A New Framework for Public Education in Michigan

Table of Contents

Title Page

Acknowledgements

Foreword (62 KB)

I. Introduction 1 (51 KB)

II. Literature Survey 31 (58 KB)

A. School Effectiveness and Institutional Structures 31

B. Comparative Institutional Structures 47

Belgium 52

France 54

New Zealand 56

Ontario (Canada) 58

Chile 60

East Central Europe 61

III. Economic Analysis of the Desired Role for Government in School Provision 64 (18 KB)

A. Education as a Public Good 64

B. Externalities and Education 67

C. Peer Effects and the Production of Education 69

D. Information Costs 71

E. Capital Market Imperfections 71

IV Benefits and Cost of Current System 72

A. Direct Resource Cost 72 (37 KB)

1. School Resources Prior to 1994-1995 School Year 74

B. Analysis of the Current System 85 (95 KB)

1. Cross Section Data 86

2. Simple Correlation of Graduation and Dropout Rates 95

3. Production Function Model 98

4. Dropout and Graduation Regression Results 99

5. Regressions Using 7th and 8th Grade MEAP Scores as Output Measures 105

6. Production Function Model Using Pre-1990 Panel Data 112

7. Panel Data 113

8. Limitations of IDME 116

9. Regression Results 118

C. Summary 121 (6 KB)

V. AN ALTERNATIVE FRAMEWORK 125

A. Problems under the Current Structure 126 (12 KB)

B. Objective of the New Framework 130 (6 KB)

C. Essential Elements of an Alternative System 133 (21KB)

(1) Ownership 133

Government Production 134

Nonprofit Ownership 138

For-Profit Private Ownership 141

D. Optimal Ownership Form 143 (10 KB)

(2) Financial Subsidies 144

(3) Choice of Schools 148

E. A Plan 148 (12 KB)

Ownership 149

Governance 150

Financing 151

Transition Issues 152

1. Phase-In or Comprehensive Change 152

2. Subsidy Levels 153

3. Personnel 154

F. Wealth Consequences of the Plan 154 (222 KB)

VI. EMPIRICAL ASSESSMENT OF THE NEW FRAMEWORK

A. Effectiveness Of Schooling Under Alternative Structures 190 (57 KB)

B. Macroeconomic Consequences Of The New Framework 211 (95 KB)

1. Relationship Between Human Capital and Economic Growth 212

2. Tax Savings and Economic Growth 217

a. Overview 217

b. Michigan tax savings 220

Summary 255 (146 KB)

References 286 (16 KB)

List of Tables

Table 4.4 1993 Dropout Rates and Graduation Rates (District Level)

Table 4.5 7th and 8th Grade Regression Results (School Level Data)

Table 4.6 10th and 11th Grade Regression Results (School Level Data)

Table 4.7 Summary Statistic from the Panel Data

Table 4.8 1985-1989 Panel Data Regression Results (District Level Observation)

Table 5.1 Private, Mixed and Public Enterprise Earnings

Table 5.2a Data Summary: Sample Michigan School District Fixed Asset Values

Table 5.2b Data Summary: Sample Michigan School District Net Asset Values

Table 5.3 Estimated Net Asset Values

Table 5.4 Asset Distribution of School Districts

Table 6.1 Description of Variables

Table 6.2 Student Achievement by Country

Table 6.3 Predicted Score Gain and Achievement Level by Country

Table 6.4 Private School Benefits by Socioeconomic Status

Table 6.5 Index of the Human Capital Stock in the United States, Midwest, and Michigan 1940-1990

Table 6.6 Annual School Tax Burden per Tax Payer in Michigan ( based on the adjusted median income in the school district)

Table 6.7 Summary of Econometrics Studies of Tax Effects on Business Location

Table 6.8 Proportion of Michigan Households by Number of Enrolled Children in 1990: Elementary and Secondary Education

Table 6.9 Choice of School Type by Income Category (total number and percentage)

Table 6.10a State of Michigan Revenue Sources, FY 1990 (in billions of dollars)

Table 6.10b State of Michigan Expenditures of Function, FY 1990(in billions of dollars)

Table 6.11 Average Scholarship Awarded Under Different Funding Methods

Table 6.12a Total State Cost of Education and Effective Tax Rates by per Pupil Funding Levels and Enrollment Type in 1989 Current Funding Levels

Table 6.12b Total State Cost of Education and Effective Tax Rates by per Pupil Funding Levels and Enrollment Type in 1989 Alternative Funding Plan B

Table 6.13a Estimated Lifetime Household Tax Savings with Means Tested Scholarships by Income Levels: All Children Funded

Table 6.13b Estimated Lifetime Household Tax Savings with Means Tested Scholarships by Income Levels: All Children Funded

Table 6.14a Estimated Lifetime Household Tax Savings with Means Tested Scholarships by Income Levels: All Children Funded

Table 6.14b Estimated Lifetime Household Tax Savings by Income Levels All Children Funded at Scholarship = $2,500

Table 6.15 Upper and Lower Bounds for Scholarship and Distribution of Scholarship Types

 

List of Figures

Figure 4.1 Sources of Michigan Public School Funding

Figure 4.2 Sources of Michigan Public School Funding Per Pupil

Figure 4.3 Expenditures per Pupil

Figure 4.4 Average Instructional Salaries

Figure 4.5 Capital Outlay Expenditures

Figure 4.6 Michigan Dropout Rates: Mean Dropout Rates by Geographic Region (1993)

Figure 4.7 Michigan Schools: Mean Graduation Rate by Geographic Region (1993)

Figure 4.8 Sorting by Socioeconomic Characteristics:

Number of Schools with Percent of Children in Free Lunch Programs

Figure 4.9 Wayne County Schools: Percent Students in Large Central City Schools

Figure 5.1 Current System of Public Schooling

Figure 6.1 Percent Households with Enrolled Children 1990

Figure 6.2 Percent of Michigan Households w/children in Elementary & Secondary Schools.

Figure 6.3 Percent of Michigan Households with no Children

Figure 6.4 Upper Income bound for Funding Formula

Figure 6.5 Alternative Funding Plan A

Figure 6.6 Total Cost of Schooling Under Alternative Funding Plan A

Figure 6.7 Alternative funding Plan B

Figure 6.8 Total Cost of Schooling Under Alternative Funding Plan B