FISCAL EFFORT
DEFINED...
Overview - Fiscal effort measures how much a locality, state, or nation spends of its resources in relation to capacity - or the ability to pay. Measuring capacity is a good place to start examining how much a nation, state, or locality can afford to spend on education. The relative effort of that spending - the degree of exertion or fiscal struggle a community commits to its resources for education - tells a much more robust story about what people value. It is possible for communities to have varying levels of fiscal capacity and commit varying levels of fiscal effort to fund their public educational programs and facilities. For example, poorer school districts (low capacity) may spend a greater share of their wealth on education (high effort) whereas more affluent school districts (high capacity) may spend relatively little (low effort) to support their schools to achieve the same or higher levels of services for the children (Owings & Kaplan, 2013, p.152).
Factors Influencing Effort - Many factors influence the fiscal effort provided to support public education. First, the public’s interest and attitude about their public schools sway their effort to fund education services. In many areas, traditional attitudes about public education affect this view. Historically, some states valued public education and supported their local schools more than others did. You may find that tradition has a great deal to do with how much your state spends on public education today. People’s opinions about taxes in general bring another factor associated with fiscal effort to support public schools. Unfortunately, when legislators and councilpersons cut other public services in order to maintain public schools, the competition for available public dollars intensifies. If every budget except education has its funding cut, hostile feelings among various departments may result. The cost in political support from those hurt often leaves school boards and superintendents vulnerable to personnel changes (Owings & Kaplan, 2013, p.153).
Computing Effort - The concept and the computation are rather simple. Effort is best described as a ratio. In its simplest form, effort can be described as the ratio of school revenue (expenditures) to the overall tax base, or
R
E = ---
TB
where E = effort, R =revenue for school budget expenditures, and TB = tax base or some measure of wealth (capacity). Effort must be considered as a ratio for one good reason. Without comparing the revenue provided for education against the available tax base to fund education, only the tax dollars contributed would be examined. Even if those dollars were based on a per-pupil expenditure, wealthy districts - by spending just a few dollars more per pupil - would always look like they were exerting more effort than any other school district because they would present a larger budget. To understand effort more accurately, these dollars must be examined in light of the locality’s capacity to fund education. We do that by using a ratio that accounts for the tax base available to fund public services (Owings & Kaplan, 2013, p.154).
Local Effort - Wealth is a measure of many variables. Many states use a composite index of real estate, income, and sales taxes on a proportional basis to calculate a locality’s ability to fund education. To look at capacity with only one measure - real estate value or income - does not provide an accurate measure of a locality's capacity. In localities that use income as a primary measure of wealth, the cash flow tends to be more erratic year to year. In strong economies, employed people get raises and bonuses, and the revenue from income increases rather rapidly. When the economy eventually turns down (economies always run in cycles) and salaries decrease or jobs are lost, income tax revenues tend to drop quickly. The same can be said to a lesser extent for sales tax revenue. Spending for items tends to slow when the economy slows, reducing sales tax revenue to the state and the locality (Owings & Kaplan, 2013, p.158-60).
State Effort - State effort can be calculated in the same way we calculated the hypothetical levels for local school districts in the previous section. The formula for determining effort by dividing the revenue or expenditures by the tax base to obtain a ratio that equalizes for capacity is still valid at the state level. All that remains is to determine the tax base structure that will be used. Gross state product (GSP) can be one measure of wealth. To ensure a stable revenue stream, states typically measure relative wealth by per capita income (PCI) and per capita property value, and many include sales tax generated within a given locality. Sales tax revenue can be a significant predictor of wealth - especially in tourist areas. By spreading the measures of wealth across various sources, states can protect themselves and the services they must provide from drastic revenue swings, ensuring a stable tax base to fund basic services. Including multiple measures to calculate wealth in computing effort provides a more complete picture of the wealth and effort snapshot (Owings & Kaplan, 2013, p.161).
National Effort - The United States has tremendous fiscal capacity. In many ways, our country is the most powerful on the planet. We hold undisputed influence with our military, technological, and economic strength, yet many question how much we should spend on public education. Some believe we spend too much on public education for the modest results we obtain. Others believe our moderate spending does not reflect the national priority we should place on education as an investment in human capital for economic vitality and as the essential underpinnings for a democratic republic. Consider U.S. education expenditures as a percentage of GDP, which shows the relative importance countries place on educating their children. This is perhaps the best way to examine education-related spending on an apples-to-apples basis. In 2006, the United States ranked in the top six countries on educated-related spending. By 2009, however, the United States did not rank in even the top 13 countries when examining spending as a portion of GDP (Owings & Kaplan, 2013, p.164).
Related Scripture - "So then let us pursue what makes for peace and for mutual upbuilding" ( Romans 14:19 ESV )
Scriptural Significance - No real result can be had without a good effort and this speaks directly to the mindset of individuals who provide that effort when they do good for the sake of the children. The Lord looks kindly upon facilitators who encourage others to provide effort in supporting schools by use of their time and monies.
Leadership Significance - Administrators who strive to better the educational system and its schools are at the forefront of providing the effort needed in getting the job done. All faith-based leaders are given license by the Lord to exert themselves in the march for better education in the United States. The idea is to improve everyone's lot in life through mutual support.
Overview - Fiscal effort measures how much a locality, state, or nation spends of its resources in relation to capacity - or the ability to pay. Measuring capacity is a good place to start examining how much a nation, state, or locality can afford to spend on education. The relative effort of that spending - the degree of exertion or fiscal struggle a community commits to its resources for education - tells a much more robust story about what people value. It is possible for communities to have varying levels of fiscal capacity and commit varying levels of fiscal effort to fund their public educational programs and facilities. For example, poorer school districts (low capacity) may spend a greater share of their wealth on education (high effort) whereas more affluent school districts (high capacity) may spend relatively little (low effort) to support their schools to achieve the same or higher levels of services for the children (Owings & Kaplan, 2013, p.152).
Factors Influencing Effort - Many factors influence the fiscal effort provided to support public education. First, the public’s interest and attitude about their public schools sway their effort to fund education services. In many areas, traditional attitudes about public education affect this view. Historically, some states valued public education and supported their local schools more than others did. You may find that tradition has a great deal to do with how much your state spends on public education today. People’s opinions about taxes in general bring another factor associated with fiscal effort to support public schools. Unfortunately, when legislators and councilpersons cut other public services in order to maintain public schools, the competition for available public dollars intensifies. If every budget except education has its funding cut, hostile feelings among various departments may result. The cost in political support from those hurt often leaves school boards and superintendents vulnerable to personnel changes (Owings & Kaplan, 2013, p.153).
Computing Effort - The concept and the computation are rather simple. Effort is best described as a ratio. In its simplest form, effort can be described as the ratio of school revenue (expenditures) to the overall tax base, or
R
E = ---
TB
where E = effort, R =revenue for school budget expenditures, and TB = tax base or some measure of wealth (capacity). Effort must be considered as a ratio for one good reason. Without comparing the revenue provided for education against the available tax base to fund education, only the tax dollars contributed would be examined. Even if those dollars were based on a per-pupil expenditure, wealthy districts - by spending just a few dollars more per pupil - would always look like they were exerting more effort than any other school district because they would present a larger budget. To understand effort more accurately, these dollars must be examined in light of the locality’s capacity to fund education. We do that by using a ratio that accounts for the tax base available to fund public services (Owings & Kaplan, 2013, p.154).
Local Effort - Wealth is a measure of many variables. Many states use a composite index of real estate, income, and sales taxes on a proportional basis to calculate a locality’s ability to fund education. To look at capacity with only one measure - real estate value or income - does not provide an accurate measure of a locality's capacity. In localities that use income as a primary measure of wealth, the cash flow tends to be more erratic year to year. In strong economies, employed people get raises and bonuses, and the revenue from income increases rather rapidly. When the economy eventually turns down (economies always run in cycles) and salaries decrease or jobs are lost, income tax revenues tend to drop quickly. The same can be said to a lesser extent for sales tax revenue. Spending for items tends to slow when the economy slows, reducing sales tax revenue to the state and the locality (Owings & Kaplan, 2013, p.158-60).
State Effort - State effort can be calculated in the same way we calculated the hypothetical levels for local school districts in the previous section. The formula for determining effort by dividing the revenue or expenditures by the tax base to obtain a ratio that equalizes for capacity is still valid at the state level. All that remains is to determine the tax base structure that will be used. Gross state product (GSP) can be one measure of wealth. To ensure a stable revenue stream, states typically measure relative wealth by per capita income (PCI) and per capita property value, and many include sales tax generated within a given locality. Sales tax revenue can be a significant predictor of wealth - especially in tourist areas. By spreading the measures of wealth across various sources, states can protect themselves and the services they must provide from drastic revenue swings, ensuring a stable tax base to fund basic services. Including multiple measures to calculate wealth in computing effort provides a more complete picture of the wealth and effort snapshot (Owings & Kaplan, 2013, p.161).
National Effort - The United States has tremendous fiscal capacity. In many ways, our country is the most powerful on the planet. We hold undisputed influence with our military, technological, and economic strength, yet many question how much we should spend on public education. Some believe we spend too much on public education for the modest results we obtain. Others believe our moderate spending does not reflect the national priority we should place on education as an investment in human capital for economic vitality and as the essential underpinnings for a democratic republic. Consider U.S. education expenditures as a percentage of GDP, which shows the relative importance countries place on educating their children. This is perhaps the best way to examine education-related spending on an apples-to-apples basis. In 2006, the United States ranked in the top six countries on educated-related spending. By 2009, however, the United States did not rank in even the top 13 countries when examining spending as a portion of GDP (Owings & Kaplan, 2013, p.164).
Related Scripture - "So then let us pursue what makes for peace and for mutual upbuilding" ( Romans 14:19 ESV )
Scriptural Significance - No real result can be had without a good effort and this speaks directly to the mindset of individuals who provide that effort when they do good for the sake of the children. The Lord looks kindly upon facilitators who encourage others to provide effort in supporting schools by use of their time and monies.
Leadership Significance - Administrators who strive to better the educational system and its schools are at the forefront of providing the effort needed in getting the job done. All faith-based leaders are given license by the Lord to exert themselves in the march for better education in the United States. The idea is to improve everyone's lot in life through mutual support.