Chapter 1 analyzes the Ohio fiscal stress labeling system, a statewide financial intervention system that labels school districts with projected deficits in the general fund. Labeled school districts are required by the state to implement a financial recovery plan that balances budgets, with recovery operated by the district or the state depending on the level of projected deficits. This chapter examines the effect of these labels on school district financial behavior and housing prices from 2000-2012. In response to these labels school districts decrease capital and operating expenditures, with larger percentage reductions in capital, and increase local property tax revenue funding operating expenditures. These labeled school districts are in much better financial positions following successful recovery and maintain financial viability well after recovery is complete. House prices fall following a state takeover of the district's financial decision-making, suggesting that the state takeover sends a stronger signal to residents than district-led recoveries. In addition to responding to labels, school districts and homebuyers are responsive to earlier state interventions that alleviate financial problems before labels become necessary. Chapter 2 consider issues of equality and efficiency in two different school funding systems - a state-level system in Michigan and a foundation system in Ohio. Unlike Ohio, the Michigan system restricts districts from generating property or income tax revenue to fund operating expenditures. In both states, districts fund capital expenditures with local tax revenue. The results indicate that although average revenue and expenditures per pupil in Michigan and Ohio are almost identical, the distributions of the various revenue sources are quite different. Ohio?s funding system has greater equality in terms of total revenue, largely due to Ohio redistributing state funds to the least wealthy districts while Michigan does not. This chapter finds that relatively wealthy Michigan districts spend more on capital expenditures while relatively wealthy Ohio districts spend more on labor and materials. This suggests that constraints on raising local revenue to fund operating expenditures in Michigan could create efficiency issues.Chapter 3 analyzes Empirical Bayes' (EB) estimation, a popular procedure used to calculate teacher value-added. This estimation strategy is often motivated as a way to make imprecise estimates more reliable. In this paper we review the theory of EB estimation and use simulated and real student achievement data to study its ability to properly rank teachers. This chapter compares the performance of EB estimators with that of other widely used value-added estimators under different teacher assignment scenarios. This chapter finds that, although EB estimators generally perform well under random assignment of teachers to classrooms, their performance generally suffers under nonrandom teacher assignment. Under nonrandom assignment, estimators that explicitly (if imperfectly) control for the teacher assignment mechanism perform the best out of all the estimators we examine. This chapter also finds that shrinking the estimates, as in EB estimation, does not itself substantially boost performance.
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