Fiscal Impacts and Redistributive Effects of the New Federalism on Michigan School Districts

Abstract

Using a quasi-experimental time-series design and employing a multiple regression technique, we examined the fiscal impacts and redistributive effects of the recently enacted federal education block grant on Michigan’s 525 K–12 school districts. Two important policy questions were addressed: Are resource allocations for targeted school districts likely to be affected by the adoption of different federal grant mechanisms? If so, will there be a shifting of resources away from or toward these districts? We found that the movement to the block grant mechanism resulted in a definite shift of funds away from former Emergency School Aid Act (ESAA) districts, districts with high proportions of poverty children, highly urbanized districts, and large districts toward smaller and rural districts. The implications of these changes in federal policy are discussed.