EducationFinanceSystems

EducationFinanceSystems - Equity and Resources An Analysis...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Equity and Resources: An Analysis of Education Finance Systems Raquel Fernández New York Univeristy CEPR and NBER Richard Rogerson Arizona State University NBER September 5, 2002 Abstract We analyze fi ve education fi nance systems: local, State, foundation, power equalizing with recapture (PER) and power equalizing without re- capture (PEN). In a calibrated model, we fi nd that fi nance systems have large e ff ects on educational resources and equity. The trade-o ff between equity and resources, however, is not monotone. Ranking systems by ex- pected utility, we fi nd that PER consistently ranks highest, though it pro- vides fewer resources to education than the foundation and PEN systems, and is less equitable than a state system. We prove that for an important subset of preferences, PER will win in majority voting comparisons with the other systems. 1. Introduction Publicly fi nanced education is a pervasive feature of modern economies. Even a casual look at education spending patterns across either states within the US or across countries, however, reveals substantial variation in both spending on public We wish to thank Richard Romano, Eli Berman and seminar participants at the University of Iowa, University of Michigan, Boston University, and NYU as well as at the NBER Public Economics Conference on Education Finance and the Florida University Conference on Educa- tion Policy, for helpful comments. Both authors gratefully acknowledge fi nancial support from their respective NSF grants and the fi rst author also thanks the CV Starr Center for support.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
education and its distribution across students. This may be thought to be in large part a result of the rules which impact on education spending—what we will call the education fi nance system . Education fi nance systems di ff er signi fi cantly across US states and across coun- tries and, not surprisingly, are the subject of much controversy. In the US, states have found themselves facing actual or threatened court challenges to their edu- cation fi nance systems over the last several decades, most often on the grounds that the actual system results in large inequities. As a result, many states have made dramatic changes to their systems of fi nancing K- 1 2 education with the speci fi c objective of providing more equitable educational opportunities. There has been relatively little accompanying analysis, however, examining how these changes might a ff ect the total sum of resources dedicated to education and whether indeed increased equality is a likely outcome. Central to understanding how a school fi nance system a ff ects the sum and distribution of education resources is an analysis of the mechanisms through which it transfers resources across individuals and distorts incentives to devote funds to education. The objective of this paper is to study these mechanisms in a simple general equilibrium model and to perform a calibration exercise to assess their quantitative signi fi cance. In order to do so, we use a standard model of local
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern