ADJUSTING SCHOOL AID FORMULAS FOR THE HIGHER COST OF EDUCATING DISADVANTAGED STUDENTS

In this paper, we consider the problem of determining the appropriate method for adjusting state aid to compensate for cost differentials across localities. The feasibility of using cost and expenditure functions to estimate these adjustments is considered. Data from Arizona are used to determine ad...

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Bibliographic Details
Published in:National tax journal 1994-03, Vol.47 (1), p.89-110
Main Authors: DOWNES, THOMAS A., POGUE, THOMAS F.
Format: Article
Language:English
Subjects:
Advantages
At risk students
Coefficients
Cost efficiency
Cost estimates
Cost functions
Costs
Decision making
Economics
Education
Estimates
Estimating techniques
Expenditures
Finance
Government aid
Government spending
Implicit costs
Labor force
Management
Mathematical independent variables
Public schools
Public sector
Public services
School districts
School finance
Socially handicapped children
State aid to education
State government
Student costs
Studies
Test scores
Variable costs
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Summary:In this paper, we consider the problem of determining the appropriate method for adjusting state aid to compensate for cost differentials across localities. The feasibility of using cost and expenditure functions to estimate these adjustments is considered. Data from Arizona are used to determine adjustments for districts with at-risk students (students with limited English proficiency or eligible for subsidized lunch). We find districts with at-risk students face higher costs, and we show that failing to account for temporally stable effects of omitted variables leads to inaccurate estimates of cost differentials. We also discuss advantages of using cost functions for determining aid.
ISSN:0028-0283
1944-7477
DOI:10.1086/NTJ41789054