AG Nessel Applauds MSC Ruling in Taxpayers for Michigan Constitutional Government, et al v State of Michigan
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Agency: Attorney General

Media contact: Lynsey Mukomel 517-599-2746
Public inquiries: 517-335-7622

July 28, 2021

LANSING - Today the Michigan Supreme Court (MSC) ruled largely in favor of the State in a case that addressed Michigan's Headlee Amendment, which, in part, requires that roughly half of the State's spending from state revenue sources each year be paid as aid to local governments.

The minimum percentage required to satisfy Section 30 of the Headlee Amendment has been set at 48.97%.

Plaintiffs argued the State is shortchanging local governments because the State counts payments directed to school districts, including charter schools, pursuant to Proposal A of 1994, as well as spending for state-mandated local services, as part of that 48.97%.

The Court mostly sided with the State, holding, in significant part, that:
  1. State payments from Proposal A revenues paid to public schools count under Headlee Section 30 as state aid to local governments.
  2. State payments to Public School Academies (charter schools) are not necessarily payments to local units of government, although some charter schools may still qualify as local units of government. As a result, the Court remanded this question to the Court of Appeals for further review.
  3. State payments to local units of government to cover State mandates required by Headlee Section 29 also must be counted under Headlee Section 30.

"This ruling is a win for the people of this state," Attorney General Dana Nessel said. "Public school funding is about 25% of the State's annual budget, representing approximately $12-13 billion of state dollars each year. A significant portion of that annual funding was in question in this case - and could have resulted in higher taxes and/or fewer state-level services for Michigan's residents if the Court had determined the State was not providing enough money to local governments. This decision affirmed that the State's decades-long treatment of these public school funds was proper under our Constitution. This was a complicated issue that demanded the best advocates on behalf of Michigan and I am proud of the work done by my staff."

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The full opinion can be read here.

Additional case background can be found online here.

Oral arguments in the case were held in March. They can be viewed on MSC's YouTube page.


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