Public Schools and Communities they Serve

The issue of school funding is a prominent issue in our region. Why?

The issue of school funding in our region has become prominent in the news as the Little Miami School District pursued its fourth consecutive failing levy in a little over a year, and numerous other districts are also considering levies. The issue highlights the complex relationship between public schools and the communities they serve and raises important questions about public school funding, equity and outcomes. According to the Ohio Department of Taxation, local communities provide nearly half of all statewide school funding, primarily from property taxes. Certainly, this implies that communities with lower real estate values will have a smaller tax base with which to fund their public schools.

The constitutionality and effectiveness of reliance on property taxes for public schools has been debated for some time, in Ohio and other states with similar situations, with no clear solutions arising. Residents of the Little Miami School District have been caught between the desire to provide high quality education for their student residents and the economic hardships faced by the funding base such as unemployment and falling home values. Their struggle is not unique.

The difficulty that some school districts have passing levies raises some important questions, not the least of which is “Why do levies fail (or succeed)?” Researchers have demonstrated that voter self-interest is a powerful determinant of levy success (Tedin et al., 2001). Thus, voters are weighing what benefits them more, contributing more to the local school district or maintaining their current tax bill. In 2008, Maher and Skidmore found that a change to Wisconsin’s school funding policy, in which the state increased average support from one-half to two-thirds of school costs, increased the chance of a funding referendum passing in districts that benefited from the policy change by way of a reduced tax price for education. The success rate of a levy was also enhanced by fewer issues on the ballot, using the funds for capital purchases rather than other types of purchases, the smaller the request relative to the tax base, and if the issue is appearing for the first time.

Aside from the issue of finding the resources to support a school district, a subsequent question is “What happens when support wanes or is insufficient?” If education is a pillar of economic growth, than how do communities deal with lack of sufficient funds for education? Research by Blankenau and Simpson (2004) show an inconsistent relationship between public education expenditures and economic growth. Increasing spending alone is insufficient depending on other environmental factors, such as the level of public spending and type of taxes levied, and may even have a negative impact on growth if increases in public spending lead to decreases in other types of growth-promoting investments, such as the accumulation of physical capital.

The Economics Center has been analyzing data from Southwest Ohio Local public school districts in order to better understand the positions of local school districts in terms of available resources and the outcomes that they produce. Our analysis thus far confirms what we suspected to be true, that available resources matter tremendously. Further research should indicate to what extent the resources that matter are financial versus cultural. For instance, there is a strong association between financially well-to-do districts and the educational attainment of adult residents. Both the money and also a culture that places a positive emphasis on educational achievement may be important in their own right.

While financial resources are important, it’s not only the amount of money a district has that matters it’s what the district does with it. With financial resources increasingly difficult to come by, it is important for school districts to communicate how resources they receive benefit the entire community. It is not sufficient to communicate the need, even if the need is critical. One way to communicate this value proposition may be for school districts to demonstrate clearly that they are good stewards of the resources they do possess. This may engender trust from voters that additional resources will also be put to the best use to create a strong community.

Contributed by Research Associate Jennifer Pitzer, Ph.D.