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Title page

Contents

Abstract 3

1. Introduction 4

2. CTE in Michigan 6

2.1. CTE Funding Increase and Formula Change 7

2.2. Administrative Data 7

3. Quantifying the Effects of the Funding Change 8

4. Behavioral Responses and the Incidence of Loopholes 10

4.1. Administrator Behavior and Curricular Rearrangement 10

4.2. Differential Responses across Districts 14

4.3. Implications for Incidence 16

5. Conclusion 19

References 21

Appendices 25

A. Tables and Figures 25

B. Added-Cost Funding for CTE Programs in Michigan 30

Table 1. Determinants of District Heterogeneity in Response to Funding Formula Change 15

Figure 1. CTE Completion Increases after the Funding Change 9

Figure 2. Course Completion Before and After the Funding Formula Change 11

Figure 3. Increased CTE Program Completion Stemmed from Curricular Reshuffling 12

Figure 4. Poor and Urban Districts Bear the Burden of Curricular Rearrangements 17

Table B.1. CTE Added-Cost Funding (60% Portion) Before and After the Funding Formula Change 37

Table B.2. CTE Added-Cost Funding After the Funding Formula Change (SY 2016-17) 38

Table B.3. Change in CTE Added-Cost Funding Before and After the Funding Formula Change (SY 2013-14 to SY 2016-17) 39

Table B.4. CTE Added-Cost Funding Amount in Michigan by School Year 40

Figure A.1. Notched Incentive Structure of New Funding Formula 26

Figure A.2. Student Advancement Through Michigan CTE Programs by Cohort Graduation Year 27

Figure A.3. Completion Increases Most in Low-Cost and High-Reimbursement Programs 28

Figure A.4. Completion Rates Increase Less in Poor and Urban Districts 29

Figure A.5. Trends in CTE Assessments 30

Figure B.1. Reductions are Driven by State Formula Funding 35

Figure B.2. CEPD-Level Event Study Results 36