NotesFAQContact Us
Search Tips
Peer reviewed Peer reviewed
Direct linkDirect link
ERIC Number: EJ902833
Record Type: Journal
Publication Date: 2006
Pages: 24
Abstractor: As Provided
Reference Count: N/A
ISSN: ISSN-1557-3060
Reforming Reforms: Changing Incentives in Education Finance in Vermont
Schmidt, Stephen J.; Scott, Karen
Education Finance and Policy, v1 n4 p441-464 Fall 2006
In 1997, Vermont passed Act 60, which reformed its education finance system to achieve greater equality of spending. The reform encouraged wealthy towns to reduce spending; it was politically unpopular and was replaced, in 2004, by Act 68. We analyze the spending incentives created by the two acts and estimate the effects the change will have on spending inequality. Act 68 reduces tax prices for education spending in all towns, but reduces them disproportionately for wealthy towns. It increases education spending in Vermont but also increases inequality of spending. Because spending is inelastic with respect to tax prices, the increase in inequality is small relative to existing inequality. Our findings demonstrate that understanding the way towns respond to financial incentives, economically and politically, is critical in designing successful reforms. They suggest that it is difficult to maintain finance systems that give wealthy towns strong incentives to spend less or subsidize poorer towns. Using state revenues to subsidize schools achieves nearly as much equality as more explicit attempts to force wealthy districts to share resources.
MIT Press. 55 Hayward Street, Cambridge, MA 02142. Tel: 617-253-2889; Fax: 617-253-1709; e-mail:; Web site:
Publication Type: Journal Articles; Reports - Evaluative
Education Level: Elementary Secondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Identifiers - Location: Vermont