PUBLIC SCHOOL FINANCE
FIRST AN OVERVIEW...
Funding Control - The state has the inherent power to levy taxes on its citizens to support public education. The U.S. Constitution imposes no legal obligation on the federal government to operate a public education system. In fact, no such obligation is placed on state government by the U.S. Constitution; however, this right is reserved to the states. State support of public education is a voluntary activity, by virtue of the Tenth Amendment, which states that “the powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively or to the people.” Since powers regarding education are not expressly delegated to the federal government but rather reserved to the states, it becomes a function of the state to establish, support, and maintain public schools (Essex, 2012, p.328).
Taxation for Public Schools - State and local tax account for over 90 percent of educational expenditures. There appears to be a move toward increased state control of education funding. Sales taxes and income taxes are primary sources of state funding whereas property tax represents the most abundant source at the local level. Property taxes are generally characterized as real property or personal property and contribute the major source of funding for public schools. There is no total agreement on the use of property tax as a major source of funding for public schools. The three basic types of taxes are progressive, regressive, and proportional:
1. With progressive tax, the rate of tax increases as the base increases. Consequently, a larger percentage of income is taken as taxpayer income increases. Personal income and property tax are examples of progressive tax.
2. In regressive taxes, tax rates decrease when the tax base increases, with higher income residents paying a smaller percentage than lower income residents. Gasoline and cigarette taxes are examples of regressive taxation.
3. In proportional or flat tax, the rate remains the same irrespective of income or wealth. Sales tax and estate wealth are examples of proportional tax (Essex, 2012, p.329).
Equity Funding in Education - Equity may be defined differently among state lawmakers. However, it typically means that per pupil expenditures are equally distributed throughout a local school district. Since property tax is most frequently used to support local education, there are disparities throughout a state based on the level of local revenue generated by property tax. Most states attempt to generate funding formulas that subsidize local effort to compensate for disparities among
wealthy and less wealthy districts. Typically, the equity formula includes state aid minus local effort as a means of creating parity in funding schools Throughout the state. Some states refer to such formulas as power equalization formulas or district equalization formulas. The theory behind this approach is grounded in the need to provide equal educational opportunities for all students irrespective of socioeconomic status. Equal educational opportunity occurs when all school districts within a state have equal access to resources that are necessary to provide an education up to a prescribed level (Essex, 2012, p.330).
Adequacy of Funding for Public Schools - In recent years, many states have commissioned studies to determine the adequacy of their public education system. The focus on adequacy is a departure from their traditional focus on equity. Equity denotes fairness, which suggests that all communities, rich or poor, are taxed at similar rates and have equal access to similar amounts of revenue per student—and which, of course, does not occur in most states. Adequacy, on the other hand, focuses on a minimal level of funding needed for every school to teach its students, thus subscribing to an education that is adequate rather than excellent. Public schools across the United States are facing increased pressure to improve the overall quality of education provided for students and have commissioned adequacy studies. Data generated by adequacy studies are often used to increase state aid to local school districts (Essex, 2012, p.322).
Funding Legal Challenges - Public School Finance programs have been challenged under federal and state constitutions. These challenges have centered around claims that tax systems designed to generate school revenue are unfair and do not apply
equally to all taxpayers. Other challenges involve assertions by parents that their children are denied the benefits of an equal educational opportunity based on disparities in tax revenue and distribution of revenue among school districts within the state. Challenges by parents most frequently are based on equal protection clauses of the Fourteenth Amendment to the U.S. Constitution as well as equal protection provisions found in state constitutions. Most states have adopted minimum foundation programs or basic educational programs with average daily attendance or average daily membership formulas that distribute funds on a per pupil basis based on the district’s wealth and its ability to pay. Wealth is not distributed equally among school districts. Some districts are located in wealthy communities, and others are located in poor communities. The funding gap between wealthy districts and poor districts creates disparities that affect per pupil expenditures.(Essex, 2012, p.332).
Taxation for Public Schools - State and local tax account for over 90 percent of educational expenditures. There appears to be a move toward increased state control of education funding. Sales taxes and income taxes are primary sources of state funding whereas property tax represents the most abundant source at the local level. Property taxes are generally characterized as real property or personal property and contribute the major source of funding for public schools. There is no total agreement on the use of property tax as a major source of funding for public schools. The three basic types of taxes are progressive, regressive, and proportional:
1. With progressive tax, the rate of tax increases as the base increases. Consequently, a larger percentage of income is taken as taxpayer income increases. Personal income and property tax are examples of progressive tax.
2. In regressive taxes, tax rates decrease when the tax base increases, with higher income residents paying a smaller percentage than lower income residents. Gasoline and cigarette taxes are examples of regressive taxation.
3. In proportional or flat tax, the rate remains the same irrespective of income or wealth. Sales tax and estate wealth are examples of proportional tax (Essex, 2012, p.329).
Equity Funding in Education - Equity may be defined differently among state lawmakers. However, it typically means that per pupil expenditures are equally distributed throughout a local school district. Since property tax is most frequently used to support local education, there are disparities throughout a state based on the level of local revenue generated by property tax. Most states attempt to generate funding formulas that subsidize local effort to compensate for disparities among
wealthy and less wealthy districts. Typically, the equity formula includes state aid minus local effort as a means of creating parity in funding schools Throughout the state. Some states refer to such formulas as power equalization formulas or district equalization formulas. The theory behind this approach is grounded in the need to provide equal educational opportunities for all students irrespective of socioeconomic status. Equal educational opportunity occurs when all school districts within a state have equal access to resources that are necessary to provide an education up to a prescribed level (Essex, 2012, p.330).
Adequacy of Funding for Public Schools - In recent years, many states have commissioned studies to determine the adequacy of their public education system. The focus on adequacy is a departure from their traditional focus on equity. Equity denotes fairness, which suggests that all communities, rich or poor, are taxed at similar rates and have equal access to similar amounts of revenue per student—and which, of course, does not occur in most states. Adequacy, on the other hand, focuses on a minimal level of funding needed for every school to teach its students, thus subscribing to an education that is adequate rather than excellent. Public schools across the United States are facing increased pressure to improve the overall quality of education provided for students and have commissioned adequacy studies. Data generated by adequacy studies are often used to increase state aid to local school districts (Essex, 2012, p.322).
Funding Legal Challenges - Public School Finance programs have been challenged under federal and state constitutions. These challenges have centered around claims that tax systems designed to generate school revenue are unfair and do not apply
equally to all taxpayers. Other challenges involve assertions by parents that their children are denied the benefits of an equal educational opportunity based on disparities in tax revenue and distribution of revenue among school districts within the state. Challenges by parents most frequently are based on equal protection clauses of the Fourteenth Amendment to the U.S. Constitution as well as equal protection provisions found in state constitutions. Most states have adopted minimum foundation programs or basic educational programs with average daily attendance or average daily membership formulas that distribute funds on a per pupil basis based on the district’s wealth and its ability to pay. Wealth is not distributed equally among school districts. Some districts are located in wealthy communities, and others are located in poor communities. The funding gap between wealthy districts and poor districts creates disparities that affect per pupil expenditures.(Essex, 2012, p.332).
Landmark Rodriguez Case - One significant fiscal neutrality case, San Antonio Independent School District v. Rodriguez, reached the U.S. Supreme Court, which resulted in the High Court’s reaching a landmark decision affecting Public School Finance programs across the nation. In this case, Mexican American parents whose children attended urban elementary and secondary schools in the Edgewood Independent School District filed a class action equity suit on behalf of minority children throughout the state who were poor and resided in a school community that had a low property tax base. A three-judge district court held that the Texas finance system was unconstitutional under the equal protection clause of the Fourteenth Amendment. The state appealed. The U.S. Supreme Court, in a 5–4 decision, reversed the ruling by the district court. The court did note the discrepancies created by the funding system in which great disparities existed regarding ad valorem taxes from one district to another.(Essex, 2012, p.332).
Related Scripture - "Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also" (Matthew 6:19-21 ESV)
Scriptural Significance - Keep your thoughts on the righteous use of money, not here on earth but in Heaven where the Lord can see your commitment. Funding should be shared as needed to the ones who are in need for supporting them gladdens the heart of our Savior. Sometimes it is very difficult to do so, but those are the times that tests ones character and resolve.
Leadership Significance - Spiritual leaders see the funding puzzle more from an everlasting point of view. If greed or indifference enter into the equation, then consequences will be handed to these types of leaders; especially in the case of children. A faith-based leader strives to give all of their students more than adequate opportunity to succeed; to do less would be saddening.
Related Scripture - "Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also" (Matthew 6:19-21 ESV)
Scriptural Significance - Keep your thoughts on the righteous use of money, not here on earth but in Heaven where the Lord can see your commitment. Funding should be shared as needed to the ones who are in need for supporting them gladdens the heart of our Savior. Sometimes it is very difficult to do so, but those are the times that tests ones character and resolve.
Leadership Significance - Spiritual leaders see the funding puzzle more from an everlasting point of view. If greed or indifference enter into the equation, then consequences will be handed to these types of leaders; especially in the case of children. A faith-based leader strives to give all of their students more than adequate opportunity to succeed; to do less would be saddening.