ERIC Number: ED196122
Record Type: Non-Journal
Publication Date: 1980-Jan
Reference Count: N/A
School Finance Capitalization.
Gurwitz, Aaron S.
Residential areas with low property tax rates are more desirable than those with high tax rates, and school districts that have a high rate of expenditure per pupil are more attractive to parents than those with low rates of expenditure. For these reasons, the financial characteristics of a school district influence the value of housing in the district. Changes in the fiscal conditions of districts brought about through school finance reform will lead to changes in the housing values relative to other districts. These capitalization effects have three implications for the analysis of school finance systems. First, to the extent that housing prices adjust perfectly, compensating residents of low wealth districts for their school finance disadvantages, the system is not characterized by horizontal inequity despite earlier assumptions. Second, since the well-being of households is relative to the fiscal conditions in several neighboring districts, all of those districts must be analyzed to determine the impact of alternative school finance systems on vertical equity. Finally, recapitalization effects are likely to influence the cost of reform to the state. That is, state equalization aid will lead to changes in the relative housing values and tax bases of the districts affected by the aid. (Author/PGD)
Descriptors: Educational Economics, Educational Finance, Elementary Secondary Education, Equalization Aid, Finance Reform, Mathematical Models, Property Taxes, Residential Patterns, School Taxes, State Aid, Tax Effort, Tax Rates
The Rand Corporation, 1700 Main St., Santa Monica, CA 90406 ($3.00)
Publication Type: Information Analyses
Education Level: N/A
Sponsor: Ford Foundation, New York, NY.
Authoring Institution: Rand Corp., Santa Monica, CA.