School Issues How School Funding Works « Previous Next » Kim Kovelle • February 1, 2010 Add Comment Tweet Making ends meet in schools today is no simple feat. Money’s needed for teacher salaries, classroom supplies, utility bills and everything in between. Yet a cash crunch is steadily outpacing – if not outright trouncing – districts’ ability to pay. Why? Look to the source. School funding is a complicated beast. Just like any household, every school district has both a source of income – and a laundry list of bills that constantly need paying. The primary chunk of change comes from the state’s "School Aid Fund": mostly a handful of state taxes (the 6-percent "sales and use" tax leads the pack), with federal money and Michigan Lottery profits topping off the final 11 percent or so. The rest comes from local businesses (aka, "non-residential property taxes"). And there are caveats, of course: Certain funds must be used for specific types of expenses. Want to see a breakdown? Click on the image (above right) to for a flowchart of how the school money is chopped up in Michigan.