Assessing the Efficacy of Financial Reform in California

Abstract

In response to the second California Supreme Court ruling in Serrano, the legislature has recently acted to make the financing of schools fiscally neutral. The neutrality provisions of the new law have been challenged as permitting unacceptably large variations in per pupil expenditure among districts. The author shows that even if the intent to comply fully were not at issue achieving fiscal neutrality would be a difficult and complex task. Other provisions of the law address intradistrict financial practices and policies. Since equality of educational opportunity depends as much on intradistrict resource allocation as on fiscal neutrality, the author develops a research strategy to determine the efficacy of these intradistrict reforms. Drawing on recent theoretical work in the field of public-choice economics, he devises an analysis of decision making in school districts that yields testable hypotheses about the consequences of school-site councils and minimum performance requirements, two of the intradistrict reforms. While the testing must await the unfolding of events, the analysis shows how economic reasoning can be brought to bear in promising ways on political issues in education.