Making do: State constraints and local responses in California's education finance system

William Duncombe, John Yinger

Research output: Contribution to journalArticle

18 Scopus citations

Abstract

California's unique education finance system combines general state support for school districts, numerous state categorical aid programs, a restricted local property tax, and two unusual small local revenue sources: a parcel tax and contributions from educational foundations. This paper explores the incentives this system creates for local voters and school officials and estimates the impact of these incentives on education costs, school district efficiency, and the demand for student performance. The paper finds that voters in California respond to the price incentives in this system even though they work through the hard-to-pass parcel tax instead of the property tax; that educational outcomes are strongly influenced by student characteristics and other factors that influence educational costs; that school district efficiency is undermined by the state's current emphasis on categorical instead of unrestricted aid; and that, overall, the education finance system is not well designed to meet the state's educational objectives.

Original languageEnglish (US)
Pages (from-to)337-368
Number of pages32
JournalInternational Tax and Public Finance
Volume18
Issue number3
DOIs
StatePublished - Jun 1 2011

Keywords

  • Demand for education
  • Educational costs
  • School district efficiency
  • State aid to education

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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