1. Financing Public Education
Chapter 8
Financing Public Education

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

3. 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

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

5. 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

6. 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

7. 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.

8. 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

9. 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