Knowledgeable Navigation to Avoid the Iceberg: Considerations in Proactively Addressing School District Fiscal Stress in Michigan

12 Pages Posted: 30 Aug 2015

See all articles by Kristine L. Bowman

Kristine L. Bowman

Michigan State University

Rachel White

Michigan State University

Eric A. Scorsone

Michigan State University - Department of Agricultural Economics

Kacy Martin

Michigan State University - College of Education

Date Written: January 20, 2015

Abstract

School districts in fiscal crisis are highly unlikely to provide educational environments in which students learn, grow, and thrive; yet in Michigan, 57 school districts and public school academies ended the 2014 fiscal year either in deficit or with a deficit projected for the subsequent year. These districts’ deficits range from slightly more than $5,000 to more than $169 million in the Detroit Public Schools (Michigan Department of Education, 2014). Helping these districts return to a position of fiscal health from which they can deliver quality education is an immediate concern of incredible importance. Although less pressing, implementing a system that could help prevent other districts from being mired in fiscal crisis is equally significant and the focus of this paper.

In response to the increasing number of districts experiencing fiscal stress, in December 2014, the Michigan legislature proposed an early warning finance system to allow the state government to intervene in districts that are either experiencing financial stress or appear to be headed in that direction. In this paper, the authors first describe the evolution of Michigan’s state-level response to school districts’ fiscal crises. Subsequently, the authors will compare the early warning system being discussed in Michigan in late 2014-early 2015 with such systems in other states as well as research related to indicators of school district fiscal distress. Finally, the authors will provide recommendations for consideration when developing an effective and efficient early warning system for school districts.

Keywords: school, education, school finance, financial crisis, financial early warning

Suggested Citation

Bowman, Kristine L. and White, Rachel and Scorsone, Eric A. and Martin, Kacy, Knowledgeable Navigation to Avoid the Iceberg: Considerations in Proactively Addressing School District Fiscal Stress in Michigan (January 20, 2015). Available at SSRN: https://ssrn.com/abstract=2652878 or http://dx.doi.org/10.2139/ssrn.2652878

Kristine L. Bowman (Contact Author)

Michigan State University ( email )

620 Farm Lane
East Lansing, MI 48824-1300
United States

Rachel White

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

Eric A. Scorsone

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States
+1(517)353-9460 (Phone)
+1(517)432-1800 (Fax)

HOME PAGE: http://www.aec.msu.edu/faculty/scorsone.htm

Kacy Martin

Michigan State University - College of Education ( email )

East Lansing, MI
United States

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