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School Finance Reform: Aid Formulas and Equity Objectives

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  • Duncombe, William
  • Yinger, John

Abstract

State education officials have implemented performance standards, but state education aid has not kept up. By focusing on the relationship between spending and property wealth, most existing aid formulas only partially account for cost differences across districts and, thus, fail to fully promote equity in school performance. This paper shows how to estimate comprehensive educational cost indexes that control for school district inefficiency and include them in state aid formulas. It also simulates for New York the impact of several aid formulas on educational performance and evaluates each formula using several equity criteria. The results indicate that outcome-based foundation formulas can achieve adequacy objectives, but that practical policies to promote vertical equity or wealth neutrality do not yet exist.

Suggested Citation

  • Duncombe, William & Yinger, John, 1998. "School Finance Reform: Aid Formulas and Equity Objectives," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(2), pages 239-262, June.
    • Handle: RePEc:ntj:journl:v:51:y:1998:i:2:p:239-62
    DOI: 10.1086/NTJ41789325
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    Citations

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    Cited by:

    1. Tae Ho Eom & William Duncombe & Phuong Nguyen-Hoang & John Yinger, 2014. "The Unintended Consequences of Property Tax Relief: New York’s STAR Program," Education Finance and Policy, MIT Press, vol. 9(4), pages 446-480, October.
    2. Bo Zhao, 2020. "How to Design a State Education Aid Formula That Is Equitable, Adequate, and Politically Feasible: The Case of Connecticut," Working Papers 21-1, Federal Reserve Bank of Boston.
    3. Bo Zhao, 2023. "Estimating the cost function of connecticut public K–12 education: implications for inequity and inadequacy in school spending," Education Economics, Taylor & Francis Journals, vol. 31(4), pages 439-470, July.
    4. Bird, Richard M. & Smart, Michael, 2002. "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development, Elsevier, vol. 30(6), pages 899-912, June.
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    6. Plummer, Elizabeth, 2006. "The effects of state funding on property tax rates and school construction," Economics of Education Review, Elsevier, vol. 25(5), pages 532-542, October.
    7. Kalyan Chakraborty & John Poggio, 2008. "Efficiency and Equity in School Funding: A Case Study for Kansas," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 14(2), pages 228-241, May.
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    9. Nguyen-Hoang, Phuong & Yeung, Ryan, 2010. "What is paratransit worth?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(10), pages 841-853, December.
    10. Rajashri Chakrabarti & Max Livingston & Joydeep Roy, 2014. "Did Cuts in State Aid During the Great Recession Lead to Changes in Local Property Taxes?," Education Finance and Policy, MIT Press, vol. 9(4), pages 383-416, October.
    11. John Yinger, 2009. "Hedonic Markets and Explicit Demands: Bid-Function Envelopes for Public Services, Neighborhood Amenities, and Commuting Costs," Center for Policy Research Working Papers 114, Center for Policy Research, Maxwell School, Syracuse University.
    12. Michah W. Rothbart, 2020. "Does School Finance Reform Reduce the Race Gap in School Funding?," Education Finance and Policy, MIT Press, vol. 15(4), pages 675-707, Fall.
    13. Duncombe, William & Yinger, John, 2005. "How much more does a disadvantaged student cost?," Economics of Education Review, Elsevier, vol. 24(5), pages 513-532, October.
    14. Buerger, Christian & Bifulco, Robert, 2019. "The effect of charter schools on districts’ student composition, costs, and efficiency: The case of New York state," Economics of Education Review, Elsevier, vol. 69(C), pages 61-72.
    15. Christopher R. Geller & David L. Sjoquist & Mary Beth Walker, 2006. "The Effect of Private School Competition on Public School Performance in Georgia," Public Finance Review, , vol. 34(1), pages 4-32, January.
    16. William Duncombe & John Yinger, 2011. "Making do: state constraints and local responses in California’s education finance system," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(3), pages 337-368, June.
    17. Duncombe, William & Yinger, John, 2000. "Financing higher student performance standards: the case of New York State," Economics of Education Review, Elsevier, vol. 19(4), pages 363-386, October.
    18. Hui-Ling Peng & Chih-Tung Hsiao & Ming-Hung Yao, 2016. "Systemic Analysis of Pensions: The Case of the Taiwanese Primary School Teacher Pension Fund," Systems Research and Behavioral Science, Wiley Blackwell, vol. 33(1), pages 159-172, January.
    19. Il Hwan Chung & William Duncombe & John Yinger, 2018. "The Impact of State Aid Reform on Property Values: A Case Study of Maryland's Bridge to Excellence in Public Schools Act," Education Finance and Policy, MIT Press, vol. 13(3), pages 369-394, Summer.
    20. Maria Marta Ferreyra, 2009. "An Empirical Framework for Large-Scale Policy Analysis, with an Application to School Finance Reform in Michigan," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 147-180, February.
    21. Britton, Jack & Propper, Carol, 2016. "Teacher pay and school productivity: Exploiting wage regulation," Journal of Public Economics, Elsevier, vol. 133(C), pages 75-89.

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