Economic evidence and logic show why the push to “equalize” school finance, which has touched every state in the US, is based on misconceptions and creates perverse consequences for students and taxpayers. It’s important to bring economics into the judicial conversation, since courts have been the primary avenue for forcing legislatures to centralize and equalize the funding of public schools.
Here’s the misconception: that it is “inequitable” or “disproportionate” for some towns to be able to tax at a low mill rate because they have higher property valuations per student, while other towns have to tax at a much higher mill rate because they have lower property valuations per student. This claim sounds intuitively right, which explains why so many presumably intelligent state judges have fallen for it.
Here’s what’s wrong with it: local governments compete for residents on the basis of tax rates and quality of services, so systematic differences in property valuations are as much or more the result of differing tax rates and differing school qualities as the cause of them. Some towns developed excellence in their public schools while keeping taxes low, and got high valuations that way. Others allowed more commercial, industrial, or apartment development in their zoning codes, which increased their tax base without bringing many kids into the schools, again allowing tax rates to be low. Towns were either inefficient, managing their schools poorly while wasting tax dollars, or chose to keep out development with restrictive zoning codes. As a result, their valuations are low.
Continue reading the entire piece here at the American Institute for Economic Research
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Judge Glock is the director of research and a senior fellow at the Manhattan Institute and a contributing editor at City Journal. Jason Sorens, Ph.D., is Senior Research Fellow at AIER.
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