local services.
Proposed Revenue Sharing Trust Fund
A proposal currently advocated by the Michigan’s local government associations would establish a new “Revenue Sharing Trust Fund” to receive dedicated revenues from the state sales tax in addition to those provided by the Michigan Constitution. Smarting from those years where anticipated annual state revenue sharing payments were either cut or reduced, local governments are seeking to earmark state sales tax revenues to fund ongoing annual revenue sharing payments at current or enhanced levels. By segregating additional sales tax revenues in a statutorily established trust fund, local governments hope to secure future funding levels for revenue sharing payments and preempt a future legislature from reducing those payments.
In 1998 and in years following, the Legislature adopted revenue sharing distribution formulae that simulated an earmark. However, the total overall line-item revenue sharing appropriation could still vary, resulting in each local government’s payment being lower or higher than before. The current legislative proposals include establishing the trust fund, assigning state sales tax revenues, and offering a distribution schedule to counties, cities, villages, and townships. The assignment of tax revenue has its appeal, but such earmarks also carry some risk.
Policymakers have long struggled with the dilemma posed by earmarking state revenues. Linking a budgetary expenditure to a specific program can demonstrate the direct benefit of a particular tax or user fee. And by dedicating revenues for a specific purpose, earmarks can bring stability to program funding. On the other hand, earmarks erode legislators’ effectiveness in the annual budgetary process and stymie the open deliberation of budgetary allocations during budget development. Finally, although improbable, in the case of discretionary revenue sharing, the act of earmarking a source of funding could discourage future fluctuations in payments based on political whims.
From a local government’s perspective, a confirmed, unrestricted revenue sharing payment would aid long-term budgeting decisions. With a statutory earmark as proposed, a local government could see greater consistency in their state revenue sharing payment. A statutory earmark will ultimately not, however, prevent cuts to local funding in challenging economic times.
Michigan is one of few states that relies heavily on earmarks. In FY 2024, over 65 percent of Michigan’s tax revenues were designated for specific expenditures. State sales tax revenues are already subject to significant earmarking, most notably for state school aid and constitutional revenue sharing payments.
Whether state earmarks for revenue sharing will address the actual on-going issue for Michigan local governments is unclear. Local government policymakers should consider long-term revenue-raising options alongside the trust fund proposal.
[3] Michigan’s Constitution states that cities, villages, and townships will receive 15 percent of the state sales tax levied at four percent of the state sales tax; 100 percent of the additional two percent of the state sales tax levied is dedicated to the State School Aid Fund.
[4] Michigan at the Millennium – A Benchmark and Analysis of Its Fiscal and Economic Structure – Fiscal Relations Among the Federal Government, State Government, and Local Governments, in Michigan (Ronald C. Fisher and Jeffery P. Guilfoyle), p. 663.
Local-Option Taxes
Pursuing a dedicated trust fund to stabilize and secure future state revenues sharing payments is not an unreasonable strategy for Michigan’s local governments. However, the drawbacks to earmarking state revenues from a state fiscal management perspective are significant. Local governments should consider some other options to expand their revenue raising options as well. Addressing the constitutional and statutory tax limitations to allow local governments to increase their property tax rates is one alternative. This would be a heavy political lift, however, especially with uncertain economic times ahead.
Another alternative is to diversify the revenue-raising choices available to local governments by authorizing a greater array of local-option taxes. We offered a detailed review of local-option taxes in the report, Diversifying Local-Source Revenue Options in Michigan. The report identifies what local-option taxes are currently available to local governments, such as a local city income tax and tourism-related taxes for cities and counties. While acknowledging the potential administrative burden and jurisdictional economic disparities that can occur with local-option taxes, the report recommends that with appropriate structuring of such tax policies, local-option taxes offer a desirable revenue-raising opportunity for local governments that captures local economic activity and gives agency to their own residents to determine the level of services they wish to receive. Locally-levied taxes would reduce a local government’s reliance on property taxes and state revenue sharing. The menu of local-option taxes could include taxes on retail sales, accommodations, alcohol, transportation fuels, gaming, etc., for example. Each option should be evaluated to determine its efficacy and legal landscape as different taxes may be more appropriate than others in particular jurisdictions.
A Longer-term Resolution
The issues facing local governments are many and the challenge of securing a stable, predictable level of funding for the services they provide is not going away soon. We can assume that there will be ongoing pressure to maintain funding levels for local government given the state’s existing emphasis on state revenue sharing and local property taxes as the major sources of revenue for local governments. And there is no certainty that a future legislature facing difficult choices in tough economic times will not dip into a dedicated fund such as a Revenue Sharing Trust Fund for pressing priorities. It has happened before.
As today’s state legislators deliberate the advantages and disadvantages of a Revenue Sharing Trust Fund, they should also consider alternative sources of sustainable funding for local government. A dedicated trust fund will not resolve the long-standing dilemma of ensuring Michigan’s local governments are adequately funded to provide the services expected. It is time we explored local-option taxes to diversify local government revenue-raising opportunities in the future.

Sustainable Funding For Local Governments

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In a Nutshell
Federal Title I funding might appear progressive and equitable, but there remains substantial variation in the amount of per-student dollars that similarly-situated districts receive.
Michigan policymakers have no control over how the federal program operates and splits funds among the state’s 840 individual local school districts, but they do control other funding streams that can be used to address the inequities inherent in Title I.
Michigan lawmakers should address what Congress has gotten wrong over the past six decades and prioritize state budget resources to partially equalize the per-student allocations dictated by the federal formula.
This school year, the federal government will direct nearly a half billion dollars to Michigan public schools to address the learning needs of children from low-income backgrounds. But, the federal Title I program makes little effort to ensure that ALL low-income students are treated fairly. The federal funding formula results in huge per-student inequities, even among school districts that educate similar student populations. This leaves some schools under-resourced when it comes to serving Michigan’s highest-need students.
To date, Michigan policymakers have been reluctant to use state funding to address the inherent inequities in the distribution of these federal resources. That should change. Lawmakers should look to use some of the recent increases in state “at-risk” funding to at least partially equalize the per-student allocations dictated by federal law.
Federal Title I Drives Wide Per-pupil Funding Variations
Nearly six decades ago, as part of his “War on Poverty”, President Lyndon B. Johnson signed the Elementary and Secondary Education Act (ESEA), the main federal K-12 education law. Since its enactment in 1965, Title I of ESEA has served as the primary source of federal aid to schools with high concentrations of children from low-income families with the goal of enabling these students to meet state achievement standards. Michigan public school districts, both traditional and charter schools, will share in an estimated $482 million in Title I funding for the 2024-25 school year.
Like other federal funding streams flowing to public K-12 schools (e.g., special education, school meals), Title I funds are distributed to states, then to local school districts, and finally, to individual schools to provide services to low-income students. Annual state and district-level allocation amounts are based on Congressional appropriations and determined through multiple clunky, complex, and complicated formulas, making it one of the most difficult school funding streams to understand.
Initially, Title I funding was provided to states and districts through a single formula (Basic Grant); however, over time Congress created three more formulas, each with its own federal appropriation amount and unique allocation factors. These modifications recognized that the initial formula insufficiently targeted poverty as originally intended and aimed to improve support for low-income students by directing additional funding to school districts with the greatest need. However, most evaluations of the 60-year-old federal education program demonstrate that the subsequent formula changes have yet to do much to ensure public schools are equitably resourced. Several national studies have concluded that Title I funds are not distributed equitably across districts and, in many instances, across the individual schools operated by the same district.
Today, Title I funding inequities are clearly apparent across Michigan districts. The table below presents estimated 2024-25 Title I allocation amounts for each economically disadvantaged student enrolled across districts with different concentrations of poverty. Districts are grouped into “bands” based on their opportunity index, basically the percentage of students identified as “economically disadvantaged” (ED) in state law. Using Michigan’s opportunity index for this district-by-district analysis is appropriate because one objective of the Title I formula is to direct more dollars to districts and schools with higher concentrations of student poverty.
Estimated 2024-25 Title I District Per-student Funding by Opportunity Index
Opportunity Index Band
% of District Students Considered Economically Disadvantaged (ED)
Median (per ED student)
Minimum (per ED student)
Maximum (per ED student)
1
0 to 19.9%
$211
$103
$571
2
20% to 43.9%
$206
$78
$2,811
3
44% to 58.9%
$406
$83
$4,276
4
59% to 72.9%
$504
$141
$7,010
5
73% to 84.9%
$559
$25
$2,848
6
85% and greater
$621
$17
$5,501
It is generally the case that districts with higher percentages of low-income students receive larger per-student allocations (table above). Across all Michigan districts, the median amount of Title I funding increases as the concentration of poverty increases. This suggests that funding is distributed equitably as districts with larger concentrations of high-need students are receiving more money. For this school year, a typical low-poverty Michigan district (band 1) will receive $211 per student in Title I funds, compared to $621 per student for a typical high-poverty district (band 6). Overall, the median per-student funding in the highest-poverty districts is almost three times that of the lowest-poverty districts.
However, while Title I funding might appear progressive and equitable, similarly -situated districts receive substantially different amounts of per-student funding. This is a particular criticism of the Title I program and how the various funding formulas operate together to produce inequities. It fails to ensure that ALL high-poverty districts and schools are equitably resourced.
This is clear from the wildly divergent funding ranges across several subgroups of Michigan districts. Take for example two similar-sized districts (about 3,000 students) with nearly the same student demographics from the highest poverty band. Flint’s Title I allocation is estimated to be $5,501 per student, while the Muskegon Heights district will receive $1,111 per student. Flint’s poverty concentration is slightly higher (92 percent) than Muskegon Heights (89 percent), but it will receive nearly five times more Title I per-student funding.
To highlight this variability within Michigan’s highest poverty districts, the chart below is a scatterplot of Title I allocations for the 300 public school districts in bands 5 and 6 (districts with at least 73 percent ED students). Each dot represents a district’s estimated 2024-25 Title I funding (y-axis) and its percentage of ED students (x-axis), compared to the median amount of per-pupil funding ($600) for this cohort of districts (red line in chart).
Estimated 2024-25 Title I Per-student Funding for Band 5 and 6 Districts
Source: Michigan Department of Education, 2024-25 Program Allocations; CRC calculations
Districts with similar student demographics are receiving wildly different amounts of per-pupil funding under the Title I program. Further, these district-level disparities drive school-level funding disparities across districts. In several states, many schools with a low incidence of low-income students receive Title I funds, when at the same time there are schools with the highest concentrations of poverty (90 percent) in the state that do not receive any Title I funds. Nationwide, 1,188 schools with fewer than 10 percent of students from low-income families receive Title I funds, while 1,144 schools serving 90 percent or more students from low-income families do not.
These within-district inequities are present in Michigan too and Title I allocations may be to blame. Our previous research shows that districts are not allocating more resources per student to the schools that enroll higher percentages of low-income students. Just over one-half of the schools operated by the 15 largest “high-poverty” districts showed equitable per-pupil spending; meaning greater spending to reflect the higher concentrations of “at-risk” students relative to the parent district’s average.
Michigan Could Step Up to Address Title I’s Inequities
Discussions around Title I reforms to address funding inequities arise each time the main federal education law (ESEA) comes up for Congressional reauthorization, including the most recent reauthorization in 2015. Despite the many criticisms levied against it, there has been little appetite for major reforms to Title I. The lack of significant policy modifications over the decades has allowed Title I’s hard-wired funding inequities to persist. Unlike other school funding streams that allocate resources based on student enrollments, rigid minimum funding guarantees and several “hold harmless” provisions baked into Title I formulas prevent large decreases in district allocations from year to year.
Although Michigan policymakers have no control over how the federal Title I program operates and splits funds among the state’s 840 individual local school districts, they do have responsibility over the state’s school funding system. Generally, state leaders have direct control over the use and distribution of several streams of state and local funding (collectively, accounting for $9 of $10 spent by public schools yearly). Policymakers might want to consider tapping into some of these financial resources to address Title I’s shortcomings in future state budgets.
One area they should examine is the $1 billion School Aid Fund appropriation targeted to address the learning needs of students from low-income backgrounds. This is the same student population served by federal Title I. Districts receive supplemental “at-risk” dollars on top of their base per-pupil foundation grant ($9,608); however, unlike the Title I funding, these investments are shared among districts in a much more equitable manner. Recent state budgets doubled this appropriation from $500 million in the 2018-19 school year to $1 billion this school year, guaranteeing each district a minimum of $1,100 per economically disadvantaged student. Students attending the highest poverty districts (band 6 opportunity index) receive almost $1,500, one-third more than the minimum, to account for higher poverty concentration.
Unfortunately, these increased state investments were not made with an eye toward the existing Title I funding inequities. Policymakers should consider how they might make future adjustments to state “at-risk” distributions to partially account for the Title I shortcomings. This might involve re-programming how a portion of the current $1 billion is allocated among Michigan districts or earmarking all future “at-risk” increases to equalize per-student funding disparities through a combination of federal and state funds. The policy objective should be to ensure that every high-poverty district is guaranteed a minimum amount of combined federal Title I and state “at-risk” dollars for each student from a low-income background.
Historically, school funding discussions have centered on the role played by the base foundation allowance. Governor Whitmer and lawmakers made great fanfare in 2022 when one of the goals of Proposal A of 1994 was achieved with equal per-pupil foundation funding among all K-12 districts. However, for some districts, especially those with high percentages of students from low-income households, the foundation grant is only one part of the general school budget. The state “at-risk” funding and the federal Title I dollars make up significant proportions of these districts’ resource base. It is significant that inequities in Title I distributions affect overall amounts of resources for equally situated districts and school buildings.
Michigan lawmakers should address what Congress has gotten wrong over the past six decades with the distribution of Title I funds and guarantee that every student is financially supported at more meaningful levels. Moving forward, lawmakers should prioritize state budget resources to partially equalize the per-student allocations dictated by the federal formula.

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