Education Finance

by

James W. Guthrie, Patrick J. Schuermann

• LAST REVIEWED: 15 December 2011
• LAST MODIFIED: 15 December 2011
• DOI: 10.1093/obo/9780199756810-0012

Introduction

Education finance refers to governmental and organizational processes by which revenues are generated (through taxation, tuition, fees, and philanthropy), distributed, and expended for the operational and capital support of formal schooling. Scholars and professionals knowledgeable regarding economics, public finance, school finance, budgeting, management, accounting, education law, and intergovernmental relations typically participate in this field. Education financing should not be considered exclusively as a technical field dominated by matters of arcane financial formulas and budget categories. Rather, it also involves public policy issues at the dynamic core of any society regarding equity, efficiency, and freedom of choice. The citations included in this entry lead a user to works that encompass the operation of education financing and the many issue that characterize this field. They have been selected because of their comprehensive nature or because of their significance in influencing the field generally or a particular policy direction within the historical evolution of education finance.

General Overviews

The following general works provide a well-balanced introduction to the broad field of education finance. The panel report of the National Academy of Sciences (Ladd and Hansen 1999) is a thoughtful compilation of articles exploring contemporary issues related to the financing of public K–12 schools. Extending this treatment to include higher education and such special circumstances as rural settings, limited English proficiency, and special education, Ladd and Fiske 2008 is the most comprehensive compendium of contemporary articles on the topic. To gain insight regarding the historical roots of education finance, readers may turn to Cubberly 1905. For a philosophical treatment of the debate between the roles of markets and government on education finance, readers are directed to Friedman 1962. As nations develop and school systems evolve, new approaches to school finance emerge. Callahan 1962 describes the social forces that led to key historical transitions in the finance of American education. To better understand resource distribution analyses and the examination of the relationship between school resources and student performance, readers should turn to Coleman 1966. For those interested in the intersection of education finance and school law, Coons, et al. 1970 presents perspectives and arguments that triggered four decades of judicial action aimed at redressing school funding inequities. For a more contemporary view of the influence of funding levels on student achievement, readers should turn to the compilation of articles that make up Burtless 1996.

• Burtless, Garry, ed. 1996. Does money matter? The effect of school resources on student achievement and adult success. Washington, DC: Brookings Institution.

  A compendium of social science articles considering means by which economists might conceptualize analyses of schooling and the operational relationship of schools to resource input levels.

• Callahan, Raymond E. 1962. Education and the cult of efficiency: A study of the social forces that have shaped the administration of public schools. Chicago: Univ. of Chicago Press.

  A valuable book recounting the historical transition in American schools to a formal bureaucratic model of governance, management, and finance.

• Coleman, James S. 1966. Equality of educational opportunity. Washington, DC: Office of Education.

  A seminal report, authorized by the US Congress as a part of the 1965 Civil Rights Act, exploring the extent of resource distributional inequity between racial categories and among geographic regions of the United States.

• Coons, John E., William H. Clune, and Stephen D. Sugarman. 1970. Private wealth and public education. Cambridge, MA: Harvard Univ. Press.

  This work provides a scholarly analysis of the governmental and public finance mechanisms undergirding unequal distribution of school resources and constructs a constitutional argument for adjudicating these inequitable conditions.

• Cubberley, Ellwood P. 1905. School funds and their apportionment. New York: Teachers College.

  Historically significant publication regarding initial 20th-century efforts in the United States to render the financing of schools a scholarly subject, one suitable for economic and public finance study.

• Friedman, Milton. 1962. Capitalism and freedom. Chicago: Univ. of Chicago Press.

  A philosophic volume specifying the economic principles of market economies and proposing that schooling be financed and provided in a manner guided more by markets and less by governments.

• Ladd, Helen F., and Edward B. Fiske, eds. 2008. Handbook of research in education finance and policy. New York: Routledge.

  Extensive treatment of education finance, including all components and all grade levels as well as postsecondary schooling. Contains many useful examples, citations, and references to other relevant publications.

• Ladd, Helen F., and Janet S. Hansen, eds. 1999. Making money matter: Financing America’s schools. Washington, DC: National Academy Press.

  A comprehensive description by a panel of the US National Academy of Sciences that explores issues of equity and efficiency in the financing of American schools. Concentrates on K–12 with no attention to postsecondary issues.