This study analyzes financial data from fiscal 2004
through fiscal 2010 from the National Public Education Financial Survey, which
is conducted annually by the federal government’s National Center for Education
Statistics. The NCES receives the raw NPEFS data on Michigan school districts
from the Michigan Department of Education. Neither the MDE nor the NCES makes
district-level NPEFS data available online, but the data have been provided to
Mackinac Center analysts by the MDE, and the figures are now part of the
Mackinac Center’s publicly available Web database (see
Data from the NPEFS are used by the U.S. Department of
Education to allocate federal funds to local school districts for a number of
programs, such as those created under the federal Elementary and Secondary
Education Act of 1965.[*] The
NPEFS is an excellent resource for a comparative analysis, since it “provides
the official revenue and expenditure statistics for public elementary and
secondary education in the United States.”
To categorize school
districts by location, the author used locale codes developed by the U.S.
Census Bureau and assigned by the NCES to determine a district’s geographic
status. There are 12 categories: city-large,
city-midsize, city-small, suburb-large, suburb-midsize, suburb-small,
town-fringe, town-distant, town-remote, rural-fringe, rural-distant and
rural-remote. This study analyzes data from these 12 categories and data from
four combined categories: city, suburb, town and rural.[†] These four categories will be referred to as the
four major “locale groups,” while the constituent categories will be referred
to as the 12 “locale subgroups.”
These locale designations are dynamic, not static. In
other words, a particular district’s designation can shift from year to year,
and each locale — city, rural, etc. — will typically include a different set of
districts each year. The data in this study reflect this fact with the
exception of one year. The NCES locale codes for 2010 have not been released as
of this writing, even though the 2010 fiscal data are available. In order to
include this financial data, this study assigns a district its 2009 locale code
in 2010. (See Appendix C for a list of districts’ locale codes.)
methodology for assigning locales was developed by the U.S. Census Bureau in
NCES adapted this approach for schools and school districts and applied it
retroactively to school data, beginning with the 2003-2004 school year. Thus, the data
provided throughout this study begin with that earliest year and conclude with
the 2009-2010 school year, the most recent year for which such data are
In general, this study adopts the convention of
referring to a school year, which spans parts of two calendar years, by the
latter of the two years. This convention corresponds to the standard fiscal
year typically used by schools: For example, the 2009-2010 school year is
usually referred to in school finance as fiscal 2010.
In the discussions below, district locale groups’
revenues and expenditures are frequently compared using per-pupil figures.
These per-pupil calculations use NCES average daily attendance figures to
represent pupil counts. These NCES daily attendance data for Michigan are
supplied by state government, and by law, Michigan defines its average daily
attendance as 92 percent of total pupil membership, which is based on the
state’s two annual count days.[§] Also
note that a locale group’s per-pupil revenues and expenditures are calculated
by dividing the locale group’s total revenues and expenditures by its total
average daily attendance; the figures do not represent an average of the
individual districts’ per-pupil revenues and expenditures.
The dollar figures in this study are nominal; they are
not adjusted for inflation. The purpose of this study is not to compare school
district revenues and expenditures with price increases over time, but rather
to compare different locale groups to each other using financial data. As noted
earlier, this study does not attempt to determine what expenditures or revenues
are “justified” or “appropriate.”[¶]
One final note: The districts discussed in this study
are conventional local school districts; both intermediate school districts and
public charter schools are omitted. Intermediate school districts generally
provide support services to local districts, particularly for special and
vocational education services. The ISDs’ revenues, spending and activities are
therefore significantly different from those of conventional local school
Charter schools, which are considered individual school
districts under Michigan law,[**] are
omitted for a somewhat similar reason. Charter schools’ revenue and
expenditures differ substantially from those of conventional school districts,
and these differences could confuse the analysis. For instance, Michigan’s
charter schools, unlike Michigan’s conventional school districts, do not have the
taxing authority to raise revenue through local millage elections. Compared to
conventional districts, charter schools must therefore commit a larger portion
of the revenue they receive from state government to spending on facilities and
other capital assets.
Using the NPEFS data to compare charter schools is also
challenging, since charter schools may report financial data differently. Some
charter schools hire private “educational management organizations” to supervise their day-to-day activities. Since
many charter schools report expenditures related to EMOs in a lump-sum
“purchased services” category, the charter schools’ reporting of expenditures
in NCES categories is less uniform, and comparing data for specific types of
expenditures among charter schools is difficult.
[*] The federal No Child Left Behind Act of 2001 reauthorized the Elementary and
Secondary Education Act of 1965.
[†] See Appendix A for more details about these NCES
[‡] The NCES did assign locale codes to school districts prior
to 2004, but it used the Census Bureau’s earlier methodology for doing so.
Hence, data for previous years exists, but the pre- and post-2004 locale
assignments are not consistent with each other.
[§] MCL 388.1603(1). For more information on
Michigan’s “count days,” see Ryan S. Olson and Michael D. LaFaive, A
Michigan School Money Primer: For Policymakers, School Officials, Media and
Residents (Midland, MI: Mackinac
Center for Public Policy, 2007), 53-55. Because the Michigan Department of
Education uses district membership figures when it calculates per-pupil
spending and revenues, the per-pupil figures the department publishes will be
lower than those published by NCES and provided in this study.
[¶] Inflation adjustments that accommodate differences
in locales are not necessarily straightforward. Transportation and food prices,
to name two examples, can vary substantially depending on location and
[**] Known legally as “public school academies,”
charter schools are authorized by public universities, local school districts,
intermediate school districts or community colleges to receive state funding to
provide educational services, and are held accountable to performance-based
“charters.” These schools must comply with state regulations, may not charge
tuition or deny a student admission if space is available. MCL § 380.501 et
Frank Johnson, “Comparison of the NPEFS and the F-33 Surveys: Should
NCES Replace the NPEFS with State-Aggregated F-33 Data,”(National Center for
Education Statistics, 2008), 1, http://www.reginfo.gov/ public/do/DownloadDocument?documentID=136944&version=0
(accessed Feb. 21, 2011).
 Tai Phan and Mark Glander, “Documentation to
the NCES Common Core of Data Local Education Agency Locale Code File: School
Year 2005-06”(National Center for Education Statistics, 2007),
http://nces.ed.gov/ ccd/pdf/al051agen.pdf (accessed Feb. 22, 2011).
 Ibid., 1.
 “Common Core of Data (CCD): Local Education
Agency (School District) Locale Code Files,” (National Center for Education
Statistics, 2010), Common Core of Data,
http://nces.ed.gov/ccd/CCDLocaleCodeDistrict.asp (accessed May 17, 2011).
more information, see: “Education Management Organizations: Managing
Competition,” (Mackinac Center for Public Policy, 1999), https://www.mackinac.org/2140 (accessed Feb.