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Impact of School Finance Reform on Resource Equalization and Academic Performance: Evidence from Michigan

  • Joydeep Roy

    ()

    (IBO and Columbia University)

Michigan radically altered its school finance system in 1994. The new plan, called Proposal A, significantly increased state aid to the lowest-spending school districts and limited future increases in spending in the highest-spending ones, abolishing local discretion over school spending. I investigate the impact of Proposal A on the distribution of resources and educational outcomes. I analyze the differential effects on the lowest-spending and the highest-spending districts, highlighting the role of local discretion, which has so far been neglected in the literature. I also provide important evidence on the effect of spending on academic performance. Proposal A was quite successful in reducing interdistrict spending disparities. There was also a significant positive effect on student performance in the lowest-spending districts as measured in state tests. However, the constraints on future increases in spending may have had a negative effect on student performance in the highest-spending districts. © 2011 Association for Education Finance and Policy

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File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/EDFP_a_00030
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Article provided by MIT Press in its journal Education Finance and Policy.

Volume (Year): 6 (2011)
Issue (Month): 2 (April)
Pages: 137-167

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Handle: RePEc:tpr:edfpol:v:6:y:2011:i:2:p:137-167
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  18. Courant, Paul N & Gramlich, Edward M & Loeb, Susanna, 1995. "Michigan's Recent School Finance Reforms: A Preliminary Report," American Economic Review, American Economic Association, vol. 85(2), pages 372-77, May.
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