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5 The Politics of School Finance in the 1990s Melissa C. Carr and Susan H. Fuhrman Introduction Education is one of the most important investments that a state can make in the future of its individual citizens and of the society as a whole. Educational opportunities and resources, however, are unevenly distributed among rich and poor sectors in our society.1 In the United States, a country based on the principles of equality, thousands of American children may be deprived of future opportunities because they do not receive an equal or even adequate education. Other chapters in this volume have documented the efforts in many states to reduce educational disparities, especially disparities in the amount spent per student or disparities resulting from differences in school district wealth. Solving the problems of school finance, however, is difficult and has often required action in the courts. In addition, the politics of school finance are inherently contentious. A state's existing school finance system is a product of the legislative process and therefore reflects the state's balance of political power. Changing that system requires a shift of power relationships, and the external stimulus from the courts is often only one of many factors that determine the success of school finance reform efforts within individual states. This chapter explores how state politics have affected the implementation of reforms that result from court orders or concerns about possible legal challenges in the area of school finance. It examines questions such as: How have state legislatures and executive branches responded to anticipated legal action and to court mandates to reform school finance systems? What coalitions formed to support or resist various approaches to equity? Do governors and state legislatures
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have the capacity, resources, and political will to implement the types of reforms embedded in school finance litigation? This chapter will explore the trends in the politics of school finance from the 1970s to the present and will look specifically at four states where the courts have ordered reforms of school finance systems. Analysts of school finance litigation have argued that favorable trends in recent court decisions give cause for optimism about improved school finance equity (Thro, 1989, 1990). Political and economic analysts, on the other hand, have argued that significant challenges to school finance reform remain in many states (Reed, 1997). Using a general analysis of the issues and the evidence from these four states, we will argue that although judicial decisions in favor of finance equity are more common and more comprehensive, the political climate can impede efforts to take action based on these decisions. The political incentives for governors and legislators are such that comprehensive changes in school finance programs are not likely to come easily within a state, at least for the foreseeable future. The analysis of school finance politics in this chapter addresses the following questions: (1) Why is school finance reform so contentious in the United States? What incentives encourage politicians to either support or oppose greater equity in school finance? (2) How were the politics of school finance in the 1970s and 1980s influenced by the trends in the courts, in state politics, and in the economy? (3) How did the political, economic, and social contexts in the 1990s differ from those of the 1970s and 1980s? (4) Are the politics of school finance in four states (Kentucky, Alabama, New Jersey,2 and Texas) examples of the trends in the 1990s? (5) What are some of the lessons learned in school finance politics? What are some of the crucial elements for successful reform? The Politics Of School Finance: Issues And Incentives Issues School finance is an inherently controversial issue in the United States because it affects two basic issues that concern most American voters: the resources available for their children's education and their state and local taxes. Education is often seen as the great equalizer, the key to success, and the most important responsibility for state and local politicians. Although most people support the idea of giving all children equal educational opportunities, problems arise when attempts are made to define equality (see Berne and Stiefel, Chapter 1 in this volume). There is no consensus about the quality of education to which every child is entitled, the extent to which each citizen should pay for that education, or the level or forms of disparities that are acceptable within a school district, state, or the nation.
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Local Control The long-standing tradition of using local property taxes to finance education has been the cause of many inequities in education and makes state reform of school finance systems controversial. Variations in property values, local tax rates, and costs of competing municipal services have led to large disparities in per-pupil spending and in educational opportunity. Americans are used to the idea that they can directly determine how much to tax themselves to fund their local schools. Moreover, with locally determined and locally raised taxes, almost all questions related to education—whether in the realm of finance, curriculum, facilities, or personnel—have historically been decided and managed at the local level. Thus, there are strong coalitions with vested interests in maintaining local control of education funds and services. School finance reform, however, is legislated at the state level and reduce the number of financial and, to some extent, programmatic decisions made at the local level. Many voters are opposed to relinquishing this local control over their taxes and education policies. Moreover, for many people, it has become part of the American tradition to aspire to earn more money, live in a larger house in a better community, and send one's children to a better school than one's parents were able to do. People often feel that they are entitled to the good public schools in their community as a reward for their hard work. This feeling of entitlement makes people reluctant to transfer the fruits of their labor out of their own communities. If, instead of paying for the education of their own children, taxpayers see their money going to students in other towns or other counties, they may feel that neither these students nor the students' parents have earned their benefits. Similarly, since education is considered the key to success, parents are often determined to secure the best possible education for their children. For some people, the desire for their own children to succeed extends into trying to maintain all possible advantages for them, even if it means unequal and unfair treatment of other children in some other district. Leveling-Up In order to overcome the inequities created by the dependence on the local property tax to finance education, states must do one or more of the following: redistribute state and local funds, increase state revenues, or cap education expenditures in wealthy districts. Because many American voters are protective of the local resources available for their children's education, school finance equalization has typically been a process of leveling-up. No proposal to equalize education funding throughout a state by decreasing expenditures down to the lowest level has ever been considered politically feasible or desirable.3 Therefore, school finance equalization requires more money and frequently involves increased state taxes.
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State officials, however, often have few incentives to raise taxes. Tax increases are always unpopular even if the program which the increased revenues support is popular. Additionally, the taxes most frequently available to states for use in supporting school finance equalization are the income tax and the sales tax. Both are hard to increase because they affect politically powerful constituencies and the state's ability to compete with other states for economic development purposes. Demographics In many states, demographics further complicate the school finance issue. Elderly people are often reluctant, or simply unable, to pay higher local property taxes in support of local schools. Similarly, taxpayers with no children, with grown children, or with children who attend private schools often protest paying high taxes in support of education, a state service from which they perceive little or no personal benefit. If these people are reluctant to support their local schools, they are often even less willing to pay higher taxes in support of schools outside their community. Furthermore, some would prefer to see the increased revenues applied to other programs from which they personally receive greater benefit, such as Medicaid, law enforcement, or public transportation. To the extent that towns and school districts are segregated along racial, ethnic, religious or socioeconomic lines, corresponding prejudices often enter the politics of school finance. People in wealthy, predominantly white suburbs may oppose school finance equalization because they perceive themselves as the main losers and urban minorities as the main beneficiaries of such policies. Perceptions that equalization aid would be wasted—either by bloated administration or on children who are difficult to teach—help fuel the opposition to school finance reform. Incentives Considering the inherently controversial nature of school finance, what incentives exist for political actors to get involved in school finance reform and work toward school finance equalization? Education is always one of the most salient issues in state politics and educational expenditures often make up the largest share of most state budgets. Therefore, making a mark on education can make or break political careers. Traditionally, one of the best ways for governors and legislators to play a role in such a state issue is through the purse. In times of fiscal surplus, governors and legislatures often face powerful incentives to get involved in school finance reform since education aid is one of the easier methods of distributing resources to all geographic constituencies. This fact provides an incentive to get involved in school finance; it does not, however, automatically translate into an incentive to equalize educational opportunity.
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Legislative Branch Incentives Constitutional requirements vary among the states, but most state constitutions require the legislature to establish a free system of public schools that fits some quality standard such as ''thorough and efficient."4 Addressing this constitutional obligation through school finance is conceptually simpler than attempting to address it through nonmonetary criteria. Therefore, constitutional obligations sometimes provide legislatures with incentives to equalize school finance, especially when there is a court mandate for reform, a threat of litigation, or the likelihood that a court will rule that the state's educational system is constitutionally inequitable or inadequate. Incentives for legislatures to change school finance systems exist when the risks of not acting are greater than the risks of acting. For instance, when there has been outside pressure from the court or from the community to reduce disparities in funding, some legislatures have found it in their best interest to act. These periods of legislative activity in the sphere of school finance have usually coincided with strong state economies that have decreased the necessity for, or softened the blow of, new taxes (Fuhrman, 1994b:31). More often than not, however, legislators have been reluctant to promote school finance reform for fear of being associated with the introduction of new taxes. Legislators represent individual districts, are accountable only to those districts, and are very conscious of their district's tolerance level for taxes. Fearful of overstepping that tolerance level, legislators are often reluctant to vote for a policy that would require a tax increase even if that policy would bring benefits to some of the members of their district. In school finance politics, representatives from poor districts are the most likely advocates of school finance equalization while representatives from other districts are protective of their portions of state aid and conscious of their voters' tolerance for new taxes. Representatives from the wealthiest districts often express their constituents' concerns: that they be allowed to spend as much as they want on education for their children and that their local money stay in their local schools rather than being put into a state pool to be redistributed to poorer districts. To the extent that poorer districts tend to be urban, their representatives have other battles to fight in the state legislature in order to secure state aid to other municipal programs. In such a scenario, representatives from suburban districts may be able to reserve more political capital for use in education debates than their colleagues from urban districts. Moreover, representatives from poor districts tend to be outnumbered by representatives from middle and wealthy districts combined. Since the 1960s, structural and legal change in state legislatures, combined with urban flight and the growth of the suburbs, have dramatically reduced the power of cities and rural areas in relation to that of the suburbs in most state legislatures (Weir, 1995).
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Executive Branch Incentives Governors are accountable to the whole state and therefore are not limited to representing local interests. This mandate makes governors more likely than members of the legislature to lead efforts for comprehensive school finance policies in the best interest of children and youth throughout the state. Governors do, however, balance the interests of the majority with those of the minority. The fact that school finance reform is often perceived to assist children in only a few districts—albeit often the largest and most populated—at the expense of children or taxpayers in the rest of the state sometimes limits the Governor's willingness to act on this issue. Governors have a limited amount of time in office, a limited number of staff, and limited amounts of political capital. They must therefore choose cautiously the issues that they will focus on and must be careful not to use too many of these scarce resources on unpopular or contentious initiatives. As a result, gubernatorial leadership on school finance reform is unlikely without at least one of the following catalysts: outside pressure from the courts, widespread support among the population, or the existence of a fiscal surplus. An existing school finance system is, after all, the result of the legislative process and thus represents an intricate web of political compromises that reflect the state's political balance of power. Upsetting that balance is often too risky for political leaders. Judicial Branch Incentives Because legislatures and governors have few incentives to solve the inequities and inadequacies in school finance systems, people have often turned to the courts to break the political logjam. It is the court's duty to interpret the constitution and decide whether or not the legislated school finance system meets constitutional requirements. The court's overriding concern in school finance cases is what the state should be required, by law, to provide for students throughout the state. Some courts simply answer that question and leave the legislative and executive branches to design a solution that meets the court's standards; others have gone further by prescribing a remedy. The court is more insulated from the political process than the legislature or the governor and is therefore most likely to advocate for the underrepresented groups in the population. It is important, however, to remember that the courts are not completely isolated from the political process. Many judges are appointed and approved by political leaders while others are elected by the population. Moreover, in deciding a school finance case, the court must always consider its willingness to enforce the decision (in some cases this has required an injunction to close the schools). Since courts really have very limited enforcement power, they run the risk of having their authority undermined if they mandate (in their
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decision or their prescribed remedy) a politically impossible solution that the legislature and/or governor decides not to enact or enforce. Interest Group Incentives The types and positions of interest groups that participate in school finance debates vary significantly over time and across states. Historically, education interest groups and state departments of education have played the key roles in determining education policy. Over the past three decades, however, their influence has decreased dramatically due to their increased fragmentation. The interest groups that have actively opposed school finance reform over the past three decades are the anti-tax groups that typically oppose school spending. On the other side of the debate, groups advocating for the poor, particularly the urban poor, have most actively argued in favor of leveling up policies and have brought many of the legal challenges to the state's system of financing education. All these interest groups play a significant role in determining the incentives facing government and legislators as they respond to court mandates for school finance reform. Teachers unions, which in many states are traditionally politically powerful entities, have been noticeably quiet in most school finance reform debates, except to argue for increased overall spending. Frequently unions, as well as other statewide educational interest groups, have been paralyzed on the school finance issue because their members have been so divided, depending on where they live and the perceived effects of any particular policy on their district. Competing concerns within the education community have also limited the influence of educational interest groups. Teachers, administrators, and school board associations view school finance reform proposals from different perspectives. Special education advocates, bilingual program advocates, gifted and talented program advocates, and advocates for "regular" education often compete with each other for pieces of the pie rather than forming coalitions to lobby to increase the overall amount of revenue available. Although all of these groups consistently agree that there should be more resources spent on education, they are divided by their disagreement over how these resources should be allocated. The Politics Of School Finance In The 1970s And 1980s The 1970s: A Decade of School Finance Reform The 1970s was a decade of great activity in school finance reform in all branches of state governments. During this decade, school finance litigation reached the highest court in 16 states. School finance reform emerged as an election issue in gubernatorial and legislative elections. Governors Askew of Florida, Milliken of Michigan, and Anderson of Minnesota chose to make school
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finance one of their top issues (Fuhrman, 1994a:57). Twenty-eight state legislatures reformed their school finance systems.5 As a result of these reforms, the state share of education spending increased from 38 percent in 1972 (Evans et al., 1997) to 45 percent by 1979 and the state aid to elementary and secondary education doubled (Fuhrman, 1982:53). The sheer prevalence of school finance reform during this period represents more than twice the expected rate of diffusion of policy ideas from state to state (Brown and Elmore, 1982:107). 6 The intense interest in school finance reform during the 1970s was a reflection of four emerging trends: the birth of school finance litigation, the activism of a national reform movement, changes in gubernatorial and legislative institutions, and the existence of fiscal surpluses. These factors combined to create an environment in which legislators and governors faced strong political incentives to act on the school finance issue. Prior to the 1970s, legislative and executive participation in education policy making had been minimal (generally confined to fiscal matters) as efforts had been made to insulate education from politics. Educators, educational interest groups, and state departments of education had played united, active roles in education issues. They determined policies and simply presented them to political leaders for their approval. In the 1970s, with school finance as the major issue in education, the role of state legislators and governors in education policy increased dramatically and began to overshadow that of the previously dominant education coalition. This trend was due in part to reforms within the legislative and executive branches, reforms that created larger professional staffs, enhanced gubernatorial veto powers, and increased budgetary control for the governors. With large professional staffs, legislators and governors could commission their own research on education issues. At the same time, conflicts between teachers and school board associations, the emergence of collective bargaining for teachers, and geographic splits between urban/rural and property-rich/property-poor districts began to fragment the once united education coalition. During the 1970s, governors and legislatures created commissions and committees to assess equity and propose solutions. They also designed proposals to respond to anticipated or actual court mandates for school finance reform. Some even proposed tax increases and new revenue sources to increase the amount of education funding that came from the states. As a consequence of their leadership roles in school finance reforms, state legislatures and governors emerged from this decade as full-fledged education policymakers. One of the legacies of the 1960s was an increased public awareness of social inequities and injustices. In the 1970s, this public awareness, along with the realization that desegregation efforts were not effectively providing each American child with an equal educational opportunity, helped spark a wave of successful school finance litigation, beginning with the watershed Serrano v. Priest case in California in 1971. In the early 1970s, people took note of the fact that
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education spending at the 95th percentile was 2.72 times higher than education spending at the 5th percentile and challenged these inequities in the state and federal courts.7 The results of the first wave of cases were mixed, but they definitely succeeded in getting the issue of school finance reform on the agenda in state politics. Although school finance litigation occurred in only 12 of the 28 states that legislated school finance reform during the 1970s, it is important not to underestimate the role that litigation had in prompting legislative and executive action in all states. The cases put the issue of school finance reform on the political agenda, dramatized the taxing and spending inequities among districts, and demonstrated to every state that its own school finance system might also be susceptible to challenge. In states where there was a school finance case, reform probably would not have occurred without litigation. In other states, the threat of school finance litigation prompted legislatures and governors to take action. Many governors and legislators therefore found school finance reform in their best interest—whether out of personal ideological conviction, in response to a court mandate, as a preemptive measure to avoid litigation, or for a combination of these reasons. Litigation resulting in a court mandate for reform of the state school finance system did not, however, guarantee reform of school finance. Legislatures were sometimes reluctant to act, in part because of confusion over what reforms were necessary to comply with the court order. Many of the court decisions in the 1970s were narrow in scope, did not establish a clear definition of a constitutional school finance system, and did not include instructions for the legislature concerning appropriate remedies. For example, the California Supreme Court and many of the other state courts employed the principle of fiscal neutrality and declared that students should not have diminished access to resources for their education simply because they live in property-poor districts. The courts did not specify, however, whether legislatures needed to assure that the same amount of money was spent on educating each child in the state or whether they needed to equalize across districts the amount of revenue raised at any given tax rate. The activism of the courts was encouraged and complemented by the activities of a national network of school finance reformers that emerged in the 1970s. Scholars, lawyers, government officials, citizen education groups, minority research and advocacy organizations, and national organizations such as the National Conference of State Legislators and the Education Commission of the States combined to provide research, technical assistance, and other support to the movement. The network, nurtured by the Ford Foundation's program in Education Finance and Management, helped plaintiffs make their cases about the state's constitutional responsibility to provide education for all children such that the amount of resources available to children and their schools is not dependent on where children live. Members of the network, which extended beyond the traditionally active educational interest groups, researched all aspects of school
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finance reform—from the technical questions regarding the best formulas to the political and economic dimensions of the issue—and then shared the results with policymakers and the public. Not all governors and legislators, however, were eager to get involved and make the changes in school finance systems that were necessary to respond to court mandates to increase equity. The contentiousness of the issue and lack of leadership made compliance with the court mandates very slow in many states. For example, the New Jersey Supreme Court and legislature engaged in a 3-year struggle which involved seven rounds of court decisions before an equalization plan that was acceptable to the courts was finally established. After the initial Robinson v. Cahill decision in 1973, the New Jersey legislature defied the court order. It did not even begin to legislate a response until the court prohibited the state treasurer from disbursing state aid to education in any manner that did not comply with Robinson. When the legislature did pass a new formula, it stalled on enacting the taxes to pay for it. Only after the court closed the schools did the New Jersey legislature implement its first state income tax and fund a school finance plan which was found to be in compliance with Robinson. Similarly, in California, Serrano v. Priest went to the state's highest court level three times and only in the third round, 15 years after the initial decision, was the legislated school finance system upheld as constitutional. Although court activism, the national reform network, and shifts in political roles in education policy making all provided increased incentives for gubernatorial and legislative action on school finance reform, the most crucial factor was the existence of fiscal surpluses. Pressure from the courts, the public, and their own institutions may not have been enough to force so many legislatures to act had there not been money with which to reform school finance systems. The pattern of school finance reform in the 1970s mirrors that of the economy. The high points of reform activity at the beginning and end of the decade also coincided with the years of fiscal surplus. Similarly, the middle years of the decade were a time of relative inactivity in school finance reform and a dip in the economic fortunes of the states. Reform during this period was a process of leveling-up in most states. Only three states, Montana, Utah, and Wyoming chose the politically more difficult route of equalizing school finance by redistributing funds from rich to poor districts (Odden et al., 1983:7). In the rest of the states where reform was enacted, districts with low-property wealth became eligible for increased state aid. As a result, the states added a total of over $27 billion to their share of education expenditures during the 1970s (Fuhrman, 1982:57). It is important to note that the reforms of the 1970s were not designed, even on their surface, to fully equalize per-pupil expenditures, much less educational opportunities.8 During the 1970s, the debate surrounding school finance reform in many states was focused on reducing property tax rates as well as equalizing education expenditures. In fact, a 1978 study found that school finance reform
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was accompanied by significant property tax relief in 11 of the 19 states studied. In eight of those states, tax relief appeared to have come at the expense of the educational program since those states' per-pupil expenditures declined relative to the national average (Brown and Elmore, 1982:112). Especially after Rodriguez, the 1973 federal court case which upheld Texas's highly inequitable school finance system as constitutional under the federal Constitution, and after the economic downturn in the mid 1970s, reforms became much more diverse in their objectives and, overall, less concerned with pure school finance equity arguments (Brown and Elmore, 1982:112-113). 9 In the 1970s, the courts and many legislatures used the standard of fiscal neutrality. New school finance formulas did not require equalized tax rates but were designed so that districts would receive equal revenue for equal tax rates. Such formulas could only equalize revenues to the extent that districts chose to tax themselves at the same rate. In many instances, however, property-poor districts taxed themselves at relatively low rates and therefore had significantly lower amounts of revenue available for educational expenditures. Although the new formulas shrunk spending gaps and increased the proportion of the state's contribution to education expenditures, they did not equalize per-pupil expenditures (Fuhrman, 1982:57). At the time, however, these changes were enough to satisfy the courts and subdue the public pressure for equity from educational and social interest groups. The 1980s: Excellence Replaces Equity as the Top Concern During the 8 years from January 1981 to December 1988, only 8 school finance cases were decided in the states' highest courts as opposed to the previous 8-year period when 16 cases had reached the highest courts in their states. Moreover, during this same 8-year time period only 1 of the cases was decided in favor of the plaintiffs as compared to 7 out of 16 between 1973 and 1980. Faced with less pressure from the courts, legislators and governors were able to turn to issues other than school finance. Events at the beginning of the decade did much to set the tenor for the remaining years. The recession of 1981-82 and the 1983 publication of the report A Nation At Risk (National Commission on Excellence in Education, 1983), combined to relegate school finance to the back burner for most of the decade. By the early 1980s, most states were experiencing fiscal difficulties. The aggregated national balance of state budgets in 1983, for example, was $2.3 billion in comparison to 5 years before, in 1978, when it had been $21.2 billion (Council of State Governments, 1980:275). States like California and Massachusetts had enacted tax and expenditure caps which limited the amount of money available for education equalization aid. Other states, such as Michigan and Oregon, were experiencing severe economic downturns. Most states had dangerously low amounts of economic reserves and experienced decreases in federal
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have little property wealth, stagnant or declining economies, and abysmal education conditions. They also have less than one-quarter of the seats in the state legislature. Blacks and Latinos constitute close to 25 percent of the public school population, yet New Jersey has one of the most segregated school systems in the country. In contrast with the national trend toward school district consolidation, New Jersey has actually created more school districts and now has over 600. Each has a vested interest in maintaining local control of its own resources and education policies. Although the lack of district consolidation is inefficient, regionalization of school districts is a political taboo because of its racial, class, and ideological implications. The Abbott decision of 1990 was well timed politically. A Democrat, Governor James Florio, a former representative from Camden and an urban schools advocate, had recently been elected and had a Democratic majority in both houses of the state legislature. A general public consensus supported efforts to increase equity and improve the quality of education in the state's poorest districts. In a 1990 poll, out of those who were aware of the Abbott verdict, 54 percent agreed with the court and only 38 percent disagreed (Reed, 1997:104). In response to the Abbott decision, a committee of legislators and technical experts authored the Quality Education Act (QEA), a new school finance formula that established a high foundation level of spending for everyone, provided supplemental programs for students in the poorest districts, and slowly phased out state aid to the wealthiest districts. The QEA provided over $1 billion of state aid to education, most of it targeted to the 30 poorest urban districts that educated one-quarter of the state's public school students. Governor Florio backed the QEA and a $2.8 billion tax package that was designed to fund the QEA, address the projected budget deficit, and provide local property tax relief (Corcoran and Scovronick, 1996:6). Within a month, the QEA and the tax package were passed and signed into law. They were never enacted, however, because the legislature rebelled against the Governor's leadership 4 months before the law was to take effect. They passed a revised package called QEAII, which substantially decreased the tax burden and reduced the level of education aid by $360 million (Corcoran and Scovronick, 1996:13). Widespread public opposition to the QEA proposals, the tax increases, and the prospect of increased spending in urban districts eventually succeeded in derailing these reforms. After the first QEA and the $2.8 billion tax increase were passed, an anti-tax uprising, led by a grass-roots organization called Hands Across New Jersey, caused the governor's approval ratings to drop 19 points (Firestone, 1997a:4). The QEA was criticized for being punitive—punishing the wealthier districts by taking away their state aid. Moreover, it was, and still is, often argued that more money would only be wasted in the poor districts. Perceptions of the urban districts as corrupt, inefficient, and hopeless have been strengthened by the rhetoric supporting choice vouchers and charter schools. These
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perceptions are further complicated by racial politics; what may lie behind some of the arguments that urban districts are inefficient is the belief that minority children cannot be educated and minority adults cannot run school districts well. Strong opposition also came from a somewhat unlikely source, the New Jersey Education Association (NJEA), which opposed the QEA proposals over pension issues. In 1991, almost every nonurban legislator who had voted for the QEA and the accompanying tax bill was defeated, and the Republicans gained a majority in the state legislature. Similarly, in 1993, Governor Whitman, running on an anti-tax platform and a promise to reduce income taxes by 30 percent over 3 years, defeated Governor Florio. The Republican legislature and governor have repealed most of the tax increases and much of the QEA spending. In another round of Abbott in 1997, the court ordered Governor Whitman and the legislature to provide an additional $130-248 million to the poorest districts (Goodnough, 1997:1). This decision was affirmed in May 1998 when the New Jersey Supreme Court approved a plan for funding and systemic education reform provided by the State Commissioner of Education (Abbott v. Burke, N.J. Sup. Ct., May 1998; see Minorini and Sugarman, Chapter 6 in this volume). Even the combination of a strong court decision, an activist court, and strong gubernatorial and legislative leadership were not enough to pass and sustain reform in New Jersey. Some important lessons can be drawn from the attempts to legislate school finance reform made by Governor Florio and the proponents of equal educational opportunity. First, if the bill had included provisions for accountability, educational standards, and programmatic initiatives, it might have inspired more confidence that the money would be well spent and might have had more support. Second, the QEA was passed too quickly without input from the necessary interest groups. Third, there might have been more support for the reforms if the governor and the legislators had taken more time to build a coalition, to educate the public about the problems, and to explain the reforms to the public. For example, although the middle districts would have benefited substantially from the bill and would only have paid a small portion of the taxes, these aspects were not highlighted in the debate (Corcoran and Scovronick, 1995). Critical Elements For Reform The preceding discussion of four states suggests that the political, economic, and judicial contexts of the 1990s pose a number of challenges for school finance reformers. Anti-tax and anti-government sentiment has emerged, especially in the 1990s, as a major issue in three of the four cases that we have discussed. The anti-tax message is a simple, clear message that appeals to a widespread audience with offers of concrete benefits. On the other hand, school finance reform is extremely complex; its benefits are more nebulous and are often concentrated in certain
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areas and populations. In Alabama and New Jersey, the current governors have made repeated promises to reduce taxes and have adopted the issue as a central political priority. With higher taxes ruled out, revenue to equalize school finance across districts disappears. Economic downturns have similar effects. The current and anticipated fiscal health of each state definitely plays a role in determining the timing, the nature, and the extent of school finance reform. School finance reform is virtually impossible without some sort of fiscal flexibility in the state's budget, whether in the form of fiscal surpluses; public tolerance to raise taxes, as was the case in Kentucky; or the possibility of transferring funds from one district to another, as Texas did. In Alabama, New Jersey, and Texas, the politics of race have significantly affected reform. In each of these states, respondents pointed to the main role that race plays in education policy, claiming that ''We have an unresolved race and class problem in New Jersey that affects everything we do"24 and "In Alabama, everything comes back to race; there is no public policy in the state that does not come back to race."25 In each of these three states, the benefits of school finance reform were perceived to accrue mostly, or even exclusively, to racial minorities. The white majority opposed tax increases and redistribution of resources to benefit minorities in part because negative assumptions were made about student ability to learn and about adult competence to lead school systems. In Kentucky, on the other hand, where racial minorities are a smaller percentage of the population and are concentrated in the wealthier districts, racial politics were not salient. It was therefore much easier to organize a community of interest among the white majority and create support for increasing taxes to fund education throughout the state. These factors pose challenges to school finance reformers. In the states we examined, successful litigation, strong political leadership, and extensive public education efforts proved to be necessary, but not automatically sufficient, conditions for overcoming these obstacles. In each of the four states we examined above, litigation played a key role in placing and keeping the issue of school finance reform on the state agenda. Without findings in favor of the plaintiffs and orders from the court to reform their systems, none of these states would have undergone school finance reform. A court decision in favor of the plaintiffs can act as a catalyst for reform but it is not sufficient to bring about improvements in a state's school finance system. The nature and scope of school finance litigation, the extent to which the court is willing to define the remedy, and the standards that it uses to evaluate equity all affect the types of incentives created for policymakers and the level of consensus for reform. Court decisions like Kentucky's, which declare the school finance system unconstitutional, define the standard of evaluation as equal educational opportunity, prescribe requirements for reform (including deadlines), and link improvements in finance systems to improvements in both inputs such as teachers
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and outputs such as student outcomes, appear to inspire legislators to pass significant equity-enhancing reform. Kentucky's court case opened a window of opportunity for extensive reform. As the comparison of events in Kentucky and Alabama so clearly illustrates however, successful comprehensive litigation is not enough to guarantee reform. An activist court and successful litigation are helpful, but political leadership from the governor and key legislators is essential in passing school finance reform to reduce inter-district inequities. In Alabama, where turnover and corruption severely limited consistent political leadership during the period following legislation, school finance reform efforts had very little chance of succeeding. Now, with the Governor actively opposing school finance reform and challenging the court's authority, there is no hope for success in the near term. As the other states demonstrate, the lack of opposition from the governor and others in positions of leadership is not enough; strong activist political leadership and positive incentives are needed to enact equity-enhancing school finance reform. The benefits of school finance reform need to be clearly articulated to political leaders and the broader public, as does evidence linking equalization of school finance systems with increased quality of educational experiences and improved student outcomes. In Kentucky these incentives existed and were clearly articulated by the Prichard Commission, the court, legislative leaders, and the Governor. Here the focus was on economic development. A clear argument linking school finance reform and greater investment in education to the future economic health of the state was developed and publicized for many years leading up to the litigation and reform. In other states where there has not been such decisive, repeated articulation of the benefits of school finance reform, it has been hard to identify what politicians and the broader public have to gain from taking on equity issues. Because the arguments in favor of school finance reform are complex and usually contentious, while those opposing reform are fairly simple and often have more widespread appeal, extensive and prolonged efforts to educate the public and create a community of interest for reform are essential. These efforts are necessary both in building consensus around the need for reform and in garnering support for specific reform bills. In devising a new school finance initiative, governors and legislators must often confront interest groups defending their economic advantages and "a mass public opposition that is, in significant ways, racially based" (Reed, 1997:104). School finance reform is a politically risky initiative for politicians to support unless they can clearly identify and articulate universal benefits, explain where the new money will go, show how it will improve students' experiences and outcomes, and demonstrate how these improvements benefit the wider society. The Kentucky legislators had major advantages by responding to an adequacy argument that framed both the problem and the remedy in terms of substantive education change and not just money.
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Such a focus is not sufficient (witness Alabama), but in today's climate it appears at least necessary. School finance is an increasingly partisan issue in most states as the parties take more sharply defined positions on the issue. A united and broad community of interest can help bridge partisan gaps, especially when remedies that benefit diverse interests can be formulated and presented in ways that attract popular support within the general population. Active coalitions within the educational community can help articulate the need to invest in children and the future and provide arguments that would help push reforms through the political process. Such coalitions can also examine and illustrate the status of school finance by measuring how the allocation of opportunities and resources changes over time and specifying whether the problem of inequalities exists at a national or state level or is focused only within certain kinds of districts or schools. When courts, legislatures, educators, and the public at large agree on the types of disparities in educational resources that are unacceptable, such agreement helps overcome impediments to reform that are shaped by confusion, uncertainty, and inconsistent or contradictory evidence. In states where school finance and comprehensive education reform can be billed as a necessary step toward economic development, the politically influential business community can sometimes be united behind reform initiatives and play a very important role in the debate. When the business community and a united education community support reform, as they did in Kentucky, they provide politicians with the incentives that they need to support reform. As the politics of school finance reform have become more contentious, the issues themselves are also changing. As Allan Odden (1998) has argued, the nature of the school finance equity problem in some states is different now than it was in the past. In the 1970s, for example, inequities resulted from high tax rates in districts with low property wealth and low amounts of per-pupil spending while low tax rates in districts with higher property wealth resulted in high amounts of per-pupil spending. In the 1990s, after an initial round of reforms that attempted to equalize potential revenues, many states are faced with a situation where low-wealth districts have low tax rates and low spending while high-wealth districts have higher tax rates and higher spending. Moreover, in many states, as spending levels have increased in property-poor districts, wealthier districts have increased their local tax rates and maintained spending inequities. Politically, this situation presents a less compelling argument for state intervention because low-wealth districts could improve their situation themselves if they were willing to raise their tax rates. The shift in school finance reform from tax equity to equalizing educational opportunity creates complex challenges and intricate politics. Many states are attempting to resolve these challenges through the creation of foundation levels and the use of weights to reflect the higher costs associated with serving large numbers of pupils from low-income families, special education, and other special
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groups, as well as addressing variations in district characteristics such as regional cost differences, size, or enrollment change. In the current political atmosphere, especially with the public demanding more accountability from its government, it is increasingly difficult politically to sell school finance reform on the equity principle alone. In many cases it has become necessary, though not sufficient, to have an adequacy argument and to explain what the increased or redistributed money will buy. In addition, compelling evidence about the types and levels of investments that are most likely to improve student outcomes can generate public support for school finance reform. Notes 1. For a vivid description of the current system's "savage inequalities" that create vastly different opportunities for different children, see Kozol, 1991. 2. Because the authors both reside in New Jersey, the chapter draws heavily on this state's example throughout. 3. However, this was the end result of a series of reforms passed in California. California's highest court required equity in per-pupil spending in its Serrano v. Priest case and the legislature passed a remedy consistent with this decision. Not long after that legislation, California voters passed Proposition 13, limiting taxation. The result in California has been a significant increase in school finance equity but a decline in total resources available to education as compared to the national average and a corresponding drop from near the top to near the bottom in the national rankings of many educational indicators. 4. Two state constitutions do not require the legislature to establish free public schools. The Mississippi Constitution simply requires the legislature to establish schools. Under the Alabama Constitution, the state must promote education but theoretically would not be constitutionally required to establish public schools if it did not have adequate resources. In the other 48 states, the constitution requires, at a bare minimum, that the legislature establish a system of free public schools. Fourteen state constitutions require only this minimum standard while 19 state constitutions apply a minimum quality standard to the state system of schools such as requiring that they be "thorough and efficient." Eight states have stronger and more specific quality requirements in their constitutions. The remaining seven states have the strongest category of education clause in their state constitutions, which establish education as the most important duty of the state. See McUsic, 1991. 5. Based on the Education Commission of the States count of legislated school finance reforms between 1971 and 1981 (Fuhrman, 1982:53). 6. The expected rate of diffusion of state preserve policies (not instigated by federal action), as determined by a review of studies of diffusion of innovation, is about 16 years for the first 25 percent and 24 years for the first 50
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percent. Thus, the volume of school finance activity in the 1970s is more than twice the expected rate of innovation. 7. These inequity figures come from Table 3-2 of Evans, Murray, and Schwab (Chapter 3) in this volume. 8. California eventually achieved substantial equality of per-pupil spending and of educational opportunity through school finance reform in response to Serrano combined with state and local tax capping laws such as Proposition 13 and the Gann Amendment. Equality of spending came at a high price, however, as California's total spending on education declined and the state's education system dropped from one of the best in the nation to one of the worst. 9. The record in the Rodriguez case demonstrated that Edgewood, a poor district in San Antonio, taxed itself at a 24 percent higher rate than neighboring Alamo Heights but still only had a per-pupil expenditure that was 60 percent of Alamo Heights' per-pupil expenditures. In 1967-68 dollars, Edgewood was spending $356/pupil and had a tax rate of $1.05 per $100 of assessed property while Alamo Heights spent $594 per pupil and had a tax rate of only $0.85 per $100 assessed property. 10. As Table 3-2 in Evans, Murray, and Schwab (Chapter 3) in this volume demonstrates with nationally aggregated data, the 95th percentile was spending 2.22 times more than the 5th percentile in 1982 and by 1987 the 95th percentile was spending 2.53 times more than the 5th percentile. Similarly, the other measures of inequality listed in that table all show an increase in inequality from 1982 to 1987. 11. Two of these rulings (Alabama's Harper v. Hunt and Missouri's Committee for Educational Equality v. State) were decided at the circuit court level in 1993 but were not appealed, and legislative action began in response to the lower court's ruling. In Alabama, the lower court's decision was later upheld by the Alabama Supreme Court in 1996. 12. Much of the information in this section comes from telephone interviews conducted with the following people in May and June 1997: Jacob Adams from Vanderbilt University and Timothy Collins from the University of Kentucky's Appalachian Center. 13. Telephone interview, Timothy Collins, Appalachian Center, University of Kentucky, June 1997. 14. Telephone interview, Timothy Collins, Appalachian Center, University of Kentucky, June 1997. 15. Figure cited in telephone interview, Timothy Collins, Appalachian Center, University of Kentucky, June 1997. 16. Much of the information in this section comes from telephone interviews conducted with the following people in May and June 1997: Wayne Flynt from Auburn University, Kathy Gassenheimer from A+, and Ira Harvey from University of Alabama, Birmingham.
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17. Alabama is $750 million below the southeastern average in school funding, according to Kathy Gassenheimer (in a telephone interview in June 1997). 18. Much of the information in this section comes from telephone interviews conducted with the following people in May and June 1997: Catherine Clark from the Texas Center for Education Research, Albert Cortez from the Intercultural Development Research Association, and Larry Picus from the University of Southern California. 19. Telephone interview, Albert Cortez, Intercultural Development Research Association in Texas, June 3, 1997. 20. In all of the interviews we conducted, people pointed to the court decision and the continued court involvement as the main cause of reform. 21. Telephone interview, Catherine Clark and Albert Cortez, June 1997. 22. Much of the information in this section comes from telephone interviews conducted with the following people in May and June 1997: William Firestone from Rutgers University, Herb Green from the Public Education Institute in New Jersey, Nathan Scovronick from Princeton University, and John White from the New Jersey Senate Education Committee Staff. 23. Although 29 poor districts originally filed suit, an additional one joined and was treated in the remedy phase. 24. Telephone interview, Herb Green, Public Education Institute in New Jersey, June 1997. 25. Telephone interview, Wayne Flynt, Auburn University History Department, June 1997. References Brown, P.R., and R.F. Elmore 1982 Analyzing the impact of school finance reform. Pp. 107-139 in The Changing Politics of School Finance, N.H. Cambron-McCabe and A. Odden, eds. Cambridge, MA: Ballinger. Card, D., and A.B. Krueger 1992 Does school quality matter? Returns to education and the characteristics of public schools in the United States. Journal of Political Economy 100(1):1-40. Corcoran, T., and N. Scovronick 1995 More Than Equal: New Jersey's Quality Education Act. Unpublished paper. Council of State Governments 1980 The Book of the States 1980-1981, Vol. 23. Lexington, KY: Council of State Governments. Crampton, F. and T. Whitney 1996 The Search for Equity in School Funding. Education Partners Working Papers. Boulder, CO: National Conference of State Legislators. Dove, R.G. 1991 Acorns in a mountain pool: The role of litigation, law and lawyers in Kentucky education reform. Journal of Education Finance 17(Summer):83-119. Evans, W.N., S.E. Murray, and R.M. Schwab 1997 Schoolhouses, courthouses, and statehouses after Serrano. Journal of Policy Analysis and Management 16(1):10-32.
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Ferguson, R.F. and H.F. Ladd 1996 How and why money matters: An analysis of Alabama schools. Pp. 265-298 in Holding Schools Accountable: Performance-Based Reform in Education, H.F. Ladd, ed. Washington, DC: The Brookings Institution. Firestone, W.A. 1997a Does Court Ordered Funding Equalization "Work"?: The New Jersey Experience. Paper presented at a Conference on Equity Issues in Education at the Woodrow Wilson School of Public and International Affairs on January 17. 1997b Telephone interview conducted in June. Fuhrman, S.H. 1978 The politics and process of school finance reform. Journal of Education Finance 4(Fall):158-178. 1982 State-level politics and school financing. Pp. 53-71 in The Changing Politics of School Finance, N.H. Cambron-McCabe and A. Odden, eds. Cambridge, MA: Ballinger. 1994a Governors and education policy in the 1990s. Pp. 56-74 in The Governance of Curriculum, R. F. Elmore and S. H. Fuhrman, eds. Alexandria, VA: The Association for Supervision and Curriculum Development. 1994b Legislatures and education policy. Pp. 30-55 in The Governance of Curriculum, R.F. Elmore and S.H. Fuhrman, eds. Alexandria, VA: The Association for Supervision and Curriculum Development. Fulton, M. 1997 Telephone interview conducted in March. Fulton, M., and D. Long 1993 School Finance Litigation: A Historical Summary. Denver, CO: Education Commission of the States. Goodnough, A. 1997 New Jersey's school financing is again held unconstitutional. New York Times (May 15). Hanushek, E.A. 1986 The economics of schooling: Production and efficiency in public schools. Journal of Economic Literature 24(September):1141-1177. 1991 When school finance "reform" may not be good policy. Harvard Journal on Legislation 28(2):423-457. 1996 Measuring investment in education. Journal of Economic Perspectives 10(4):9-30. Hedges, L.V., R.D. Laine, and R. Greenwald 1994 Does money matter? A meta-analysis of studies of the effects of differential school inputs on student outcomes. Educational Researcher 23(3):5-14. Herrnstein, R., and C. Murray 1994 The Bell Curve: Intelligence and Class Structure in American Life. New York: Free Press. Johnston, R.C. 1998 Frustrated with state, Texas districts back reviving finance suit. Education Week May 20, Vol. 17(36): 22. Kozol, J. 1991 Savage Inequalities: Children in America's Schools. New York: Crown. Krueger, A.B. 1997 Experimental Estimates of Education Production Functions. Working Paper #379. Princeton, NJ: Princeton University Industrial Relations Section. Massell, D., M. Kirst, and M. Hoppe 1997 Persistence and Change: Standards-Based Reform in Nine States. Philadelphia: Consortium for Policy Research in Education.
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McDonnell, L.M., and S. Fuhrman 1985 The political context of school reform. Pp. 43-65 in The Fiscal, Legal, and Political, Aspects of State Reform of Elementary and Secondary Education, V.D. Mueller and M.P. McKeown, eds. Cambridge, MA: Ballinger. McUsic, M. 1991 The use of education clauses in school finance reform litigation. Harvard Journal on Legislation 28(2):307-341. Monk, D. 1994 Subject area preparation of secondary mathematics and science teachers and student achievement. Economics of Education Review 13(2):125-145. Murray, S.E. 1995 Two Essays on the Distribution of Education Resources and Outcomes. Unpublished Ph.D. dissertation, University of Maryland. National Association of State Budgetary Officers 1991 The Fiscal Survey of the States: October. Washington, DC: National Association of State Budget Offices. 1993 The Fiscal Survey of the States: October. Washington, DC: National Association of State Budget Offices. 1995 The Fiscal Survey of the States: October. Washington, DC: National Association of State Budget Offices. 1997 The Fiscal Survey of the States: December. Washington, DC: National Association of State Budget Offices. National Center for Education Statistics 1995 Common Core Data, 1995. Washington, DC: U.S. Department of Education. National Commission on Excellence in Education 1983 A Nation at Risk: The Imperative for Educational Reform. Washington, DC: U.S. Government Printing Office. Odden, A. 1998 Improving State School Finance Systems: New Realities Create the Need to Re-Engineer School Finance Structures. Philadelphia, PA: Consortium for Policy Research in Education, University of Pennsylvania. Odden, A., C.K. McGuire, and G. Belsches-Simmons 1983 School Finance Reform in the States: 1983. Report No. F83-1. Denver, CO: Education Commission of the States. Picus, L. 1997 Does money matter in education? A policymakers guide. Pp. 15-36 in Selected Papers in School Finance, 1995, W.J. Fowler,. Jr., ed. NCES 97-536. Washington, DC: National Center for Education Statistics, U.S. Department of Education. Poterba, J.M. 1997 Demographic structure and the political economy of public education. Journal of Policy Analysis and Management 16(1):48-67. Rebell, M.A. 1994-95 Fiscal equity in education: Deconstructing the reigning myths and facing reality. New York University Review of Law and Social Change 21(4):691-723. Reed, D.S. 1997 Court-ordered school finance equalization: Judicial activism and democratic opposition. Pp. 91-115 in Developments in School Finance, 1996. Washington, DC: National Center for Education Statistics, U.S. Department of Education. Rubin, A. 1996 Time shortens for hard choices on Medicare, social security. Congressional Weekly 54(43):3055-3058.
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Thro, W.E. 1989 To render them safe: The analysis of state constitutional provisions in public school finance reform litigation. Virginia Law Review 75(8):1639-1679. 1990 The third wave: The impact of the Montana, Kentucky, and Texas decisions on the future of public school finance reform litigation. Journal of Law and Education 19(2):219-251. U.S. General Accounting Office 1995 School Finance: Three States' Experiences with Equity in School Funding. GAO-HEHS-96-93. Washington, DC: U.S. General Accounting Office. Weir, M. 1995 In the shadows: Central cities loss of power in state politics. The Brookings Review 13(2):16-19.
Representative terms from entire chapter: