1 Discussion © Allen C. Goodman, 2007

2 Thoughts Even though article is relatively new, a lot of the numbers are dated. Still, it identifies some key questions that address not only education funding, but all types of funding. So, we will concentrate on the types of questions to ask, rather than the specific answers.

3 Most Funding is State and Local

4 Issue 1 – Service Increases? To what degree to local school districts use grant funds to increase spending and expand educational services? –What is income elasticity of demand for services? –To what degree to grant $ substitute for local tax $?

5 Issue 2 – Does the grant type matter? How does the additional spending or service that results from grants depend on the characteristics of the grant itself? –Lump-sum v. matching? –Block grant v. categorical grant?

6 Issue 3 – Are grant $ fungible? If grants are intended to finance a particular functional area, to what extent are those additional resources used to expand spending or service in a different functional area of the school budget? –Do grants increase spending in a category, or: –Do administrators put the grant money into a pot, and take the other money out to spend on something else?

7 Issue 4 – Do state and federal grants change things? Have state and federal education grants in aggregate changed the nature of public education substantially or have they simply served to support less wealthy districts? –Do grants help the rich districts? –Do they simply “raise the bottom?”

8 Issue 5: Which Reforms Work? As states consider a variety of options for changing the finance and provision of primary and secondary education, what does the evidence about local responses to education grants suggest about the most effective characteristics of reforms?

9 Evaluations 1.Unrestricted general grants without minimum tax rates or expenditure requirements  tax relief rather than increased spending. 2.Categorical grants stimulate educational spending more than block grants. 3.Minimum spending or tax rate requirements force schools to spend more on education than they otherwise would.

10 Evaluations 4.It is important for grants to reflect differences in the costs of providing education among districts. (Can’t give same $ grants if costs are different in different places). 5.Most research focuses on expenditures rather than outcomes. Why? –It’s hard to measure outcomes! 6.Most aid has tended to redistribute resources rather than to change educational production