Reforming Reforms: Changing Incentives in Education Finance in Vermont
AbstractIn 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 asmuch equality as more explicit attempts to force wealthy districts to share resources. © 2006 American Education Finance Association
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by MIT Press in its journal Education Finance and Policy.
Volume (Year): 1 (2006)
Issue (Month): 4 (September)
Contact details of provider:
Web page: http://mitpress.mit.edu/journals/
Find related papers by JEL classification:
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karie Kirkpatrick).
If references are entirely missing, you can add them using this form.