The funding and operation of Michigan's K-12 public school system was substantially changed in March 1994, with voter approval of a constitutional amendment and legislative adoption of 24 implementing state statutes. The comprehensive school funding proposal substantially reduced local property taxes; increased, and in some cases decreased, the tax rate of selected state taxes; established new state taxes; and addressed school quality improvement concerns. The reform also provided for the creation of charter schools. The reform measures increased the state's contribution for school funding, reduced the local share (property taxes), and guaranteed a minimum per pupil funding for each of Michigan's 557 public school districts. The success or failure of the enacted reform measures has yet to be determined. Michigan is currently experiencing above average economic growth; thus, state revenue collections have exceeded expectations, creating a small surplus for the school funding program. A revenue shortfall is forecast for the 1996-97 school year, so it is likely that guaranteed funding commitments for K-12 education will result in reductions in other state budget areas. While the new school funding distribution formula closes the funding gap between the highest- and lowest-spending school districts from $7,600 per pupil to $6,200, the funding gap will continue to exist. (TD)