Financing Public Education Chapter 8 Financing Public Education

Criteria for Evaluating Taxes No Unintended Economic Distortions Equitable Easily Collected Responsive to Changing Economic Conditions

Sources of School Funds Local Property taxes, special taxes, and user fees Exclusive product rights State Taxes: income, sales, excise, severance Lotteries Federal U.S. Treasury

School Funding: Local Resources and Disparities Wealthy versus poor districts Municipal overburden Educational overburden Urban cycle of financial strain

State Financing of Local Schools Sales Tax – Usually compares favorably when Food and medicines not taxed Easy to administer and collect Elastic: Revenue parallels the economy In a recession tax revenues decline, hurting school funding Income Tax – Compares favorably More equitable than other taxes Easily collected through payroll Highly elastic – rates can be changed Other taxes and Lotteries Excise taxes, estate taxes, severance tax, and corporate income taxes Lotteries – Initially most focused on school funding, now are minimal contributors to school funding

Educational Support and the Graying of America Aging population Median age risen steadily since 1900 Those over 65 will be 20% by 2020 Older citizens have less contact with schools Tend to be fiscally conservative, live on fixed incomes Vote in high proportions More resistant to increased school taxes

State Methods of Financing Local School Districts Flat Grant Model State gives all local districts a fixed amount per student. Foundation Plan State guarantees a minimum expenditure per student to all districts. Power-Equalizing Plan State pays smaller percentage of local school expenditures as wealth of local district rises. Weighted Student Plan State aid is weighted according to special needs of students.

Two Types of Federal Grants Categorical Grants Funds designated for a specific group or purpose Block Grants Funds to be used for general purposes, at the discretion of the recipients

School Finance Trends and Concerns Taxpayer Resistance Accountability Movement Funding Tied to Progress (No Child Left Behind Act) Tuition Tax Credits, Educational Vouchers, Charter Schools and School Choice Streamlining School Budgets Infrastructure and Environmental Problems Staffing Needs Change