The fiscal effort (see Baker et al., 2018) index measures local and state spending on education concerning a state's ability to generate revenue. Two measures of fiscal effort are considered:
- one based on a state's economic productivity, or gross state product (GSP). Fiscal effort based on GSP represents a state's ability to generate revenue from economic productivity, such as corporate income and proceeds from natural resources.
- the second based on aggregate personal income. Fiscal effort based on personal income represents residents' income capacity to pay taxes to support public services.
Our effort calculation takes into account these two principles to generate a unique localized effort measure for Michigan districts.
The measures are expressed as the dollars spent on education for every $1,000 generated in economic productivity or personal income.