New Study Reveals School Finance Lawsuits Increase Funding Temporarily, Hike Taxes Permanently

 
 
July 26, 2007

Long term, rulings prove ineffective at increasing education spending

For more information, contact: Nate Bailey at (202) 464-5102.

WASHINGTON, DC - A new, first-of-its-kind study by the Tax Foundation reveals that lawsuits targeting "inequitable" or "inadequate" school funding have failed to produce long-term increases in school spending, but many have produced long-term tax increases.

"Lawsuits may be able to build schools, but they haven't proven effective at teaching kids," said study author Chris Atkins.  "Higher tax rates appear to be the only enduring result of these school finance lawsuits.  This research questions the conventional wisdom that you can sue your way to a better school."

The study is titled "Appropriation by Litigation: Estimating the Cost of Judicial Mandates for State and Local Education Spending." The study is No. 55 in the Tax Foundation Background Paper series and is available online at: http://www.taxfoundation.org/legacy/show/22505.html,

The study will be formally unveiled by Atkins at the American Legislative Exchange Council (ALEC) 34th Annual Meeting in Philadelphia, PA on July 26, 2007 at 2:30 PM during the Education Task Force Meeting.

The key findings of the report are as follows:

  • Twenty-seven states have increased school spending or raised taxes to comply with court mandates. Legislative responses to court mandates vary, but they typically provide more funding for recurring expenses (i.e. teacher salaries), capital expenses (i.e. facility construction or repair), or take the form of general grants that seek to equalize funding among school districts. Since 1977, lawmakers have authorized an additional $34 billion in spending or taxes to comply with court mandates, which equals an average of $976 per pupil.
  • Despite increasing recurring spending to comply with court mandates, eighteen of the twenty-seven states are spending $284 less per pupil on recurring spending (overall) in 2004 than we would have expected based on growth trends before the court mandates.
  • Courts are clearly having a fiscal impact on state budgets in the short-term, where mandates are forcing lawmakers to immediately increase state spending on education. In the long-term, however, the overall impact on state budgets is questionable. Particularly in states where courts forced lawmakers to increase recurring expenditures, the evidence suggests that appropriation by litigation is not a particularly efficient means of securing permanent funding increases for schools.

"These findings show that while judges certainly hold power," continued Atkins, "the legislature will always retain the ‘power of the purse.'  Short-term funding gains realized by schools in the wake of judicial rulings have not produced, on the whole, higher school funding in the long haul.  It appears that calling your legislator is still the best way to get more money to schools."

Read the full study online at: http://www.taxfoundation.org/legacy/show/22505.html

The nonpartisan, nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.

For more information, contact: Nate Bailey at (202) 464-5102.

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