Bonds, Millages, and the November Ballot: Breaking Down School Funding

When it comes to public school funding, you'll quickly find that it is a complicated financial maze. Trying to understand it all can be overwhelming. Here in Rockford, the 2025 bond proposal has further muddied the current conversation. Didn't we just vote on school funding last year? Why are we voting on funding again this year? What's the difference?

Knowing all this, now feels like a good time to address some of this confusion so residents can make an informed vote on the upcoming Non-Homestead Operating Millage on their November 3 ballot.

Let's break it down.

A Brief Overview of School Funding Sources

The primary sources of public school funding are taxes from the state, taxes from the federal government, and taxes from local communities.¹ For the purposes of this post, we are going to focus at a high level on the local component of school funding.

At the local level, school districts commonly rely on millages and bonds to help fund the education of children who reside in their districts.²

What is a Millage?

Simply stated, a millage is a property tax. In Michigan, property tax rates are expressed in "mills." One mill equals $1 for every $1,000 of a property's taxable (or assessed) value.³

There are different types of millages you may see a local school district use. This includes operating millages, debt millages, and sinking funds. The State of Michigan caps the maximum allowable tax rates for these millages and dictates how the money generated can be used. More on that below.

Let's Talk About Operating Millages First (the one we're voting on now)

If you're a returning visitor to Support RPS, you've probably seen several posts dedicated to operating millages. An operating millage is used to pay for the day-to-day operating expenses of a school district. This includes teacher and staff salaries, instructional materials, student programs, educational services, technology and operational support, and school safety initiatives and learning opportunities.⁵

State of Michigan law expects school districts to levy an 18-mill non-homestead operating millage to cover a portion of state school funding each year. Districts are restricted from asking for rates higher than that for this operating millage (see our Headlee explainer for details).⁶

Rockford Public Schools is asking voters on the Nov 3 ballot to approve this non-homestead operating millage for the next four years. You can learn more about this in our funding breakdown post. Wondering what "non-homestead" means? We cover that in our millage explainer.

Bonds and Debt Millages: Understanding How They Work Together

A bond is a financial tool that gives school districts access to funding for major, large-scale projects. A bond is similar in concept to a home mortgage. The school district borrows a large, lump sum of money to make significant investments or improvements, and then repays that money (with interest) over time.⁷

School districts are restricted by state law in the ways they can use bond money. School bond funds can only be used for long-term investments, like new construction, renovations, site improvements, technology, furniture and equipment, or property. Bond money cannot be used for day-to-day operating expenses like employee salaries, routine maintenance and repairs, and other similar expenses.⁸

Like millages, a school bond must be approved by voters. A school district prepares a bond proposal, which explains how much the district wants to borrow and how it plans to use the money. The State Constitution also requires that the bond must be approved by the Michigan Department of Treasury.⁹

If the bond proposal passes, bonds are then sold to investors and the money generated can be used to fund the projects outlined in the ballot proposal.⁷ The district then repays the debt, with interest, over a period of time.

This is where debt millages come into play. A debt millage is the local property tax that helps the school district repay the bond debt.⁸

When voters approve a school bond proposal, they give that school district approval to levy a local debt millage. Property owners in the school district pay the debt millage as part of their property taxes. That money is used to pay off the bond debt and accrued interest.

The amount that individual property owners pay for a debt millage is based on two factors: the taxable value of their property and the debt millage rate.

Sinking Fund: Another Type of Millage Worth Mentioning

You may have also heard this term come into play during conversations about school funding.

Broadly, the term sinking fund refers to a dedicated pool of money set aside gradually over time to pay future, anticipated expenses or debts.¹¹

School districts can ask voters to approve a school sinking fund, which is funded over time through the collection of a local millage (property tax). The State of Michigan dictates that school sinking funds must be spent on capital projects, not on general operating costs. The state also requires annual auditing by the district to ensure the funds are used in the way promised and comply with all state laws.

Sinking funds can be beneficial because they allow school districts to tackle some capital projects without getting a loan (and paying associated interest).¹²

However, the State of Michigan limits the size of a school district's sinking fund to a maximum of 3 mills, and it cannot exceed 10 years in length.¹³ Because of these restrictions, it can be difficult for school districts to use these for very large capital projects. RPS currently has a sinking fund at 0.4662 mills, which generates about $1 million per year. It was approved in May 2019 and expires in 2028.¹⁴

In Summary

Bonds and millages are both mechanisms that school districts use to generate funding to educate children in their districts. Both involve levying a local property tax and need to be approved by voters. It's easy to see why these terms are sometimes used interchangeably.

However, bonds and millages serve different purposes, as dictated by the State of Michigan. In the context of the upcoming election on November 3, it's important to remember the following: