Does fiscal dependency matter? Aid elasticities for dependent and independent school districts

• Published in: Economics of education review 2000, Vol.19 (4), p.417-429
• Main Author: Downes, Thomas A
• Format: Article
• Language: English
• Subjects: Academic Standards; Aid elasticities; Barriers to Implementation; Cost Effectiveness; Educational Finance; Efficiency; Elementary Secondary Education; Fiscal dependency; Flypaper effect; Governance; Income; Influences; New York; Program Implementation; Resource Allocation; Tax Effort; Urban Schools
• ISSN: 0272-7757; 1873-7382
• DOI: 10.1016/S0272-7757(00)00007-8

In New York state, there is a perception that the fiscally dependent status of the five large city school districts creates an impediment to the attainment of standards. I attempt to assess the impact of fiscal dependence on educational spending. The results suggest that levels of spending may be systematically lower in the fiscally dependent districts. There is, however, little evidence that the general purpose governments to which these districts are fiscally dependent “steal” a disproportionate share of state aid for education. I conclude by evaluating policies that could mitigate any detrimental impact that fiscal dependence might have. This evaluation leads me to the conclusion that, even if spending levels are inadequate, elimination of fiscal dependency may not be the best policy for addressing this problem. Instead, policy makers may want to consider governance changes that would better align responsibilities for allocating revenues to the schools and for governing the schools.