Chapter 3: State aid and Education Outcomes

This chapter examines ways of achieving funding equity and explores the impact of equalization on spending and on student outcomes. State aid programs that link financing, instructional delivery, and outcomes are flawed by their poor ability to estimate how much more spending achieves adequacy and by a lack of a consensus on educational outcomes. Court-mandated school-finance reforms have been successful in reducing inequality in spending by directing new state funds to low-spending and low-income districts. Preliminary evidence suggests that new resources have found their way to classrooms and that student achievement has not been harmed by court reforms.

Traditionally, public elementary and secondary education has been highly decentralized in the United States. There are more than 16,000 school districts, each of which has significant responsibility for raising education funds and deciding how those funds are to be spent; as late as the 1920s, local governments provided well over 80% of public-school revenues. Although state governments have shared in the cost of providing education, historically their major role has been to monitor curriculum, evaluation and standards. However, since the landmark 1971 case Serrano v. Priest in California, state legislatures, on their own initiative or at the behest of state courts, have begun to assume a much larger redistributive role in public school finance and most recently have begun to link their redistributive and evaluation roles with accountability systems.