Pupil Spending Research Articles

Why do households without children support local public schools? Linking house price capitalization to school spending

While residents receive similar benefits from many local government programs, only about one-third of all households have children in public schools. We argue that capitalization of school spending into house prices can encourage even childless residents to support spending on schools. We identify a proxy for the extent of capitalization—the supply of land available for new development—and show that towns in Massachusetts with little undeveloped land have larger changes in house prices in response to a plausibly exogenous spending shock. Towns with little available land also spend more on schools. We extend these results using data from school districts in 46 states, showing that per pupil spending is positively related to the percentage of developed land. This positive correlation persists only in districts where the median resident is a homeowner and is stronger in districts with more elderly residents who do not use school services and have a shorter expected duration in their home. Our findings support models in which capitalization encourages the provision of durable local public goods and provides an additional reason why some elderly support local school spending.

Changing Education Finance Policy, School Referenda Activity, and Success Rates

In this article, we use data on Wisconsin school referenda over the 1991– 2004 period to examine how changes in education finance affected school referenda activity. Beginning in 1996–1997, state officials in Wisconsin altered the average state share of school costs from about one-half to two-thirds. Because the state equalization aid formula depends on the school district tax base and per pupil spending, the policy change resulted in some districts receiving up to 80–90 percent state funding for school district spending. However, a requirement for capital project approval is that school districts place such proposals on the local ballot. We find evidence that changes in tax prices associated with the modified state aid formula altered school district referenda success rates across school districts. In particular, we find that in districts where the state aid formula further encouraged own source spending, the probability of referenda success increased.

Effects of decentralization on school resources

Sweden has undertaken major national reforms of its school sector, which, consequently, has been classified as one of the most decentralized ones in the OECD. This paper investigates whether local tax base, grants, and preferences affected local school resources differently as decentralization took place. We find that municipal tax base affects per pupil spending in the same way regardless of whether the school sector is centralized or decentralized, but has a smaller effect on teacher–pupil ratio after the reforms. The less-targeted grants are the fewer teachers per pupil do the municipalities employ. The results for local preferences are less clear-cut.

Educational Adequacy as Legal Theory: Implications from Equal Educational Opportunity Doctrine

Evolving school finance litigation theory reflects an evolving equal educational opportunity doctrine. Decades ago race and school desegregation litigation forged the initial modern understanding of equal opportunity. More recently, school finance litigation displaced desegregation litigation as the major instrument for enhancing equal educational opportunity. Within the school finance litigation movement equity theory understood equal educational opportunity from the perspective of school resources, principally per pupil spending. Current school finance litigation theory - adequacy - approaches the equal educational opportunity doctrine with an eye towards results, notably student academic achievement. If my central claim that adequacy litigation is the most recent judicial articulation of an evolving equal educational opportunity doctrine is correct, an understanding of adequacy litigation requires some understanding of educational opportunity. Society's unending quest for greater educational opportunity, at least since the mid-twentieth century, implies a robust role for state and federal courts. Advocates' reliance on the courts for a drive toward enhanced educational opportunity, however, places critical - and increasingly uneasy - institutional stress on the judiciary. As a consequence, adequacy litigation's future efficacy relies partly on the equal educational opportunity doctrine's stability as well as the courts' institutional capacity to achieve desired educational policy changes.

School Finance, Equivalent Educational Expenditure, and the Income Distribution: Equal Dollars or Equal Chances for Success?

This article breaks new ground in the debate on school finance and equality of per pupil school expenditures. We are able to merge school district data with the individual and family data of the Panel Study of Income Dynamics (PSID). This allows us to examine both student and school district characteristics and to assess several measures of equality of expenditure across the income distribution of parents and by funding sources. Unlike studies that use district-level data, our study finds a surprising degree of equality in the actual amounts expended per child in low- versus high-income families. But after adjusting expenditures for student body composition to reach equivalent education expenditures, we find a greater inequality in per pupil spending across the income distribution. In addition, there are substantial racial inequalities in expenditures across the income spectrum. In closing we discuss policy implications for school finance and increased equality of educational opportunity.

The Effect of School Finance Reforms on the Level and Growth of Per-Pupil Expenditures

In response to court rulings, states such as California and Washington have sought to promote greater equality in per pupil spending by shifting from local financing of public education to state financing. In this article, we investigate how constraints on local discretion resulting from this shift to state financing influence the level and growth of education spending. The analysis uses an expenditure function framework and a 21-year panel for the 50 states. To understand the extent to which expenditures are influenced by constraints on local discretion, we distinguish between court-ordered and other reforms of school finance systems. We show that the stringency of constraints on local discretion determines the effects of reforms on the level and growth of spending. In addition, we find that, for any type of reform, the characteristics of a state's population and of that state's schools determine the direction and magnitude of the postreform changes in spending.

The Median-Voter Model versus the Bureaucracy Model of School Finance Equalization Aid

The median-voter and budget-maximizing bureaucracy models imply different effects from intergovernmental aid. In this article, the author uses data from an ambitious school district equalization program in Connecticut to test these models. Finding no clear winner in terms of explanatory power, he uses the results of both models to examine the impact of the equalization aid. The estimated models yield a mean price elasticity of public school expenditure of -0.39 and income elasticities of 0.49 and 0.57 for the median-voter and bureaucracy models, respectively. Simulations indicate that the Connecticut school finance equalization and Education Enhancement aid resulted in a reduction in the standard deviations of per pupil spending across districts of 29% to 33% and halved the standard deviation of net school mill rates.

Measuring the impact of casino proceeds on total per pupil expenditures for education in Mississippi

The Mississippi Legislature adopted casino gaming in 1990 for the purpose of curing financial ills that have long plagued the Magnolia state. Local policy makers were given the opportunity to tax the casino industry at 3.2 percent of gaming wins, with an additional .8 percent if these local government stakeholders deemed it necessary to extract additional supplemental revenue from the casino industry. One program designated as a beneficiary of this revenue-generating source was education. This paper borrows research techniques from the lottery literature in an effort to measure the impact of casino gaming dollars on per pupil spending in Mississippi. The conclusions reached by this research suggests that the thirteen school districts receiving casino proceeds for education are significantly benefiting from this supplemental source of revenue.

How Poorly Were Philadelphia's Schools Really Doing?: Analyzing the State Takeover and the Explanations for What Happened

The Pennsylvania state government taking over the Philadelphia school system raises important questions about how poorly Philadelphia schools were actually doing. The city had enacted a number of reforms during the mid-1990s, from instituting full day schooling for Kindergarten to increased teacher training. Some claim that Philadelphia suffered from reduced funding from the state government. This study evaluates these reforms and claims using the Pennsylvania System of School Assessment (PSSA) Exam for the entire state of Pennsylvania from 1991 to 2001. Among the findings is that per pupil spending in Philadelphia during the 1990s was not significantly related to test scores and that the returns were significantly less for spending in the rest of the state.

The Legacy of Serrano: The Impact of Mandated Equal Spending on Private School Enrollment

1. Introduction The California Supreme Court decision in Serrano v. Priest in 1971 was the first state supreme court ruling to declare a state's education finance system unconstitutional.1 The suit, originally filed by a class of Los Angeles County public school children and their parents, argued that the California public school finance system was unconstitutional because of its reliance on a local property tax system. Under this system, large differences in property wealth created enormous variations in educational resources across the state. In its subsequent 1976 Serrano H decision, the California Supreme Court found that the state legislature's response to the first Serrano decision was insufficient. The court ordered the state legislature to follow a trial court's requirement to implement a funding formula that reduces wealth-related per pupil expenditure disparities (i.e., property tax revenue exclusive of categorical aid and special needs) to $100 across school districts. The Serrano II decision resulted in a nearly complete shift of the fiscal responsibility for K-12 education in California from local to state government. In the aftermath of the initial Serrano decision, suits were filed in several other states claiming unconstitutional inequities in the state education system. Many of these suits were successful. Between 1973 and 1983, six state supreme courts (New Jersey [1973], Connecticut [1977], Washington [1978], West Virginia [1979], Wyoming [1980], Arkansas [1983]) found their systems of educational finance unconstitutional. Similar rulings followed in 1989 in Kentucky, Montana, and Texas; in 1993 in Massachusetts and Tennessee; in 1994 in Arizona; and in 1997 in New Hampshire, Ohio, and Vermont. A third of the states' education finance systems now have been ruled unconstitutional. As a result of these rulings and legislative-based education reforms in a number of other states, education expenditure inequality has been reduced.2 This in turn has left local districts with less latitude in determining spending levels. Parents in richer districts are expected to be especially frustrated with the limits on spending that accompany equalization. Changes in state educational finance systems to gain greater equity affected average spending on education in these states. The initial research on this issue focused on the California experience, where raw expenditure figures reveal the dramatic change in per pupil spending in California since the initial Serrano decision in 1971. In academic year (AY) 1969-1970, per pupil spending in California's public elementary and secondary schools was slightly greater than the national average (106.25% of the national average), ranking 14th among all states. However, by AY 1992-1993, education expenditures in California had fallen to 85.6% of the national average and its rank had dropped to 34th. Silva and Sonstelie (1995) concluded that education spending in California in 1989-1990 was significantly lower than they would have otherwise predicted. They attributed about half of the lowered spending to the legislation following Serrano II and the other half to the growth of the student population in California. But the California experience of reduced expenditures appears to be atypical. Manwaring and Sheffrin (1997) found spending to be higher in many states as a result of litigation or legislativebased educational finance reform. Downes and Shah (1995) similarly estimated that school finance reform raised spending in some states and lowered spending in other states. Murray, Evans, and Schwab (1998) found state per pupil spending rose with successful state education finance litigation. The variation across states in the spending effects of education finance reforms may be due to the source (court ordered or legislative) and/or degree (e.g., weak reform, strong reform, etc.) of the reforms. In any case, there should be greater interest in supplementing what the public schools do or opting out of the public system if reforms cause spending in a state to fall. …

Community choice and local public services: A discrete choice approach

This paper uses a discrete choice approach to estimate the impact of local fiscal and other variables on individual community choices. It employs a combination of a unique micro data set composed of 90% of all homeowners in six school districts in Camden County, New Jersey and information on local community characteristics including local crime rates, commercial activity and distance from a metropolitan area. The empirical model implies that all these variables as well as the local per pupil spending on public education and `community entry prices' play a major part in explaining the location of individual households.

Rates of return to education of blacks in South Africa

The aim of this empirical study was to calculate private and social rates of return to education and to test the hypothesis that education is a major determinant of earning differentials for blacks in South Africa. Data for 23 278 working men and women were extracted from the 1985 Current Population Survey files. This comprised a sample representative of the black population in the Republic of South Africa excluding the former Transkei, Bophuthatswana, Venda and Ciskei territories. Lifetime earnings profiles were constructed from these data for five educational levels, namely, no schooling up to Standard 1; Standards 2 to 4; Standards 5 to 7; Standards 8 to 9; and Standard 10. Schooling was assumed to account for 60 per cent of the earnings differentials between these profiles. Imputed average household outlays on schooling were taken as the private direct cost of education. These were supplemented by estimates of per pupil spending by the various government departments responsible for black education, to calculate the social costs per year of primary and secondary schooling. Indirect costs in the form of imputed foregone earnings were included from Standard 5 (age 15) onwards. The private internal rates of return to education of males were found to be about 16 per cent at primary level and 24 per cent for secondary schooling. Corresponding social rates of return are about 6 per cent for primary and 15 per cent for secondary education. Estimates for females showed negative rates of return between no schooling and Standards 2 to 4, the private and social rates being estimated at ‐1 per cent and ‐4 per cent respectively; from Standards 2 to 4 to Standards 5 to 7, a private rate of 12 per cent and a social rate of 4 per cent are reported; and for the remaining secondary school phases private rates of about 32 per cent and social rates of about 15 per cent are estimated. The study confirms that education is a major determinant of earnings differentials and education expansion can be regarded as a powerful earnings equaliser.

Educational cost factors and student achievement in grades 3 and 6: Some new evidence

Per pupil spending on teachers' salaries, which is the largest component of instructional cost, is itself the product of four factors: the teacher/pupil ratio, the level of starting salaries, the steepness of the salary schedule above the minimum, and the actual placement of incumbent teachers on the salary schedule. Using California data on grades 3 and 6, this paper finds that using per pupil expenditure on teachers' salaries to predict student achievement gives very different results than by using these four factors. This implies that previous production function studies may have failed to discover relationships that existed in the data they analyzed. Results of these studies in the aggregate will not be clear until they are done in a common format which systematically accounts for the factors of instructional cost.

Patterns of resource distribution in a decentralized urban public school system

Decentralization in the Detroit Public Schools resulted in the establishment of administrative regions and the sharing of responsibility for resource allocation among regional and central administrators. This study examines the relationship between resource levels (measured by per pupil spending and pupil-teacher ratios) and demographic characteristics of schools in each region. Regression analysis revealed differences among regions, with some allocating more resources to schools in lower-income neighborhoods and others favoring middle-income areas. Variations were also found in patterns of distribution of federal and state compensatory funds. These differences, the study concludes, were the consequence of utilization of different decision rules and responsiveness by regional administrators to different population groups.