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Centralization of school finance in Michigan

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Author Info

  • Paul N. Courant

    (University of Michigan, Ann Arbor, Michigan)

  • Susanna Loeb

    (University of Michigan, Ann Arbor, Michigan)

Abstract

School finance reform in Michigan involved centralization (at the state level) of spending decisions about schools, a large tax shift (mostly from property to sales), and a small tax cut. The changes came about after two decades of failed attempts to reduce property taxes in the state, and were the immediate result of an unlikely piece of legislation that abolished all funding for public schools. Unlike most centralized systems, foundation grants in Michigan differ by district. Distributionally, the reforms favor residents of small, rural districts (whose spending was increased sharply). Residents of poorer urban areas, including Detroit, lost net income as a result of the reforms, as did residents of some of the richest suburbs in the state. Michigan permits a number of districts to supplement their foundation grants by limited amounts, a strategy that we argue may be a promising way of combining the efficiency benefits of local control with the equity benefits of foundation grant systems.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

Volume (Year): 16 (1997)
Issue (Month): 1 ()
Pages: 114-136

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Handle: RePEc:wly:jpamgt:v:16:y:1997:i:1:p:114-136

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Web page: http://www3.interscience.wiley.com/journal/34787/home

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References

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  1. Gramlich, Edward M & Rubinfeld, Daniel L, 1982. "Micro Estimates of Public Spending Demand Functions and Tests of the Tiebout and Median-Voter Hypotheses," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 536-60, June.
  2. Rubinfeld, Daniel L & Shapiro, Perry & Roberts, Judith, 1987. "Tiebout Bias and the Demand for Local Public Schooling," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 426-37, August.
  3. Silva, Fabio & Sonstelie, Jon, 1995. "Did Serrano Cause a Decline in School Spending," National Tax Journal, National Tax Association, vol. 48(2), pages 199-215, June.
  4. Downes, Thomas A. & Pogue, Thomas F., 1994. "Adjusting School Aid Formulas for the Higher Cost of Educating Disadvantaged Students," National Tax Journal, National Tax Association, vol. 47(1), pages 89-110, March.
  5. Courant, Paul N & Rubinfeld, Daniel L, 1987. "Tax Reform: Implications for the State-Local Public Sector," Journal of Economic Perspectives, American Economic Association, vol. 1(1), pages 87-100, Summer.
  6. Romer, Thomas & Rosenthal, Howard, 1979. "The elusive median voter," Journal of Public Economics, Elsevier, vol. 12(2), pages 143-170, October.
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Cited by:
  1. Joydeep Roy, 2004. "Impact of School Finance Reform on Resource Equalization and Academic Performance: Evidence from Michigan," Econometric Society 2004 North American Summer Meetings 425, Econometric Society.
  2. Chaudhary, Latika, 2009. "Education inputs, student performance and school finance reform in Michigan," Economics of Education Review, Elsevier, vol. 28(1), pages 90-98, February.
  3. Epple, Dennis & Ferreyra, Maria Marta, 2008. "School finance reform: Assessing general equilibrium effects," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1326-1351, June.
  4. T. A. Downes & D. N. Figlio, . "School Finance Reforms, Tax Limits, and Student Performance: Do Reforms Level Up or Dumb Down?," Institute for Research on Poverty Discussion Papers 1142-97, University of Wisconsin Institute for Research on Poverty.
  5. Dennis N. Epple & Maria Marta Ferreyra, 2007. "School Finance Reform: Assessing General Equilibrium Effects," NBER Working Papers 13524, National Bureau of Economic Research, Inc.
  6. Loeb, Susanna, 2001. "Estimating the effects of school finance reform: a framework for a federalist system," Journal of Public Economics, Elsevier, vol. 80(2), pages 225-247, May.
  7. Rajashri Chakrabarti & Joydeep Roy, 2010. "Effect of constraints on tiebout competition: evidence from the Michigan school finance reform," Staff Reports 471, Federal Reserve Bank of New York.
  8. Thomas A. Downes, 2002. "Do state governments matter?: a review of the evidence on the impact on educational outcomes of the changing role of the states in the financing of public education," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 47(Jun), pages 143-180.
  9. Loeb, Susanna & Socias, Miguel, 2004. "Federal contributions to high-income school districts: the use of tax deductions for funding K-12 education," Economics of Education Review, Elsevier, vol. 23(1), pages 85-94, February.

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