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• W2992664135 abstract "ABSTRACT This paper is an empirical investigation of the hypothesis that the degree of homogeneity within a school district affects the mix of funding that the school district receives. The changing mix of school district finance has received a great deal of attention recently (Murray et al 1998, Hoxby 1998,1996, Hanushek 1986, Card and Krueger 1996). While there has been a great deal of work on the equity and efficiency of funding types, there has been little inquiry into the nature of the variance in the mix of school district financing. In this paper we develop a framework that investigates the variance in the mix of output based on the relative homogeneity of the school district population. More specifically we hypothesize that the more homogeneous the population, the more likely the funding will come from local property tax base while the more heterogeneous populations will receive more financing from higher level governments. INTRODUCTION There is an extensive body of literature in economics regarding the relationship between school district resources and outcomes, the interdependence between income and education, equalization spending, and demographic effects on school outcomes and finance. However, only recently has attention been turned to the issue of the mix and source of school district financing as both an efficiency issue. Hoxby (1996) notes that changes in the financing affects the fundamental incentives that schools face, and thus changes the long term goals that they pursue, regardless of a consensus on a preferred system of school finance. It is these incentives that support our hypothesis and are explored in Section three. Pointing out the many 'reforms' that attempt to either reduce local control or extend it with regards to school finances reinforces the relevance of this issue. Hoxby also points out that one of the most important trends in school finance funding is the decreased reliance on local property tax-based financing in favor of higher-level government finance, specifically state level equalization aid.1 However, the primary focus of her work is on the efficiency-equity problem of school finance, and contends that local finance resolves much of this problem. Hoxby (1996) argues that the level of Public Schooling is allocatively efficient when the primary source of funding is local property taxed based financing because of the Tiebout process. More importantly, Hoxby notes that in these districts that there was a high degree of homogeneity among households. We contend that it is the degree of homogeneity in the district that leads to more local property tax based finance, thus leading to allocative efficiency. It also begs the question: when the primary source of funding is not reliant on the local property tax base is allocative inefficiency the necessary outcome? The issue of the source and mix of school finance is also addressed by Murray et al. (1998). They investigate the impact of school finance equalization reform on the distribution of resources and find that these reforms have increased the aggregate level of spending on education and reduced the within-state inequalities in school districts by 19 to 34 percent. This is accomplished primarily through state funding by means of higher state taxes. Also, they find that from 1972-1992 that the share of local spending was rising while the federal shares were dwindling. They attribute the increased percentage in state and local spending shares to recent legislation and the resulting change in behavior. However, this work does not address why there were differences in the mix of these shares to start with. Hanushek (1986) extensively reviews the economics of education and schooling and focuses on the production and efficiency aspects of schooling. This deviates from the traditional inquiries into the ultimate uses of education. Hanushek also points out that federal funding jumped during the 60's and then slowed in growth during in the 70's and declined during the 80's. …" @default.
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• W2992664135 date "2008-09-01" @default.
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• W2992664135 title "Diversity and School District Spending" @default.
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