Why is it so hard to help central city schools?

Many states have implemented educational grant systems designed to provide more aid to school districts that are, by some standard, in greater need. Nevertheless, many if not most central city school systems continue to produce poor educational outcomes, as measured, for example, by test scores and dropout rates. Using data from New York State, this article asks why existing aid formulas fail to provide the assistance that central city school districts need to bring their educational outcomes up to reasonable standards. Two principal explanations are explored: the failure of existing aid programs to recognize the high cost of providing education in central cities and the possibility that aid simply makes central cities less efficient without raising educational outcomes. The article presents aid programs that account for costs, but shows that these revised programs will do little to help central cities without at least one politically unpopular provision, namely a large state budget or a high required local property tax rate. The article also estimates the extent to which increased aid to central cities leads to their less efficient operation, thereby undermining the objective of improved educational outcomes for central city students. The article concludes by listing the steps that a state can take to help central city schools and by discussing the yet unresolved problems that arise in helping these districts.     

Education Aid in New York State: Targeting Issues and Measures

The distribution of state aid for public education in New Yorkis the result of a combination of political and educationalconcerns. They influence the amount of school aid distributed,the pattern of aid distribution among school districts, thetypes of programs funded, and the accountability required forthese funds. This article focuses on the forces that influencethe split between general state aid and targeted state aid.General aid refers to aid that districts may use for any purposeconsistent with local priorities or needs. Targeted aid is moneyprovided by the state to a district for a particular purpose.When a district accepts targeted aid, it must agree to spendthe funds in accord with specific statutes or regulations. Considerationsof equity, mechanics of state aid distribution, and the historyof the development of school aid legislation are also discussedin this article.     

Schoolhouses,courthouses, and statehouses after Serrano

The constitutionality of public school finance systems has been challenged in 43 states in the 25 years since the landmark Serrano decision. Using data on revenues from more than 16,000 school districts over the 1972-1992 period, this article assesses the impact of court-mandated reform on the role of the states in school finance. We find that resources from the state increased while revenues from local districts were roughly unchanged after successful litigation. States also followed a more aggressive redistribution policy in the aftermath of court-mandated reform; after successful litigation, state aid to the poorest districts increased and aid to the wealthiest districts remained unchanged. Finally, we find that reforms that were initiated by the states without judicial prodding were typically ineffective.     

Fiscal Reaction to State Aid Uncertainties: Evidence from New York State

Late budgets have become increasingly present across the states and especially persistent in states such as New York and California. The combination of delayed states budgets and institutional constraints may trigger specific budgetary strategies. Uncertainty over state aid may lead school districts to over‐ or underestimate school budgets, which ultimately may have an effect on real property taxes and the amount of education consumed. Evidence from New York State school districts suggests that school districts react to uncertainty in the state budget through a combination of revenue, expenditure, and fund balance changes. The findings suggest that districts engage in “gaming” the institutional constraints, and tend to build up large fund balances as a response to perceived uncertainty.     

The decline in the number of school districts in the U.S.: 1950–1980

Between 1950 and 1980 the number of school districts fell from 83,642 to 15,987. Data for the fifty states for 1950, 1960, 1970, and 1980 are used to identify the factors that contributed to this decline. The focus is on the tradeoff between cost savings through scale economies (a few large districts) and a diverse population's demand for choice in public schooling (many small districts). We find that much of the decline in the number of school districts has resulted from: 1) the decline in the farm population and increase in population density, which has made it easier to take advantage of scale economies; 2) the growing importance of state aid, which reduces quality variation among districts within a state; and 3) the increase in the fraction of teachers that belong to the National Education Association teacher's union, which may reflect increased political influence used to lower the costs of organizing. Several states have laws that require school district and county (or state) boundaries to coincide. In the last section of the paper we estimate the costs of these laws. First, we compare the predicted number of districts, using the regression results in the earlier section of the paper, to the actual number in these states. Then we estimate a demand equation that is used to generate the dollar amount of the cost due to diminished interjurisdictional competition.     

Property Tax Responses to State Aid Cuts in the Recent Fiscal Crisis

Many states experienced fiscal crises at the beginning of this decade. Some responded by cutting state aid to local governments. This paper explores the extent to which local governments responded to these aid cuts by raising property taxes. The authors hypothesize that changes in aid help explain the observed differences in per capita property tax revenue changes across states. They find that on average school districts increased property taxes by 23 cents for each dollar cut in state aid. These results highlight the important role that the property tax plays in maintaining the stability of the state and local sector.     

State involvement in limiting textbook choice by school districts

Who gets to decide what textbooks are used in America’s public school classrooms varies by state. States can let each school district decide, provide standards that must be followed and make available an incomplete listing of books meeting those standards, or allow schools to choose books only from a list provided by the state. I present a model that provides an explanation for state limits on textbook selection by school districts. I examine the roles played by decision making costs, effectiveness of voters, religious composition, power of teachers, and propensity of state governments to interfere with or to help districts in textbook selection policies at the state level. There has been virtually no research on this topic. My findings corroborate the extant literature that addresses interference by state governments in local affairs and extend the morality politics literature by finding a strong link between religious fundamentalism and state-level policies. I also find that state book lists are less likely (1) in more educated states, where voters are better able to select the most appropriate textbook, (2) in states with smaller school districts, where voters are more involved in the schools, and (3) in states with stronger teacher unions, giving teachers more power in textbook selection.     

School Finance Reform's Impact on New Jersey's State Spending Priorities

The combination of school finance reform, voter opposition to higher taxes, and rising costs forced the state of New Jersey to reorient its spending priorities. This article presents an analysis of budgetary data for the period FY 1990 to FY 1996, which clearly indicates that: 1) state resources were shifted from direct state services to state aid; 2) even though the 1991 sales and income tax hikes were revoked, the state's tax structure was more progressive in 1996 than in 1990; 3) Governor Florio's attempts to level down per pupil expenditures by reducing payments to wealthy school districts were largely stymied; 4) the proportion of state resources allocated to public education was lower in FY 1996 than the year preceding school finance reform; 5) because of education's reduced budget share, efforts to level up per pupil expenditures were severely circumscribed; and 6) state aid was diverted from homestead rebates to municipal aid.     

The Equality of Public School District Funding in the United States: A National Status Report

For over 30 years, the distribution of educational opportunities and the equality of education funding across communities has generated considerable interest among policy makers, the public, and the courts. This article takes advantage of national data sets to examine funding equality across school districts in 49 states for fiscal years 1992 and 1995. It presents rankings of each state's funding equality and explores factors that may be related to the level of equality within states and to changes across years.
The analyses suggest that, overall, within-state equality improved slightly between 1992 and 1995, although most states' relative rankings changed little during the period. States with fewer school districts relative to students tended to have a more equal distribution of education dollars than states with more districts. States with higher proportions of revenues provided by state governments generally showed a more equitable distribution of resources than states in which districts were more dependent on local revenues.     

The public choice of educational choice

The very small literature explaining (i) how citizens have voted in two California voucher referenda, (ii) how legislators have voted on voucher bills in the State of Florida and the US Congress, and (iii) the variation across states in charter school provisions is summarized. New empirical evidence documenting the cross-state variation in the success of voucher referenda and voucher bills is examined. Voucher bill characteristics and state characteristics play important roles. Voucher bills have been passed only in the more conservative Republican states, and almost all of the successful voucher programs have been targeted at large, struggling school districts.     

The Federal Role in State Fiscal Stress

This article examines the extent to which the federal government'spolicies were responsible for the fiscal stress experiencedby most state governments in the early 1990s. Federal policieshave contributed considerably to recent state fiscal stress,particularly through the Medicaid program—the fastestgrowing part of state budgets—and the recession, whichdepressed revenue and increased welfare and Medicaid spending.Federal aid reductions have not been an important source ofrecent state fiscal stress. The real value of per capita federalaid other than for welfare programs fell considerably in the1980s, but the reductions were much greater for local governmentsthan for states. The largest reductions were in the early 1980s.Federal policies have affected state finances in several otherways—through tax policy, unfunded mandates, and the federalfailure to cope effectively with problems like health and poverty.Federal court rulings have also caused budget problems (as havestate court decisions). In some respects, state fiscal problemsare not a federal responsibility. Rising school enrollments,new corrections policies, and inelastic tax systems have createdfiscal stress for many states. Excessive state spending in the1980s has contributed to recent fiscal problems in some states,but not generally.     

Direct certification in the national school lunch program expands access for children

Under the policy of direct certification for free school meals, school districts use information shared by state agencies about household eligibility for means‐tested programs in the state in order to determine the potential eligibility for free meals of students enrolled in the district. This information allows districts to automatically approve students in these eligible households for free meals without requiring the household to complete the application process. This paper examines the impacts of direct certification on students' likelihood of becoming certified for free meals, using data from a national survey of school food service directors as well as statelevel administrative data on program participation. A state‐level fixed effects model is estimated to account for the possibility of selection bias. The key finding is that direct certification leads to a statistically significant increase in the number of children getting free school meals. More generally, this finding highlights a promising approach for improving access to means‐tested programs without compromising program integrity. © 2008 by the Association for Public Policy Analysis and Management.     

Political markets, property tax referenda, and local school spending

For better or worse, fiscal decisions made through property tax referenda allow local political markets to work. Demand, supply, and voting process components of such markets are estimated for those Oregon K-12 school districts that held referenda between 1981 and 1986. Various attributes of the median voter were related to school spending, but supply decisions by school boards and administrators were also important. Large districts used state aid to substitute for local property tax revenues on nearly a one-for-one basis, while relying on reversion budgets (inadequate property tax bases and implicit threats of school closures) to extract greater-than-desired spending levels from the median voter.     

The implementation of school finance reform

The reform of educational finance systems is underway in various states. The results of the reforms in early states can act as guides to the design of new finance systems in other states. Based on recent experiences in New Jersey, the authors discuss the role that policy analysis can play in aiding the school finance reform process. The results of the New Jersey reform suggest that the policy analyst must understand the behavioral responses of school districts to new aid and must take into account likely changes in the underlying economic conditions of local areas if he or she hopes to accurately assess the impacts of alternative finance proposals.     

Providing Adequate Educational Funding: A State–by–State Analysis of Expenditure Needs

While school finance research and litigation has traditionally focused on the equity of funding across school districts, courts and policy makers are increasingly addressing the adequacy of educational resources. This article reviews recent developments in adequacy research and estimates the additional expenditures required to achieve adequacy across states. Using the cost–adjusted national median of current per–pupil expenditures as a benchmark for adequacy, the results suggest that additional spending of $15.6–18.5 billion is needed nationally to reach the benchmark in all districts. The additional spending would be concentrated in a small number of states, particularly in urban and urban fringe districts.     

Targeting in Economic Development: Comparative State Perspectives

This article examines recent efforts to target state industrialpolicy along three dimensions: sectoral aid to specific businessesor economic activities, geographic aid to growing or decliningregions, and direct assistance to the unemployed. While thestates have done better with sec-toral targeting than opponentsof a federal industrial policy have feared, industrial policymust compete with many other state programs, including moretraditional economic development efforts based on advertisingand tax expenditures. Only a few states have managed to channelmuch state aid to displaced workers or distressed communities.Despite some evidence as to the success of industrial policyfocused on limited areas or activities, dilution of policy focusand underinvestment of resources characterize state industrialpolicy efforts to date.     

THE RELATIVE RESPONSIVENESS OF STATE AND FEDERAL AID TO DISTRESSED CITIES

Both the states and the federal government distribute significant aid to cities. Federal agencies generally offer direct assistance to cities, bypassing the states. Many federal programs operate under the assumption that the federal government is more responsive to urban problems than are state governments. This paper demonstrates that this assumption is probably not true. Federal aid administered through the states has benefitted "distressed" cities more than federal assistance which goes directly to urban areas.     

“Robin Hood” and Texas School District Borrowing Costs

The “Robin Hood” system of school financing in Texas takes property tax funds from wealthy school districts and gives them to poorer districts. This paper examines Permanent School Fund‐insured, school district debt and discovers that under the “Robin Hood” system, Texas school districts with either Aa or A1 underlying credit ratings have higher borrowing costs than districts with lower ratings. Also, the borrowing costs of Texas school districts with underlying credit ratings of Aa and A1 are higher than those for non‐Texas, privately insured school districts with the same ratings, while the borrowing costs of A and Baa‐rated Texas school districts are lower.     

Perceptions of Federal Aid Impacts on State Agencies: Patterns, Trends, and Variations Across the 20th Century

American federalism is a dynamic process involving the viewsand interactions among state and national officials. Based onmultiple mail surveys of state agency heads across 75 years,this article traces the perspectives of state executives towarda core component of state–national relationships—federalaid. The time frame dates from the 1920s and covers a periodin which federal aid programs to the states grew enormously,as did state administrative establishments. There was a long-termrise in the perceived intrusiveness of federal aid as well asincreased policy distortion effects. Despite substantial fluctuationsin perceived aid impacts, there was a four-decade consistencyin the penetration of federal aid into and across the existing3,000 state agencies. Furthermore, when perceptions of nationalinfluence are combined in an index of perceived national fiscalinfluence, there was a roller coaster effect with an overallsecular "decline" in national influence since 1974.     

Intergovernmental Relations in the Reagan Era

This article reviews federal Reagan-era policies that affected grant-in-aid programs to state and local governments. We find the most important developments in federal aid policies of the Reagan years are twofold—the relative decline in the national government's involvement in domestic affairs and the concomitant rise in the role of the states. The administration achieved these effects by devolving federal authority to states and by reducing grant spending. Reagan's biggest cuts in federal aid outlays came in 1981; in subsequent years, total grant outlays began to rebound, increasing in nominal dollars to levels above those in the Carter years, though still below the high-water mark reached in 1978 in real terms. Medicaid, the largest federal aid program, accounts for most of the overall growth, masking cuts in operating and capital grant programs. Reagan's devolutionary and retrenchment policies are one of several factors we see as contributing to the rising role of states in domestic affairs, a trend we think is likely to continue in the next administration.