For the last 30 years, beginning with the 1971
landmark Serrano v. Priest decision in California, state courts have
been inundated with challenges to the constitutionality of their
state-based systems for financing elementary and secondary
education. However, since many states employ different equity
standards and definitions of education, and more importantly, since
legal standards vary among states and over time, it has been
exceedingly difficult to distill a general theory of educational
finance that explains the behavior of individual states.
Fortunately, interested readers need wait no longer; in this
excellent and timely new book, Yinger not only makes sense of the
various state-based experiments in educational finance, but also
presents a unifying theory that has powerful implications for the
design of such systems. The book itself is divided into two parts.
The first part focuses on many of the general issues in the reform
of state aid to education (e.g., selecting aid formulas, adjusting
for disadvantaged students and district accountability); the second
part presents detailed case studies of recent ambitious school
finance reform in five states. Although highly technical, this is a
must-read for academics and policy makers. Summing Up: Highly
recommended. Upper-division undergraduates and above.
-- Brian Jacob, John F. Kennedy
School of Government, Harvard University, Journal of
Economic Literature, September 2005. pg. 838.
This edited volume
examines key issues and recent developments in education finance
reform and how these policy decisions impact educational
opportunities for poor children. The book is quite timely given the
proliferation of legal challenges to state education finance systems
in recent years along with the increasing role states are required
to play in education under the federal legislation No Child Left
Behind. The volume provides an excellent overview of education
finance and should be a valuable resource for policymakers,
scholars, and educators.
The first half of the book consists of four
chapters that discuss general issues relevant to state aid reform,
including the legal history and theories underlying constitutional
challenges to state finance systems and the interaction between
accountability and finance reform. The first chapter, which provides
a clear and thorough overview of many key concepts, is particularly
useful. Among other things, the author discusses the most common aid
formulas, describes the equity and adequacy objectives of finance
838 Journal of Economic Literature, Vol. XLIII (September 2005)
reform, highlights the importance of accounting for differential
costs, and reviews the issue of district supplementation of state
aid. Another chapter focuses on the limits of state aid policies in
general equilibrium, emphasizing the role of private schooling,
housing markets, and nonfinancial inputs to the education process.
While the partial versus general equilibrium distinction is
well-known to economists, this discussion serves as a good
introduction to noneconomists and provides economists with useful
benchmark effects based on simulations from a computable GE model.
The second half of the book consists of
five chapters that examine in greater detail school finance reforms
in Kansas, Kentucky, Michigan, Texas, and Vermont. These chapters
provide a wealth of background information that will be useful to
serious scholars, but perhaps contain too many details for the
casual reader. The most attractive feature of these chapters is that
they not only provide details of the reforms themselves, but also
examine the impacts on student performance as well as expenditures.
Given the invariable space limitations, however, this breadth comes
at the expense of depth. Data and identification issues, for
example, are not as thoroughly discussed as they would be in a
rigorous program evaluation. Finally, it is worth noting that the
volume includes three appendices that provide a state-by-state guide
to court decisions and funding formulas, which will be extremely
useful to researchers.
While this volume covers many central
issues in education finance reform, several topics deserve greater
attention. The first is the relationship between financial resources
and student outcomes. A fundamental assumption underlying education
finance reform is that financial resources will improve student
outcomes. While certainly plausible, decades of research have
suggested the link is not nearly as clear as one might expect. There
is evidence, for example, that public school districts do not hire
the best teachers available to them and that the current pay
structure in most school systems results in compressed wage
schedules that do not reward performance. Also, recent research on
teacher labor markets suggests that nonfinancial factors, such as
student characteristics and geographic preferences, play a large
role in teacher location and transfer decisions. At best, education
finance reform can be seen as a necessary but not sufficient
condition for enhancing school quality. A second issue is the
relative costs and benefits of the different taxes utilized under
alternative finance systems. Finance reform is one of the areas
within education in which economists have considerable insight to
offer policymakers. The chapter on Michigan briefly reviews evidence
on the incentive effects of sales vs. property taxes, but the volume
would benefit from a more comprehensive discussion of these issues
Finally, this reader would have benefited from an interpretative
summary of the five case studies that integrated the lessons from
these experiences into the existing literature.
Overall, however, this volume serves as an
excellent introduction for the causal reader and a valuable resource
for the serious scholar, or anyone who seeks to leave no child
behind.
-- A. Abigail Payne, McMasters
University, Hamilton, Ontario, Canada, National Tax Journal December
2005. pg. 843-46.
Abstract:
The editor of the book, John Yinger, has
assembled an interesting group of authors to survey the issues
around state aid reform and to analyze the reforms in specific
states. The book is a good reference work from two perspectives.
First, it provides a good overview of state aid financing schemes
and of the issues one should consider when constructing or studying
the effects of a state aid finance plan. Second, it provides a nice
set of within–state analyses of specific reforms. The book, however,
is not exhaustive in its review of the existing literature, nor does
it address specific empirical analyses and the issues associated
with these analyses. Any reader of this book should use it as a
stepping stone for understanding the various issues associated with
state education finance.
Full review available to members at:
http://ntj.tax.org
