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Financing Schools in Today's Recession

It's no longer news that public schools across the country are facing the worst financial crisis since the Great Depression. Because the federal government contributes less than 10 percent of funding, public education depends heavily on state and local support in roughly equal proportions. But the recession has shrunk revenues from both sources. As a result, states are engaged in a series of unprecedented reforms to deal with the deficits they face.

At the heart of the movement is the belief that despite spending more per student than most developed countries, the U.S. still performs below average on tests of international competition in math and reading. Therefore, the argument goes, spending more money on schools will do little to improve outcomes. Rather than engage in a debate that the U.S. also happens to be the country with the highest childhood poverty rate in the industrialized world, according to UNICEF, I'd like to point out some things that we have done to exacerbate matters. I hope they shed some light on the Byzantine world of school financing.

California serves as a case study. Recent cuts forced California to shorten the school year, increase class size, lay off teachers and more. What plays a big role in the financial crisis is not so much inadequate funding as incoherent funding. Adjacent school districts with similar populations and similar needs, for example, receive dramatically different funds per student because of an antiquated funding formula from the 1970s.

This inequity is the basis of a current lawsuit contending that California is violating its Constitution. (A similar suit in New York, which spends thousands of dollars more per student than California, proved successful.) If plaintiffs prevail, per-pupil funding would be made more equitable from one district to another, with additional money provided for special education and English language learners. At present, the wealthiest districts can become "basic aid" districts. This designation means that their schools are funded by local property taxes instead of per-student dollars from the state. The arrangement gives them several thousands more to spend on each student than the state average, even though these districts have no greater needs.

In January, Beverly Hills was in the limelight over this issue. For years, its prestigious school district offered nearly 500 nonresidents "opportunity" permits because each student brought in annual state funding of more than $6,000. But when Beverly Hills realized that local property taxes would generate more money than it would get from the state, the school board voted to boot out about 400 of these opportunity students this June.

Beyond this controversy, however, is the belief by many taxpayers across the country that public schools are bloated. In a scathing cover piece in the June 21st issue of The Weekly Standard, P.J. O'Rourke argued that it's time to close all public schools ("End Them, Don't Mend Them"). "America's public schools have served their purpose. Free and compulsory education was good for a somewhat unpromising young nation." But that time has long since passed, he wrote. The way public schools are presently financed may pave the way for his proposal to become a reality.

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The opinions expressed in Walt Gardner's Reality Check are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

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