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Michigan and Ohio K–12 Educational Financing Systems: Equality and Efficiency

Author

Listed:
  • Michael Conlin

    (Department of Economics Michigan State University)

  • Paul N. Thompson

    (Oregon State University)

Abstract

We consider issues of equality and efficiency in two different school funding systems -- a state-level system in Michigan and a foundation system in Ohio. Unlike Ohio, the Michigan system restricts districts from generating property or income tax revenue to fund operating expenditures. In both states, districts fund capital expenditures with local tax revenue. Our results indicate that although average revenue and expenditures per pupil in Michigan and Ohio are almost identical, the distributions of the various revenue sources are quite different. Ohio’s funding system has greater equality in terms of total revenue, largely due to Ohio redistributing state funds to the least wealthy districts while Michigan does not. We find relatively wealthy Michigan districts spend more on capital expenditures, whereas relatively wealthy Ohio districts spend more on labor and materials. This suggests that constraints on raising local revenue to fund operating expenditures in Michigan could create efficiency issues. © 2014 Federal Reserve Bank of New York

Suggested Citation

  • Michael Conlin & Paul N. Thompson, 2014. "Michigan and Ohio K–12 Educational Financing Systems: Equality and Efficiency," Education Finance and Policy, MIT Press, vol. 9(4), pages 417-445, October.
    • Handle: RePEc:tpr:edfpol:v:9:y:2014:i:4:p:417-445
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    References listed on IDEAS

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    Cited by:

    1. Teresa Garcia-Milà & Therese J. McGuire & Wallace E. Oates, 2018. "Strength in diversity? Fiscal federalism among the fifty US states," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(4), pages 1071-1091, August.
    2. Mary D. Bruce & Natalia Ermasova & Linda Mattox, 2019. "The Fiscal Disparity and Achievement Gap between Extremely Wealthy and Poor School Districts in Illinois," Public Organization Review, Springer, vol. 19(4), pages 541-565, December.

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    More about this item

    Keywords

    equality; education; Michigan; Ohio; local tax revenue;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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