School financing
Following on the heels of yesterday’s review of The Two-Income Trap is this article from today’s New York Times, about the disastrous consequences of Texas’ Robin Hood system to equalize school finances.
The basic problem (which the Robin Hood system was designed to fix) is that most public school funding in the United States comes from local property taxes. Rich areas have much more of a valuable property base, and so are able to put more money into their schools. As a recent study from the Education Trust showed, nationwide, there’s a gap in school funding of more than $1,000 per student between the highest- and lowest-poverty school districts.
The Robin Hood system was implemented after a group of school districts sued the state, claiming the old system of school funding was unconstitutional, and won. It attempts to overcome this inequity by taking money from the wealthiest school districts — those with property value above a threshold — and distributes it to the poorest. The New York Times article, based on an analysis by Harvard economists Caroline Hoxby and Ilyana Kuziemko, explains what went wrong. Hoxby and Kuziemko argue that the problem is that part of what determines the value of property is the quality of the schools. As the quality of the schools went down (for a given level of taxation), the property values also dropped, so the state’s share of taxes went down. In order to provide the level of funding they had promised to the poor districts, the state had to lower the threshold and therefore affect more districts. And the spiral continued. They conclude that the Robin Hood system only reduced inequality between school districts by about $500 per student, but destroyed thousands of dollars per student in property value.
What are the implications of this study?
First, it both supports Warren and Tyagi’s argument that access to quality schools is a significant portion of what drives up property values, and emphasizes how unlikely it is that their proposal to delink residence from access to schools could ever be implemented. The disruption, as home values in previously “good school districts” plummeted, would be monumental. I can’t imagine the circumstances under which such legislation would pass.
Second, it’s a strong rebuttal to those who argue that how much money a school district has doesn’t matter. Homebuyers in Texas certainly valued access to schools in rich districts less when their funding dropped, even though nothing else about the schools had changed. Thus, it could support an argument for either a minimum floor on school spending per student or for some version of equalization or both. Hoxby and Kuziemko are quite clear that they don’t want their paper used as an argument against equalization in general.
Third, as Hoxby and Kuziemko argue, it suggests that lawyers shouldn’t be allowed to design tax systems. They claim that the Robin Hood system was designed solely in order to avoid a legal ban on a statewide property tax, and that it does pretty much everything wrong from the standpoint of creating an efficient tax system.
What none of these studies do is tell you what to do if you’re a parent and a good liberal who believes in public schools and can’t really afford private school anyway and enjoys living in a diverse urban (or semi-urban) area but isn’t quite sure that the schools where you live are as good as you want them to be and doesn’t want to sacrifice your kid to an abstract principle. (Here’s a link to a friend of mine’s much funnier and slightly obscene rant on the same subject. Don’t click if cussing offends you.)
Tomorrow night we’re off to a pizza party being held for parents of preschoolers who are zoned for our local elementary school (which is literally 3 blocks from our house). Part of the goal is to discuss how we can help the school, but another part is just to hold each other’s hands and convince ourselves that we’re making the right choice.
