The Problem in Brief I. INTRODUCTION Although almost every State constitution makes education a State responsibility, in practice much of the responsibility is delegated to local school districts. By virtue of proximity to the point at which educational services are delivered, the school system is presumably in the best position to make decisions on the form of education appropriate to the needs and preferences of its community. But its decisions are That level is determined, also subject to the constraints imposed by the level of resources that the community can make available for education. for the most part, by taxation on property wealth; and property wealth is distributed nonuniformly throughout the districts in each State. A number of State courts have ruled that substantial disparities in educational resources, when traceable to varying levels of local ability to pay, violate their constitutions by failing to provide equality of educational opportunity to all children. The Congress has already recognized the national importance of this issue in several ways. The long-standing Federal impact aid program reimburses localities for the costs of educating children of Federally connected workers. Within that program, regulations now permit States that have adequate school finance equalization programs to count as State aid a school district's impact aid grant. More recently, the Congress has authorized grants to assist States in planning for equalization. is not clear what further role the Federal government ought to play in school finance within the States. From at least one perspective, however, there is a potential motivation stemming from the Federal drive to eliminate . It discrimination in schooling and to reduce the effects of educational disadvantage; these programs would be of little, avail if the educational system suffers a broader and more pervasive form of shortfall -- in re Moreover, the sources available to children in less wealthy districts. drive to eliminate discrimination in the core program is consistent with the current Federal focus on equalization of opportunity. This study examines changes that have taken place in recent years in the distribution of resources within the States, to serve as a base for evaluating the possible need for further Federal involvement in school finance.1* Structure of the Study States have reacted in various ways to the concern for equalization. Some have modified the basic form of their school finance system, others have increased the percentage of total funds that is collected by the State rather than by the localities, and others are studying the problem. Out of this mix of activities, it is difficult to discern the effectiveness of school finance reform. This study examines the effectiveness of school finance reform solely in terms of results the resource levels made · available in the school districts of a State and the relation between resources and local wealth. In contrast to other analyses, the present study examines all the states. 2 A snapshot of the distribution of resources at a single time could, however, be misleading. At least as important is the extent to which the situation has changed over time. If the situation has improved, it may If there not be unreasonable to assume that it will continue to do so. This study therefore describes not only the recent situation but also the changes that have taken place over the past. Ideally, for such a study there would be data available for each of a number of years including the most recent. The real world never makes such data available; but for the purposes of this analysis there are two comparable data bases one for 1970 and the other for 1975 that contain generally adequate 3 - data for all the states. The movement to reform State school finance programs did not get under way until after 1970, and its initial impacts could be expected to have registered by 1975. The study begins by examining, in Section II, the changes in disparity in the States, the beneficiaries and losers from the changes, and the costs of further equalization. In Section III we relate the changes in resource allocation to activities that various States have taken in a presumed effort to reform their school financing arrangements. A summary of the findings and conclusions is presented in Section IV. II. DISPARITY CHANGES, 1970 to 1975 This section presents the changes that have taken place between 1970 and 1975 in the distribution of educational resources. The discussion is organized around three basic questions: What changes have taken place between 1970 and 1975 in overall What kinds of districts have gained and lost from those changes? To be able to address these questions, two methodological matters must be decided: (1) how resources are to be defined and (2) how dis parities are to be measured. The first part of this section addresses these matters. A. Methodology Definition of Resources Resources are defined here as the portion of current operating expenditures (COE) per pupil that is supported by non-Federal sources. COE is chosen for several reasons: it is a comprehensive measure of educational resources; it excludes capital outlays, which could otherwise make resources appear to be very high in the year of outlay; and it is readily available in national data bases. COE as reported in the data files are based on revenues collected from several sources, including the Federal Since the purpose of this study is to examine the distribution of local and State funds, it is necessary to adjust COE to remove Federal 4 government. revenue. The exception is Federal impact aid, which is treated here as local revenue. 5 Although many analysts have employed expenditures as though they were equivalent with resources, they are not the same. The difference 97-782 212: arises principally from the fact that a dollar buys different levels of real educational resources in different parts of a State. Techniques are now under study for identifying and adjusting for the varying costs of education throughout a State, but it has not been possible to apply them 6 in the present study. This shortcoming affects the analyses discussed below differentially, as will be pointed out in the review of the results. All district expenditure figures are stated on a per-pupil basis. The States count pupils in various ways. Some use average daily attendance (ADA), some use average daily membership (ADM), and some use a combination of the two. Rather than impose one or the other of these measures on all States, this study employs whatever measure the State has used. 7 Measures of Disparity Several methods are used to display the effect of resource allocations in the States. First, it is helpful to have a simple measure for assessing overall disparity in a State - that is, how much disparity there is, without reference to the incidence or causes of the disparity. There is no wholly satisfactory measure of disparity, and the perceived inequality can depend, sometimes quite strongly, on the measure employed. This study employs two measures: 95:5 Percentile. The ratio of expenditures at the 95th per- 8 |