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A More Equitable Approach to Cutting Intergovernmental Aid

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  • Bo Zhao
  • David Coyne

Abstract

In response to the recent fiscal crisis, state governments in the United States have deeply cut aid, often by the same percentage across communities. This across-the-board approach ignores local fiscal disparities and places a larger burden on communities in worse underlying fiscal health. This article introduces a more equitable approach to distributing aid cuts based on both underlying local fiscal health and the existing aid distribution. Policy simulations using Massachusetts data show that this approach could be politically feasible, as a majority of communities and state population would receive smaller aid cuts under this gap-based approach than under across-the-board cuts.

Suggested Citation

  • Bo Zhao & David Coyne, 2015. "A More Equitable Approach to Cutting Intergovernmental Aid," Public Finance Review, , vol. 43(1), pages 32-52, January.
    • Handle: RePEc:sae:pubfin:v:43:y:2015:i:1:p:32-52
    DOI: 10.1177/1091142113499963
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    1. repec:mpr:mprres:4098 is not listed on IDEAS
    2. Downes, Thomas A. & Pogue, Thomas F., 1994. "Adjusting School Aid Formulas for the Higher Cost of Educating Disadvantaged Students," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(1), pages 89-110, March.
    3. Downes, Thomas A. & Pogue, Thomas F., 1994. "Adjusting School Aid Formulas for the Higher Cost of Educating Disadvantaged Students," National Tax Journal, National Tax Association, vol. 47(1), pages 89-110, March.
    4. Congressional Budget Office, 2010. "Fiscal Stress Faced by Local Governments," Reports 21966, Congressional Budget Office.
    5. Congressional Budget Office, 2010. "Fiscal Stress Faced by Local Governments," Reports 21966, Congressional Budget Office.
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