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Litigation, School Finance Reform, And Aggregate Educational Spending

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  • Robert L. Manwaring
  • Steven M. Sheffrin
Abstract
The United States has traditionally financed elementary and secondary education through property taxation. In the past two decades, litigation in many states has triggered educational reform movements designed to reduce the inequalities in educational expenditures across districts inherent in a property tax financed system. While these movements have been successful in reducing inequalities, there are some who argue that this movement has had adverse affects on the level of educational spending. If, indeed, this is the case, then there would be trade-offs between reductions in inequality and the level of investment in education. In this paper, we use a panel data set across all the states from 1970-1990 to examine the role of litigation and educational finance reform in determining the level of education funding in a flexible, dynamic setting. This allows us to analyze the determinants of educational spending and to assess the differential impacts of litigation and reform movements across states. The dynamics are driven by four effects - an income effect, a state control effect, a state budget effect, and a base effect. An important finding of our work is that litigation and reform have differential effects across the states, in some cases leading to increases while in other cases decreases in spending. We supplement our empirical research with a closer examination of several case studies.

Suggested Citation

  • Robert L. Manwaring & Steven M. Sheffrin, "undated". "Litigation, School Finance Reform, And Aggregate Educational Spending," Department of Economics 96-05, California Davis - Department of Economics.
    • Handle: RePEc:fth:caldec:96-05
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    File URL: http://www.econ.ucdavis.edu/working_papers/96-5.pdf
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    References listed on IDEAS

    as
    1. Silva, Fabio & Sonstelie, Jon, 1995. "Did Serrano Cause a Decline in School Spending," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(2), pages 199-215, June.
    2. Rothstein, Paul, 1992. "The demand for education with 'power equalizing' aid : Estimation and simulation," Journal of Public Economics, Elsevier, vol. 49(2), pages 135-162, November.
    3. Fernández, Raquel & Rogerson, Richard, 1999. "Education finance reform and investment in human capital: lessons from California," Journal of Public Economics, Elsevier, vol. 74(3), pages 327-350, December.
    4. Manwaring, R.L. & Sheffrin, S.M., 1994. "The Effects of Education Equalization Litigation on the Levels of Funding: An Empirical Analysis," Papers 94-14, California Davis - Institute of Governmental Affairs.
    5. Fischel, William A., 1989. "Did Serrano Cause Proposition 13?," National Tax Journal, National Tax Association;National Tax Journal, vol. 42(4), pages 465-473, December.
    6. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-1177, September.
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    8. Raquel Fernandez & Richard Rogerson, 1994. "Income Distribution and Public Education: A Dynamic Quantitative Evaluation of School Finance Reform," NBER Working Papers 4883, National Bureau of Economic Research, Inc.
    9. Silva, Fabio & Sonstelie, Jon, 1995. "Did Serrano Cause a Decline in School Spending," National Tax Journal, National Tax Association, vol. 48(2), pages 199-215, June.
    10. Fernandez, Raquel & Rogerson, Richard, 1998. "Public Education and Income Distribution: A Dynamic Quantitative Evaluation of Education-Finance Reform," American Economic Review, American Economic Association, vol. 88(4), pages 813-833, September.
    11. Fischel, William A., 1989. "Did Serrano Cause Proposition 13?," National Tax Journal, National Tax Association, vol. 42(4), pages 465-73, December.
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    Cited by:

    1. Fernández, Raquel & Rogerson, Richard, 1999. "Education finance reform and investment in human capital: lessons from California," Journal of Public Economics, Elsevier, vol. 74(3), pages 327-350, December.
    2. Caroline M. Hoxby, 2001. "All School Finance Equalizations are Not Created Equal," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1189-1231.
    3. Loeb, Susanna, 2001. "Estimating the effects of school finance reform: a framework for a federalist system," Journal of Public Economics, Elsevier, vol. 80(2), pages 225-247, May.
    4. Thomas Downes, 2003. "School Finance Reform and School Quality: Lessons from Vermont," Discussion Papers Series, Department of Economics, Tufts University 0309, Department of Economics, Tufts University.
    5. Raquel Fernandez & Richard Rogerson, 2003. "Equity and Resources: An Analysis of Education Finance Systems," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 858-897, August.
    6. Douglas Noonan, 2007. "Fiscal pressures, institutional context, and constituents: a dynamic model of states’ arts agency appropriations," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 31(4), pages 293-310, December.
    7. Mörk, Eva & Ahlin, Åsa, 2007. "Effects of decentralization on school resources: Sweden 1989-2002," Working Paper Series 2007:9, Uppsala University, Department of Economics.
    8. Thomas A. Husted & Lawrence W. Kenny, 2002. "The Legacy of Serrano: The Impact of Mandated Equal Spending on Private School Enrollment," Southern Economic Journal, John Wiley & Sons, vol. 68(3), pages 566-583, January.
    9. Ahlin, Åsa & Mörk, Eva, 2008. "Effects of decentralization on school resources," Economics of Education Review, Elsevier, vol. 27(3), pages 276-284, June.
    10. Blankenau, William & Skidmore, Mark, 2002. "The Relationship Between Education Finance Reform and Tax and Expenditure Limitations," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 32(1), pages 1-18.
    11. Thomas A. Downes, 2002. "Do state governments matter?: a review of the evidence on the impact on educational outcomes of the changing role of the states in the financing of public education," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 47(Jun), pages 143-180.
    12. Raquel Fernandez, 2001. "Sorting, Education and Inequality," NBER Working Papers 8101, National Bureau of Economic Research, Inc.
    13. James Alm & Robert D. Buschman & David L. Sjoquist, 0. "Citizen "Trust" as an Explanation of State Education Funding to Local School Districts," Publius: The Journal of Federalism, CSF Associates Inc., vol. 41(4), pages 636-661.
    14. Fernández, Raquel, 2001. "Sorting, Education and Inequality," CEPR Discussion Papers 3020, C.E.P.R. Discussion Papers.
    15. Eric J. Brunner & Jon Sonstelie, 2006. "California's School Finance Reform: An Experiment in Fiscal Federalism," Working papers 2006-09, University of Connecticut, Department of Economics.

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