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ERIC Number: EJ1169643
Record Type: Journal
Publication Date: 2016
Pages: 27
Abstractor: As Provided
ISSN: ISSN-0098-9495
Which Districts Get into Financial Trouble and Why: Michigan's Story
Arsen, David; DeLuca, Thomas; Ni, Yongmei; Bates, Michael
Journal of Education Finance, v42 n2 p100-126 Fall 2016
Like other states, Michigan has implemented a number of policies to change governance and administrative arrangements in local school districts deemed to be in financial emergency. This paper examines two questions: (1) Which districts get into financial trouble and why? and (2) Among fiscally distressed districts, are there significant differences in the characteristics of districts in which the state does and does not intervene? We analyze factors influencing district fund balances utilizing fixed effect models on a statewide panel dataset of Michigan school districts from 1995 to 2012. We evaluate the impact of state school finance and choice policies, over which local districts have limited control, and local district resource allocation decisions (e.g., average class size, teacher salaries, and spending devoted to administration, employee health insurance, and contracted services). Our results indicate that 80% of the explained variation in district fiscal stress is due to changes in districts' state funding, to enrollment changes including those associated with school choice policies, and to the enrollment of high-cost, special education students. We also find that the districts in which the state has intervened have significantly higher shares of African-American and low-income students than other financially troubled Michigan districts, and they are in worse financial shape by some measures.
University of Illinois Press. 1325 South Oak Street, Champaign, IL 61820-6903. Tel: 217-244-0626; Fax: 217-244-8082; e-mail:; Web site:
Publication Type: Journal Articles; Reports - Research
Education Level: Elementary Secondary Education
Audience: N/A
Language: English
Sponsor: Institute of Education Sciences (ED)
Authoring Institution: N/A
Identifiers - Location: Michigan
IES Funded: Yes
Grant or Contract Numbers: R305B090011