Tax Policy and Public School Finance

Abstract

‐ Over twenty‐five years after the Serrano v. Priest (1971) decision by the California Supreme Court sparked intense debate over school finance equity, the topic remains at the forefront of the education reform debate in many states. Over the past two decades, a number of states have faced lawsuits over the equity of their school finance system, and several states have been forced to make changes. In the last several years, a new round of court cases has challenged traditional equity standards and solutions implemented in response to past court orders. Several of the recent challenges, most notable in Kentucky and Michigan, have involved reform of the whole school finance system. Accompanying the continued debate over school finance equity has been intense interest in reforming the organization and performance of public schools and renewed opposition to local property tax financing of education. After the 1983 publication by the national commission of Excellence in Education of A Nation at Risk, with its scathing critique of American education, "education reform" has become the rallying cry for major structural changes in public schools. Reforms have ranged from the establishment of minimum competency standards and mandatory testing (Fuhrman, Elmore, and Massel, 1993) to the development of new performance incentives for teachers, school, and school While states have debated how to improve public school performance, the property tax ‐ the heart of local school finance ‐ has come under renewed attack. Recent proposals to reduce the role of the local property tax in financing schools have been passed in five states (Michigan, Oregon, Wisconsin, Nebraska, and Vermont) and have been considered in several more (Gold, 1994a; Reschovksy, 1994). Despite the fact that state education finance systems have been under challenge on a number of fronts, public finance and education research continues to be segmented into separate