The efficiency - equity tradeoff in school aid how efficiency targeting in lump-sum aid generates unexpected effects Jay E. Ryu
By: Ryu, Jay Eungha
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Material type: 
ArticlePublisher: 2019Subject(s): CENTROS DOCENTES | AYUDA ESTATAL | EFICIENCIA | ESTADOS UNIDOS
In:
Public Budgeting and Finance v. 39, n. 3, Fall 2019, p. 22-43Summary: Formulas of state aid to local school districts have recently incorporated efficiency targeting, which incentivizes school districts to enhance the efficiency of school administration and teaching. This paper shows that efficiency targeting in lump-sum foundation aid fails to make school districts more efficient than typical foundation aid does. Efficiency targeting instead improves fiscal equity across school districts under almost all scenarios. This paper also clarifies why these unexpected equity effects take place and suggests feasible and implementable alternatives to obtain the efficiency improvement from efficiency targeting.
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| OP 1716/2019/2-4 The impact of the Amazon tax on local sales tax revenues in urban and rural jurisdictions | OP 1716/2019/3 Public Budgeting and Finance | OP 1716/2019/3-1 Does the cost - cutting strategy of closing public schools provide financial benefits? | OP 1716/2019/3-2 The efficiency - equity tradeoff in school aid | OP 1716/2019/3-3 Local government fiscal health | OP 1716/2020/1 Public Budgeting and Finance | OP 1716/2020/1-1 Looking forward to cuts |
Resumen.
Formulas of state aid to local school districts have recently incorporated efficiency targeting, which incentivizes school districts to enhance the efficiency of school administration and teaching. This paper shows that efficiency targeting in lump-sum foundation aid fails to make school districts more efficient than typical foundation aid does. Efficiency targeting instead improves fiscal equity across school districts under almost all scenarios. This paper also clarifies why these unexpected equity effects take place and suggests feasible and implementable alternatives to obtain the efficiency improvement from efficiency targeting.
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