Public School Finance Before and After Serrano.doc

Public School Finance Before and After Serrano
Sarah A. Hill
California Institute of Technology
February 2006
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Abstract
This paper examines the history of education finance in the United States from 1890 to 2003. The data do not show a dramatic increase in the state share of education finance during the recent period of court-ordered equalization reforms, as has been suggested by the literature. Instead the data show that state governments assumed a large amount of responsibility for supporting public schools during the Great Depression, and since that time the state share of education revenues has increased at a steady rate. Regression analysis reveals that court-ordered reform does increase the state share of education revenue, but by at most 5%. Using the effects estimated through regression analysis, the estimated increase in education expenditures is between 47 and 75 cents for each extra dollar provided by the state.
Introduction
In 1971, the California Supreme Court ruled in its landmark Serrano v. Priest decision that the educational finance system then in place was unconstitutional. Because local school districts relied heavily upon local property taxes for revenue, large disparities in property values resulted in large disparities in per-pupil spending. In subsequent years similar rulings have followed in 23 other states, and these cases have resulted in changes to education finance across the United States. These states and the dates of their court rulings are listed below in Table 1.
(Table 1 about here)
Disparities in education spending have been ruled eptable by state courts through various arguments. In some cases the court bases its decision upon an equal protection argument. That is, they find that the state constitution requires equal educational opportunity so that the spending disparities in the system must be eliminated. Often such a determination means that education is a fundamental right, and so courts can be hes