Developing an Early Warning System for Michigan's Schools

14 Pages Posted: 25 Nov 2015 Last revised: 27 Nov 2015

See all articles by Rachel White

Rachel White

Michigan State University

Kacy Martin

Michigan State University - College of Education

Eric A. Scorsone

Michigan State University - Department of Agricultural Economics

Kristine L. Bowman

Michigan State University

Date Written: May 4, 2015

Abstract

The development of a system that alerts school districts of potential fiscal distress and assists those approaching fiscal distress is essential in the current context in which an increasing number of Michigan schools in this position. On March 11, 2015, State Representatives Earl Poleski, Al Pscholka, Lisa Lyons, Patrick Somerville, and Tim Kelly introduced House Bills 4325, 4326, 4327, 4328, 4329, and 4330, which contribute to the development of an early warning system. After some of the bills were amended on April 23, 2015, the House of Representatives passed this package of bills. The bills now sit in the Michigan Senate awaiting a hearing and potentially a vote.

To in fact provide early warning of imminent fiscal distress, an early warning system must incorporate strong predictors of fiscal distress. Unfortunately, the currently proposed system may not. In fact, using three of the quantitative indicators of fiscal distress in the proposed system, less than a third of districts that are in deficit would be identified. Moreover, these indicators of fiscal distress will quite likely inaccurately identify many schools as approaching fiscal distress that will then be subject to additional administrative and oversight requirements.

Keywords: fiscal distress, crisis, financial, emergency financial manager, education policy, school funding, school, education, school finance, financial crisis, financial early warning

Suggested Citation

White, Rachel and Martin, Kacy and Scorsone, Eric A. and Bowman, Kristine L., Developing an Early Warning System for Michigan's Schools (May 4, 2015). Available at SSRN: https://ssrn.com/abstract=2695024 or http://dx.doi.org/10.2139/ssrn.2695024

Rachel White

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

Kacy Martin

Michigan State University - College of Education ( email )

East Lansing, MI
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

Kristine L. Bowman (Contact Author)

Michigan State University ( email )

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

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