tious question, one that bedevils policy makers at all governmental levels. Although the federal government is a junior partner to states and local jurisdictions in financing education, Congress, too, becomes caught up in the complex issues involved each time it considers funding decisions related to new and continuing federal programs. In late 1994, after passing Goals 2000 and then undertaking an especially fractious debate in the course of authorizing the Improving America's Schools Act, Congress included in the appropriations bill for the U.S. Departments of Education, Labor, and Health and Human Services provision for a study to be conducted by the National Academy of Sciences on education finance.


In response to this request from Congress, the National Research Council (the operating arm of the National Academy of Sciences and the National Academy of Engineering) established the Committee on Education Finance to carry out a study under the auspices of the U.S. Department of Education. In fleshing out the brief mandate assigned from Congress, the department charged the committee to evaluate the theory and practice of financing elementary and secondary education by federal, state, and local governments in the United States.

The key question posed to the committee was: How can education finance systems be designed to ensure that all students achieve high levels of learning and that education funds are raised and used in the most efficient and effective manner possible? In answering this question, the committee was further charged to:

  • give particular attention to issues of equity, adequacy, and productivity;

  • be sensitive to the legal and constitutional context and constraints surrounding school finance;

  • examine the relationship between incentive structures and education resources;

  • clarify, to the extent it could, the relationships between expenditures and performance;

  • identify data needed to give policy makers a better understanding of resource allocations, expenditures, and outcomes; and

  • consider developing funding models that would display policy options for consideration by elected officials, educators, judges, and other interested parties.

The committee translated this key question into three goals for education finance systems, a translation that provides objectives against which to evaluate the performance of existing arrangements and the likely effects of proposed changes:

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