ERIC Number: ED490872
Record Type: Non-Journal
Publication Date: 2004-Apr
School Funding, Taxes, and Economic Growth: An Analysis of the 50 States. NEA Research Working Paper
Sims, Richard G.
National Education Association Research Department
Recent court decisions and state studies indicate that none of the states measure up on even rough measures of adequacy and equity in school funding. Because of tax and spending limits, some states have school funding systems that are equitable, but hardly adequate. One way to address this problem is for states to get on a path toward achieving adequacy and equity by increasing education spending by a small percentage each year. However, given the compelling need to balance state budgets, governors and legislators frequently confront the difficult choice of cutting spending or raising taxes. A major aspect of this knotty fiscal dilemma is the effect such a fiscal policy decision will have on employment levels in the state. This study employs a set of state-specific dynamic computable general equilibrium (CGE) models to evaluate the employment effects of a fiscal policy decision relating to education-related taxing and spending. Specifically, the study looks at the consequences of an increase in education spending by 2 percent and an equal increase in state residents' consumer taxes. The analysis considers the development impacts of education as an economic "industry," employing resources and producing an output. It also considers effects that are unique to educational spending, such as its role in regional amenity enhancement (i.e., the value that the increased quality of life from better-supported schools has in attracting a productive and efficient workforce). The study finds that the number of jobs created by increasing education spending is larger than the number of jobs lost from increasing taxes to support that spending. The study reveals that such a strategy has significant net positive near- and long-term employment effects for each of the 50 states. The following are appended: (1) Education Expenditures of State and Local Governments, by State; (2) The Economic Model; and (3) Detailed Results of 50-State Analyses. (Contains 6 tables, 3 boxes, and 2 figures.)
Descriptors: Resource Allocation, Employment Level, Economic Progress, Educational Finance, Educational Equity (Finance), Public Education, Local Government, State Government, Expenditures, Financial Policy
National Education Association Research Department, 1201 16th St., NW, Washington, DC 20036. Tel: 800-229-4200; Fax: 770-280-4134; Web site: http://www.nea.org/books.
Publication Type: Numerical/Quantitative Data; Reports - Evaluative
Education Level: Elementary Secondary Education
Authoring Institution: National Education Association, Washington, DC. Research Div.