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The Effects of Changes in Michigan's School Finance System

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  • Leslie E. Papke

    (Michigan State University)

Abstract

I use district-level panel data from the 1991/92 school year through the 2003/04 school year to study the effects of Proposal A, passed in Michigan in 1994. Proposal A dramatically changed the way schools were funded starting in the 1994/95 school year. I discuss what has happened to the pattern of spending in years before and after the reform, including a discussion of funding equalization. Using the several additional years of data—which include additional periods of substantial funding increases for low-spending districts—and a richer lag structure in an econometric model, I find that increases in spending have nontrivial, statistically significant effects on math test pass rates. The effects are notably larger for districts with initially poor performance.

Suggested Citation

  • Leslie E. Papke, 2008. "The Effects of Changes in Michigan's School Finance System," Public Finance Review, , vol. 36(4), pages 456-474, July.
    • Handle: RePEc:sae:pubfin:v:36:y:2008:i:4:p:456-474
    DOI: 10.1177/1091142107306287
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    References listed on IDEAS

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    1. Hanushek, Eric A & Rivkin, Steven G & Taylor, Lori L, 1996. "Aggregation and the Estimated Effects of School Resources," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 611-627, November.
    2. Fisher, Ronald C. & Wassmer, Robert W., 1995. "Centralizing Educational Responsibility in Michigan and Other States: New Constraints on States and Localities," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(3), pages 417-428, September.
    3. Grogger, Jeff, 1996. "School Expenditures and Post-schooling Earnings: Evidence from High School and Beyond," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 628-637, November.
    4. Fisher, Ronald C. & Wassmer, Robert W., 1995. "Centralizing Educational Responsibility in Michigan and Other States: New Constraints on States and Localities," National Tax Journal, National Tax Association, vol. 48(3), pages 417-28, September.
    5. Papke, Leslie E., 2005. "The effects of spending on test pass rates: evidence from Michigan," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 821-839, June.
    6. John Yinger (ed.), 2004. "Helping Children Left Behind: State Aid and the Pursuit of Educational Equity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262240467, April.
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    Cited by:

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    2. Chakrabarti, Rajashri & Roy, Joydeep, 2015. "Housing markets and residential segregation: Impacts of the Michigan school finance reform on inter- and intra-district sorting," Journal of Public Economics, Elsevier, vol. 122(C), pages 110-132.
    3. Cordis, Adriana S. & Muzatko, Steven, 2021. "Higher education spending and CPA exam performance," Journal of Accounting Education, Elsevier, vol. 55(C).
    4. Josh B. McGee, 2023. "Yes, money matters, but the details can make all the difference," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(4), pages 1125-1132, September.
    5. Molly Sherlock, 2011. "The Effects of Financial Resources on Test Pass Rates: Evidence from Vermont’s Equal Education Opportunity Act," Public Finance Review, , vol. 39(3), pages 331-364, May.
    6. Hong, Kai & Zimmer, Ron, 2016. "Does Investing in School Capital Infrastructure Improve Student Achievement?," Economics of Education Review, Elsevier, vol. 53(C), pages 143-158.
    7. C. Kirabo Jackson, 2018. "Does School Spending Matter? The New Literature on an Old Question," NBER Working Papers 25368, National Bureau of Economic Research, Inc.
    8. Nozaki, Yuko & Matsuura, Katsumi, 2017. "Does money affect children’s educational outcomes? Evidence from Japan," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 19-32.

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