"A Dollar Isn’t a Dollar": Rethinking Equity in School Funding

Each year, Michigan lawmakers convene to finalize the state budget—a critical step that allows school districts and community institutions to plan, hire, and allocate resources before the July 1 fiscal deadline. When the process works, schools gain the stability they need to serve students effectively. But in years marked by political infighting or national disruption, the timeline slips—and with it, public confidence.

This year, political tension is especially high. President Trump has reignited federal efforts to reshape education policy, including threats to withhold funding from states whose ideological commitments differ from his administration’s. While proposals to eliminate the U.S. Department of Education have not advanced, they reflect broader efforts to weaken federal oversight. In Michigan, the state House recently passed an education budget that would dramatically alter the current structure—gutting portions of the Department of Education and overhauling the per-pupil funding formula. These moves signal a turning point in the long-standing debate over school funding: Does money actually make a difference in student outcomes?

For decades, education economists have asked this very question. One of the most well-known voices in the field, Erik Hanushek, argues that simply increasing funding does not guarantee better results. In his 2016 paper, “Does School Spending Matter? The New Literature on an Old Question,” Hanushek reviews research suggesting that funding increases—without systemic reforms—often fail to improve student achievement. This argument has become a mainstay among conservatives, particularly during the COVID-19 era, when schools received billions in emergency funding. Critics point to Michigan’s stagnant achievement scores—currently ranking 44th in the nation—as evidence that more money isn’t the answer.

While Hanushek’s concerns about efficiency are valid, the “money doesn’t matter” argument often misses the complexity of how school funding works—especially in states like Michigan. Michigan’s current funding system is rooted in Proposal A, passed in 1994. It was designed to reduce disparities between wealthy and poor districts by capping the role of local property taxes and establishing a statewide per-pupil funding model. On paper, this created a more equal system. In practice, it didn’t go far enough.

Districts with large populations of low-income students and students of color often have far greater needs—ranging from mental health support to multilingual instruction to trauma-informed care. But the funding system rarely accounts for these needs with adequate flexibility or additional resources. Instead, schools with higher burdens are expected to stretch every dollar further, while wealthier districts benefit from stronger tax bases, private fundraising, and less bureaucratic restriction.

At Edquity, our team often uses the phrase “a dollar isn’t a dollar” to explain this dynamic. Though per-pupil amounts may appear equal across districts, the value, flexibility, and impact of those dollars vary wildly depending on their source, restrictions, and local context. These disparities aren’t abstract—they shape everything from staffing and class sizes to extracurricular programs and building maintenance. A school in a high-need district may spend the same dollar on basic services like bus transportation or special education, while a wealthier district uses that same dollar for art, robotics, or smaller class sizes. In other words, equal inputs do not produce equal opportunities.

This disconnect is what makes the equity conversation so urgent. Equity means recognizing that students with greater needs require more support—not as a luxury, but as a condition for fairness. As one Michigan advocate put it, “Favor ain’t fair.” That is, meeting higher need with more investment is not favoritism—it’s justice.

Yet conversations about equity are often buried beneath jargon: “categorical aid,” “Section 31a,” “Title I,” “MDE guidance.” This creates barriers for parents, educators, and community members who want to understand—and influence—how funding decisions are made. Fortunately, advocates across the state are working to demystify school funding. Through podcasts, community briefings, town halls, and plain-language explainers, these efforts aim to shift power back to the people most affected by school budgets. When families understand how and why school dollars are distributed unevenly, they are better positioned to demand policies that respond to their students’ real needs.

Michigan’s school funding debate is not just about how much money is spent, but how wisely—and equitably—it’s allocated. While scholars like Hanushek rightly challenge us to ensure funding is used effectively, we must also examine the design of the funding system itself. Proposal A was a step toward fairness, but it is now outdated, inflexible, and ill-equipped to address today’s complex educational realities. The phrase “a dollar isn’t a dollar” captures the core truth of this debate: funding that appears equal can have vastly unequal impact. Michigan’s funding model must evolve beyond equality toward true equity—a system that invests based on need, not just enrollment. That means acknowledging historical disinvestment, eliminating bureaucratic obstacles, and empowering communities to understand and influence how dollars are spent.

Fairness in funding doesn’t mean giving every student the same. It means giving each student what they need to succeed—and building a system honest enough to admit that some students need more.