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State, as well as local, aid formulas are about to become a matter for widespread public debate. The California Supreme Court recently ruled (in Serrano vs. Priest) that the Fourteenth Amendment prohibits per capita expenditure inequalities that result from differences in the property tax base among local school districts. Similar laws are being introduced in several other states, and eventually the Supreme Court will have to rule on the issue. Assuming that the California decision is upheld, all states (except Hawaii, which does not fund education with local property taxes) will either have to (a) develop wholly new state aid formulas that fully compensate for variations in educational spending arising from differences in local tax base, or (b) eliminate reliance on local property taxes altogether, in which case new allocation formulas will also be necessary. For a review of current state aid methods and a discussion of the legal logic underlying the plaintiffs' case, see John E. Coons, William H. Clune 111, and Stephen D. Sugarman,Private Wealth and Public Education (Cambridge: Harvard University Press, 1970).
All data are for 1970–1971, since 1971–1972 data were not available at this writing.
Innumerable modifications of these two basic alternatives are of course possible.
Under the “equal dollars per student” formula, a district with high costs of class coverage must use nearly all of its funds to employ teachers to assure that all its classes have 32 or fewer students, and hence ends up with few discretionary dollars; a district with low costs of class coverage must spend less to employ teachers to assure class sizes below limits, and therefore is left with more discretionary dollars. Since the “average-class-size-based” formula adjusts for differences in costs of class coverage, all districts spend about the same proportion of their budgets to maintain class sizes within limits and are left with comparable amounts per capita in discretionary funds.
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Carter F. Bales directs the public practice consulting group in McKinsey & Company's New York office. He has directed major projects for the City of New York, including program analysis and development projects in housing, education, tax policy, hospitals, and environmental protection. He has also worked on a range of consulting projects for other state and local governments and for industry. Mr. Bales has written on urban problems forNew York Magazine and has been published by the Harvard Business School Division of Research.
Julien R. Phillips is an associate in the New York office of McKinsey & Company. His assignments include the framing and analysis of alternative funds allocation formulas for the New York City Board of Education and a study of possible budgetary economies in Rhode Island state government. Earlier Mr. Phillips served with the Peace Corps in Latin America.
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Bales, C.F., Phillips, J.R. Fairness by formula. Urban Rev 5, 10–16 (1971). https://doi.org/10.1007/BF02227119
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DOI: https://doi.org/10.1007/BF02227119