Where does new money go? Evidence from litigation and a lottery


Thomas Dee

Year of Publication: 
In W. Fowler (Ed)
Developments in School Finance, 1999-2000
National Center for Education Statistics, U.S. Department of Education

Voters and policymakers who are interested in improving the quality of the public schools in poor communities through increased spending face a number of difficult challenges. The first and most obvious of these challenges simply involves how new resources can be raised. Over the last 30 years, reformers in almost every state have attempted to compel state governments to play a larger role in financing public education in poor com-munities by challenging in court the constitutionality of education finance systems based largely on local property wealth. This class of litigation has typically argued that such systems are unconstitutional because, by limiting the educational opportunities of the children in poor communities, they violate the equal protection or education clauses of state constitutions.1 To date, the supreme courts in 17 states have agreed, invalidating the education finance system and encouraging states to direct new aid to their poorest school districts. However, over this same period, 37 states have also turned to new state lotteries as a way to increase state funding for key services like education. There are several reasons that these popular approaches to reforming education finance might of-ten prove to be ineffective. For example, it is by no means clear that these reforms actually increase educational spending. State legislatures may respond slowly, if at all, to a negative court ruling that encourages increased aid. Furthermore, states that earmark new lottery revenues for education may simply choose to then reduce their education appropriations from other sources. And, even if these reforms do increase state aid, the effect on educational spending may be undone at the district level by reductions in revenues raised from local and Federalsources.2 Finally, even if new state aid were to increase local educational spending, it is not clear that these new resources would be allocated in ways that actually improved school quality. An extensive empirical literature on educational productivity suggests that there is no systematic relationship between increased school spending and measured school quality (e.g., Burtless 1996). This view, though controversial, raises the critical concern that school districts would not allocate new reform-driven state aid in a productive manner.

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APA Citation

Dee, T. (2002). Where does new money go? Evidence from litigation and a lottery. In W. Fowler (Ed), Developments in School Finance, 1999-2000. National Center for Education Statistics, U.S. Department of Education.