In an ideal world, Pennsylvanians could ‘vote with their feet’ for fair school funding. Instead, it’s up to the government.
Philly-area economist Joel Naroff helped Massachusetts create its school-funding formula. It took political will to make it reality.
Pennsylvania’s system of paying for public schools is unconstitutional, a Commonwealth Court judge ruled in February. In a 786-page decision, Judge Renee Cohn Jubilerer ruled that the petitioners presented “manifest deficiencies” between the high-wealth and low-wealth school districts with “no rational basis” for the funding gaps.
It should surprise no one that a state program dependent upon property values, which differ so dramatically across communities, would be viewed as having, in poorer school districts, “manifest deficiencies” that create unmet needs as basic as “safe and temperate facilities in which children can learn.”
Implementing an acceptable funding program, though, will not be easy and may require court intervention.
Forty years ago, I worked with a small team of economists to help restructure the Massachusetts educational aid formulas. We used an assortment of measures, broken down by districts, and created a variety of algorithms that produced alternative aid options. The rest was up to the politicians.
» READ MORE: Landmark Pa. school funding case decided: The state’s system is unconstitutional
My experience in Massachusetts offers a valuable lesson for Pennsylvanians who want to see the school funding crisis resolved: Political will is key to moving forward.
In a perfect world, funding inequalities wouldn’t arise, or if they did, they would not matter. If incomes were relatively equalized, households would determine where they wanted to live according to their preferences for housing structure and government services. There would be neither poor nor rich communities.
People would choose locations, or “vote with their feet,” a concept popularized by economist and geographer Charles Tiebout in 1956. He suggested that people would physically move to cities or towns that have a combination of the private and public goods — and the resulting tax structure — that best match their requirements and ideologies.
Under this model, funding would not necessarily be equalized. Communities with large numbers of families with children might be willing to spend heavily on education, while retirement communities might provide more limited funding. Still, households would move to where their educational preferences match the educational services provided, limiting dissatisfaction.
Unfortunately, an ideal world where everyone gets the level of education spending they want has shortcomings — the most important being that the assumptions underlying Tiebout’s model are largely unrealistic. For this to work, people must have equal income, free mobility, perfect information about communities, costless commuting, and multiple competitive communities from which to choose. That is not the world we live in.
However, the concept of “voting with your feet” does give us insights into why there are such extreme inequalities across geographic divisions.
Poorer communities = less money for schools
In Tiebout’s model, the most important factor is the ability to move.
Income inequality is the greatest barrier to mobility. People with low incomes cannot afford to live in communities with high, or even moderate, home prices. They are limited to communities that have significantly less fiscal capacity to raise revenue — otherwise known as taxable property values — than wealthier communities and thus can spend less on education. As income inequality in the U.S. continues to increase, the educational funding gap will keep widening.
It is possible, though difficult, to create income-diverse communities. Mixed-income housing construction would provide options for a variety of income classes. Nice idea, but economics of building low-income housing in high-value locations don’t often work for the private sector. Government intervention is thus required.
Costs are only one aspect of the problem. The politics of mixed-income housing may be more important. It is typically not very popular with higher-income residents, and opponents have a powerful tool at their command. Nothing better limits affordable housing than zoning, which has been used to restrict the type, structure and lot size of houses to keep out lower-income households.
Government intervention
Bridging income barriers is the logical way to level fiscal capacity and reduce educational spending differences.
If incomes were uniform — which is not something a whole lot of economists think would work very well — then obstacles to mobility would be minimized. Everyone could buy a house in any area that matches their preferences. Some would live in high-density but smaller-sized units. Others might choose large homes on large lots of land. The ability to fund high-quality education would largely be equalized across jurisdictions.
But that optimistic scenario is not our reality, so school funding inequality must be addressed through government action.
Since equally funded educational opportunities require state government subsidies, it doesn’t matter whether some of the educational funding comes from local sources or all the funds come from state coffers. It is all about the educational aid formula that distributes the money.
When I helped Massachusetts restructure its educational aid formula, I saw firsthand that any change will provoke strong reactions. Pennsylvania will be able to change how the state funds schools only if elected leaders have the political will to get it done.
How do you insert political backbone into the education funding revision process? The same way redistricting was accomplished. Pennsylvania’s Supreme Court may have to oversee the process by setting firm requirements for when the process must be completed. If it is not, the court would then choose an option or formula, as it did with redistricting.
Resolving the unconstitutional educational funding inequalities will create massive battles as there is no one best formula. Ultimately, though, it’s the lack of political will that is the roadblock. In our current political world, equitable funding may never get done unless the courts intervene.
Joel L. Naroff is the president and founder of Naroff Economics consulting firm in Margate.