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Making Money Matter: Financing America's Schools
into goal 2 must be on the school's role in breaking the nexus between students' background characteristics and their academic achievement.
Goal 3 complements the first two goals of a good education finance system by focusing attention on how revenues are generated. For historical reasons, the United States has relied much more heavily on state and local revenue sources than have most other countries. While such a decentralized financing system clearly promotes certain values that Americans hold dear, such as the value of local control, the continuing reliance in many states on locally generated revenue may be unfair in a world in which some households are increasingly able to move with ease from one area to another. That middle-and upper-income households can move out of high-taxation areas makes it possible for them to avoid sharing the burden of financing the local share of education for those left behind. In particular, as households and firms have moved out of central cities in search of lower land prices in the suburbs or more favorable business conditions in other states or countries, they have often left behind them smaller tax bases and concentrations of economically disadvantaged and difficult-to-educate students. The result is widening disparities among the capacities of school districts to generate local funds to meet the educational needs of their students at the same time that graduating students are increasingly having to compete for jobs in a national and global marketplace. While assistance from the federal and state governments helps to offset these disparities, large differences remain, both within and across states.
Moreover, the property tax has been a mainstay of education finance and historically has been a productive generator of revenue, but many people believe it imposes unfair burdens. The burdens may be unfair because the tax is poorly administered or because a local property tax may end up putting a disproportionately greater burden on low-income taxpayers than on higher-income taxpayers. Ensuring that revenues are raised in a fair way is important not only for its own sake but also to ensure support for education. However, any changes designed to increase fairness must also be sensitive to their impacts on the efficiency with which funds are raised and in how education is delivered.
The importance of rethinking how educators can raise and spend money efficiently and fairly as they strive to meet goals 1 and 2 is underscored by the drumbeat of criticism that has been directed at American education in recent years, with its threat of diminished support for public schools. In part the criticism has been motivated by concerns over the performance of the system, in both an overall sense and in terms of how well it meets the needs of particular groups of students. In part it reflects dislike of the main tax (the local property tax) that pays for education.
Attacks on public schools (which, it should be noted, have never been absent) seemed to grow steadily louder beginning in the late 1960s—perhaps not coincidentally the same time when the Vietnam War and then Watergate and the economic shocks initiated by the Arab oil embargo punctured the post-World