FISCAL CAPACITY
DEFINED...
Overview - The idea of fiscal capacity - or the measurement of wealth reveals the ability of a locality, state, or nation to fund those services it deems important. Fiscal capacity can be defined as the tax base of a locality, a state, or a nation as measured by some form of economic income or wealth. Capacity can be measured using various methods. For example, a county’s fiscal capacity might be measured by residents’ per capita property value. At the state level, fiscal capacity may be represented by state residents’ per capita income. As a nation, we can examine fiscal capacity by comparing our gross domestic product (GDP) to that of other nations. These examples display widely varying levels of capacity based on different criteria: property, income, and GDP (Owings & Kaplan, 2013, p.132).
Determining Fiscal Capacity - Initially, the idea of fiscal capacity and how state and federal governments equalize for capacity seems relatively simple: Low-capacity states and localities receive a greater share of funds from respective federal and state treasuries to operate the schools to “level the playing field” for educational opportunity The richer help the poorer. As we know, however, sharing scarce resources is much more complex. Most localities use property taxes as the primary source of school funding. The value of one’s home as measured by the property tax may not be the best measure of capacity to fund schools - especially in an economy when many mortgages are “underwater.” Today, income may be a more realistic measurement of wealth. Moreover, a combination of measurements may be the best overall indicator of capacity (Owings & Kaplan, 2013, p.133).
Local Fiscal Capacity Issues - Traditionally, a locality measured its fiscal capacity as a ratio of the district’s property valuation divided by the number of pupils within the system, which provides a property value amount on a per-pupil basis. On the surface, this seems like a fair means of comparing local capacity. This calculation method lacks an important education component - the students’ needs. A high-poverty school district will have greater proportional needs than virtually any other school district. Students who come to school well fed and already possessing basic literacy and numeracy skills do not have the same educational needs as those who come to school hungry and without years of reading and arithmetic experiences at home. In addition, all other factors being equal, a school district with 20% of its students identified as eligible to receive special education services will have a greater need than the district with 10% of its students receiving special education services. Moreover, an isolated, rural school system has different needs from those of an affluent, suburban district close to a great city’s cultural and intellectual advantages (Owings & Kaplan, 2013, p.135).
State Fiscal Capacity Issues - Just as localities have differences in their ability to raise funds for services, states also vary in their capacity. For example, the pictures President Lyndon Johnson showed in the mid-1960s of family poverty in the Deep South bore no resemblance to anything that most New England families had seen in their states. In truth, most middle- and upper-class Americans could not relate to that type of abject poverty. If that level of deprivation existed in homes, what types of schools did these children attend? What resources did their teachers have? How much money was the PTA able to raise for these schools? Variance exists in states’ fiscal capacity. Just as the late 19th century measured capacity as property values, states can calculate per capita property values. Likewise, it is possible to calculate per capita income, and also to adjust for cost-of-living standards across states. Each piece of information provides another part of the puzzle in determining state capacity. Variance also exists in how state capacity is measured. Some states measure capacity on a capita or total population basis. Other states calculate capacity according to how many students are enrolled in public school (Owings & Kaplan, 2013, p.139).
National Fiscal Capacity Issues - Certain national and international issues are of concern to education finance. Addressing national fiscal capacity in detail is beyond the scope and responsibilities of most U.S. educators, but a brief overview id provided here. Just as states and localities have difficulty measuring capacity, so do nations. This problem is seen in the various measurements that come in and out of favor to measure wealth and productivity. Many ways exist to compute a nation’s wealth. Gross National Product (GNP) includes the total economic value of all the goods and services produced by a country during a given year. Gross Domestic Product (GDP) includes the total output a country produces, including either public or private factors, regardless of where production occurs, within a given year. GDP is now a more favored indicator with economists than GNP. GDP is a fair proxy for a nation’s capacity. Natural resources were once considered the primary focus for developing wealth or capacity. We now know that human capital development plays an integral role in how nations develop (Owings & Kaplan, 2013, p.146).
Related Scripture - "One gives freely, yet grows all the richer; another withholds what he should give, and only suffers want. Whoever brings blessing will be enriched, and one who waters will himself be watered" (Proverbs 11:24-25 ESV)
Scriptural Significance - We have all been given the capacity to give. Yet for some reason school financing is still underfunded. Our children are our best resource for the future and this nation's ability to survive in the 21st century. Having to look at numbers based on GNP, GDP, or other gauges of wealth just to see that schools will continue to have less is a sign of a country that is in need of spiritual guidance. Children's needs are to be provided for as to not deprive them of their promises by the Lord.
Leadership Significance - Spiritual leadership in insuring that there is enough hay in the barn to care for the needy is something that each aspiring administrator should be considering. Whether or not the capacity exists should not be the qualifier in providing for the concerns of students. Good leadership finds other avenues of support to increase the capacity to give.
Overview - The idea of fiscal capacity - or the measurement of wealth reveals the ability of a locality, state, or nation to fund those services it deems important. Fiscal capacity can be defined as the tax base of a locality, a state, or a nation as measured by some form of economic income or wealth. Capacity can be measured using various methods. For example, a county’s fiscal capacity might be measured by residents’ per capita property value. At the state level, fiscal capacity may be represented by state residents’ per capita income. As a nation, we can examine fiscal capacity by comparing our gross domestic product (GDP) to that of other nations. These examples display widely varying levels of capacity based on different criteria: property, income, and GDP (Owings & Kaplan, 2013, p.132).
Determining Fiscal Capacity - Initially, the idea of fiscal capacity and how state and federal governments equalize for capacity seems relatively simple: Low-capacity states and localities receive a greater share of funds from respective federal and state treasuries to operate the schools to “level the playing field” for educational opportunity The richer help the poorer. As we know, however, sharing scarce resources is much more complex. Most localities use property taxes as the primary source of school funding. The value of one’s home as measured by the property tax may not be the best measure of capacity to fund schools - especially in an economy when many mortgages are “underwater.” Today, income may be a more realistic measurement of wealth. Moreover, a combination of measurements may be the best overall indicator of capacity (Owings & Kaplan, 2013, p.133).
Local Fiscal Capacity Issues - Traditionally, a locality measured its fiscal capacity as a ratio of the district’s property valuation divided by the number of pupils within the system, which provides a property value amount on a per-pupil basis. On the surface, this seems like a fair means of comparing local capacity. This calculation method lacks an important education component - the students’ needs. A high-poverty school district will have greater proportional needs than virtually any other school district. Students who come to school well fed and already possessing basic literacy and numeracy skills do not have the same educational needs as those who come to school hungry and without years of reading and arithmetic experiences at home. In addition, all other factors being equal, a school district with 20% of its students identified as eligible to receive special education services will have a greater need than the district with 10% of its students receiving special education services. Moreover, an isolated, rural school system has different needs from those of an affluent, suburban district close to a great city’s cultural and intellectual advantages (Owings & Kaplan, 2013, p.135).
State Fiscal Capacity Issues - Just as localities have differences in their ability to raise funds for services, states also vary in their capacity. For example, the pictures President Lyndon Johnson showed in the mid-1960s of family poverty in the Deep South bore no resemblance to anything that most New England families had seen in their states. In truth, most middle- and upper-class Americans could not relate to that type of abject poverty. If that level of deprivation existed in homes, what types of schools did these children attend? What resources did their teachers have? How much money was the PTA able to raise for these schools? Variance exists in states’ fiscal capacity. Just as the late 19th century measured capacity as property values, states can calculate per capita property values. Likewise, it is possible to calculate per capita income, and also to adjust for cost-of-living standards across states. Each piece of information provides another part of the puzzle in determining state capacity. Variance also exists in how state capacity is measured. Some states measure capacity on a capita or total population basis. Other states calculate capacity according to how many students are enrolled in public school (Owings & Kaplan, 2013, p.139).
National Fiscal Capacity Issues - Certain national and international issues are of concern to education finance. Addressing national fiscal capacity in detail is beyond the scope and responsibilities of most U.S. educators, but a brief overview id provided here. Just as states and localities have difficulty measuring capacity, so do nations. This problem is seen in the various measurements that come in and out of favor to measure wealth and productivity. Many ways exist to compute a nation’s wealth. Gross National Product (GNP) includes the total economic value of all the goods and services produced by a country during a given year. Gross Domestic Product (GDP) includes the total output a country produces, including either public or private factors, regardless of where production occurs, within a given year. GDP is now a more favored indicator with economists than GNP. GDP is a fair proxy for a nation’s capacity. Natural resources were once considered the primary focus for developing wealth or capacity. We now know that human capital development plays an integral role in how nations develop (Owings & Kaplan, 2013, p.146).
Related Scripture - "One gives freely, yet grows all the richer; another withholds what he should give, and only suffers want. Whoever brings blessing will be enriched, and one who waters will himself be watered" (Proverbs 11:24-25 ESV)
Scriptural Significance - We have all been given the capacity to give. Yet for some reason school financing is still underfunded. Our children are our best resource for the future and this nation's ability to survive in the 21st century. Having to look at numbers based on GNP, GDP, or other gauges of wealth just to see that schools will continue to have less is a sign of a country that is in need of spiritual guidance. Children's needs are to be provided for as to not deprive them of their promises by the Lord.
Leadership Significance - Spiritual leadership in insuring that there is enough hay in the barn to care for the needy is something that each aspiring administrator should be considering. Whether or not the capacity exists should not be the qualifier in providing for the concerns of students. Good leadership finds other avenues of support to increase the capacity to give.