Andrew Reschovsky

Let No Child Be Left Behind: Determining the Cost of Improving Student Performance:

The No Child Left Behind Act of 2001 and recent legislation in a number of states have raised the standards for accountability in schools, with the objective of closing achievement gaps and increasing student performance overall. These new education policies, however, rarely address the way in which schools are financed. They ignore the fact that characteristics of schools and students require that some schools spend more than others to achieve any given student performance standard. To determine the characteristics that lead to variations in the costs of achieving a specified improvement in student performance, the authors estimate an educational cost function using data from elementary and secondary school districts in Texas. Results indicate that cost differences across districts can be quite large. The cost function results are summarized into a cost index that can then be used in a simple formula to guarantee that every district has sufficient fiscal resources to achieve state-imposed performance goals.

FISCAL EQUALIZATION AND SCHOOL FINANCE

Discusses fiscal equalization in financing public education and provides examples of school districts (from varying income levels) that have successfully provided equal access to educational resources.

Residential choice and the local public sector: An alternative test of the “Tiebout Hypothesis”

Abstract This paper provides an empirical test of the hypothesis, commonly referred to as the “Tiebout Hypothesis,” that locally provided public services and the level of local taxes influences residential choice decisions of households. This hypothesis has previously been tested by looking at the capitalization of fiscal factors into housing prices. This study analyzes the determinants of residential choice by looking at household moving data. The results provide support for the Tiebout hypothesis, even in cases when no capitalization is expected. Support was developed for the hypothesis that at any point of time significant fiscal disequilibrium exists for residents of some communities, resulting in a reduction of the efficiency properties of the Tiebout mechanism.

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.

Financing Schools in the New South Africa

Race was the dominant fact in explaining all aspects of life in apartheid South Africa. In April 1994, with the election of Nelson Mandela as president, a new, nonracial government was formed. The new government was committed to providing access to a wide range of public services, including education, to all South Africans, regardless of race or economic circumstance. In almost every dimension, South Africa has undergone dramatic changes since the end of apartheid. Public education in South Africa has been completely transformed from an amalgam of separate and highly unequal educational systems, defined in terms of the race and place of residence of students, into a unified system based on the principle of providing equal access to highquality education to all South Africans. Although since 1994 funding and resource inequalities in the public education system have been dramatically reduced, significant inequalities still remain. While some schools have highly qualified teachers and a full range of education facilities, such as science laboratories and well-stocked libraries, other schools must rely on many unqualified teachers and lack even basic facilities and supplies such as working toilets and a sufficient number of classrooms for their students. This article traces the changes in education finance that have occurred since 1994, especially the decentralization of financial responsibility for primary and secondary education to nine new provincial governments, though most funding flows from the national government to the provinces. I assess the success of the government in meeting its constitutional mandate to provide all South Africans with a “basic education,” paying particular attention to the challenges of (a) allocating adequate resources to schools serving the nation’s historically disadvantaged students and (b) finding an appropriate mix of school fees paid by parents and public funds.

Does No Child Left Behind Place a Fiscal Burden on States? Evidence from Texas.

The No Child Left Behind Act of 2001 (NCLB) requires states to establish goals for all students and for groups of students characterized by race, ethnicity, poverty, disability, and limited English proficiency and requires schools to make annual progress in meeting these goals. In a number of states, officials have argued that increased federal education funding is not sufficient to cover the costs imposed by the new legislation. In this article, we use data from Texas to estimate the additional costs of meeting the new student performance standards. We find that these costs substantially exceed the additional federal funding. The article concludes with a discussion of whether NCLB should be considered an underfunded federal mandate and a brief discussion of the appropriate federal role in the financing of K12 education.

States' Responses to the Budget Shortfalls of 2001-2004

A mild recession took a far harder toll on state budgets than had been expected. States have even cut back, by some measures, on spending for primary and secondary education. The authors think budgetary restrictions are likely to continue as sources of tax revenues become more constrained.

Tax Base Sharing: An Assessment of the Minnesota Experience

Abstract In 1971 Minnesota enacted tax base sharing legislation designed to share a proportion of all commercial-industrial growth occurring within the Twin Cities metropolitan area among all local governments in the area. In addition to reducing the inequities caused by the existing distribution of resources within the metropolitan area, the tax base sharing plan is designed to stimulate a more efficient and rational pattern of metropolitan area development. The article describes how the plan works and assesses its first years of operation. The analysis suggests that in the long run the plan will lead to a more efficient pattern of development only if used in conjunction with other planning instruments.

The Taxation of the Poor

This paper uses microsimulation modeling to estimate the annual burden of federal, state, and local taxes on the poor in two states. We find that in 1988 the average burden of taxation on poor families and individuals was 15.3 percent in Massachusetts and 18 percent in New York. As most of the burden is due to state and local taxes, federal tax reform had only a minor impact on the overall tax burdens faced by the poor. Though the analysis is for two state, we argue that the basic results are applicable for most other states. Given the high incidence of persistent poverty among those who are poor in any given year, we argue that annual burdens provide a good indication of long-run burden for a significant proportion of the poor.

State Fiscal Responses to Welfare Reform during Recessions: Lessons for the Future

The 1996 welfare reform transformed open-ended matching grants to states to fixed block grants. This article considers whether, given the new regime, states will be able and willing to meet the need for public assistance during recessions. The accumulation of large balances of unspent federal welfare funds helped states weather the first year or so of the current recession without having to cut programs for needy families. While new fiscal rules promoted positive reform during a period of economic prosperity, they may be leaving states and their most vulnerable citizens at serious risk as the economic and fiscal slowdown continues.