TY  - JOUR
AU  - Fernandez,Raquel
AU  - Rogerson,Richard
TI  - Education Finance Reform and Investment in Human Capital: Lessons from  California
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5369
PY  - 1995
Y2  - November 1995
UR  - http://www.nber.org/papers/w5369
L1  - http://www.nber.org/papers/w5369.pdf
N1  - Author contact info:
Raquel Fernández
Department of Economics
New York University
19 West 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8908
Fax: 212/995-4186
E-Mail: raquel.fernandez@nyu.edu

Richard Rogerson
Woodrow Wilson School of
  Public and International Affairs
323 Bendheim Hall
Princeton University
Princeton, NJ 08544
Tel: 609-258-4839
Fax: 609-258-5349
E-Mail: rdr@princeton.edu
AB  - This paper examines the effect of different education financing systems on the level and distribution of resources devoted to public education.  We focus on California, which in the 1970's moved from a system of mixed local and state financing to one of effectively pure state finance and subsequently saw its funding of public education fall between ten and fifteen percent relative to the rest of the US. We show that a simple political economy model of public finance can account for the bulk of this drop.  We find that while the distribution of spending became more equal, this was mainly at the cost of a large reduction in spending in the wealthier communities with little increase for the poorer districts.  Our model implies that there is no simple trade-off between equity and resources; we show that if California had moved to the opposite extreme and abolished state aid altogether, funding for public education would also have dropped by almost ten percent.
ER  -