School finance reformers have long been divided into two camps. On one side, there are the advocates who argue for increased fiscal equity. They believe the primary issue concerning school finance is funding fairness and point to an abundance of evidence that shows high-poverty districts with needier students receive far less money than their wealthier counterparts.
On the other side of the debate are those who argue for increased fiscal efficiency. These advocates believe that school districts do not do nearly enough with the dollars they have. Stanford University’s Eric A. Hanushek—seen as the intellectual grandfather of this camp—put it succinctly, saying, “The real issue is how to organize the [nation’s school] system so that you get the most you can out of the resources you put in.”
Yet there’s a problem inherent to both points of view. Fiscal equity and fiscal effectiveness are not mutually exclusive, and this nation needs to do more to improve both the fairness and the productivity of public school dollars. In other words, we need to make sure that schools and districts not only get enough money to serve their student populations but also that they then spend those dollars wisely.
For educators, this is not some sort of Ivory Tower point. Given uncertain revenues, schools have to show that they are using public dollars in ways that clearly raise student achievement. As noted in my 2011 report “Return on Educational Investment,” fiscal accountability promotes fiscal trust. Indeed, without some push for greater productivity, taxpayers will eventually lose their faith in public schools and thus be far less inclined to fund them.
At the same time, our nation cannot ensure that all students have a fair shot at a good education without greater fiscal equity. In too many parts of the country, students living in high-poverty communities simply do not receive their fair share of education dollars. In fact, in some areas, states systemically give less money to low-income districts. Consider Chicago: As school finance expert Bruce Baker suggests, because of a financial funding formula that is far too dependent on local property taxes, the wealthy suburbs around Chicago receive much more public money than needier schools in inner-city Chicago.
In the end, equity and effectiveness must be considered the same side of the fiscal coin. They support each other and depend on each other. To help improve both equity and the effectiveness of school funding, CAP is releasing three new reports today that address these issues. One of them is my paper, which you can find at the Center and includes the productivity evaluations of 7,000 school districts. Also be sure to look at Bruce Baker’s excellent report.