Today's landed gentry: how our public education system rewards those who start out ahead - reform of public school financing

Washington Monthly, Oct, 1996 by Dante Chinni

In 1984 General Motors opened its Hydra-Matic plant in Warren, Michigan, began churning out transmissions and drive trains, and secured my high school education.

The plant did not give my parents a job or offer me a scholarship. Hydra-Matic changed my life simply by remodeling, retooling, and revitalizing an old factory near my home. The plant pumped $1.8 million in new property tax revenue into the community, and, for the Fitzgerald Public Schools - my school district - that money was manna. In the early 1980s, Fitzgerald, faced with a community weary of tax increases, was forced to consider cutting nonessential programs like music, gym, and, most important to me, the school newspaper. But the cuts never happened. Instead, Hydra-Matic moved in, ended Fitzgerald's fiscal crisis, and assured steady funding for years to come.

Why Fitzgerald got lucky is not the point. The fact that Fitzgerald had to rely on luck is. Luck was a key factor in the education of many Michigan students at the time and still is for students in many other states. Why? Because their primary source of education dollars is local property taxes - which means large portions of school funding come from local homeowners and businesses. In such a system, one GM plant or affluent enclave can dramatically tip the finding scales and mean the difference between old or new books, large or small classes, or the existence or nonexistence of a school newspaper. A few years ago Michigan decided that luck was not a good way to determine what kind of education a child gets, and it changed its funding system. Now, mostly because of lawsuits, many other states are considering the same thing.

More than 20 states throughout the country are in the midst of legal challenges over whether their school funding systems are adequate and equitable. And in 17 of those states, local property taxes are either the primary means of funding education or a very close second. The issue in these cases is this. Why, when education is a right guaranteed by the state constitution, should the money to provide a public education come from localities? Or, basically, why should the amount spent on a childs education be determined by where his parents live? Many times state courts provide a simple answer: It shouldn't. But in reality, change is not so easy. School funding reforms are often half-hearted, partly successful efforts that end up back in court, because in states where local property taxes rule school funding, a powerful combination of money, politics, and deeply rooted tradition stands in the way.

A Taxing System

Any talk of changing the way the public schools are funded inevitably runs up against "our grand national tradition of local school control." That we have a national tradition of local funding is inarguable; whether it is grand is subject to question. One could just as easily call our tradition the result of bad historical timing.

Today's public schools have their origin in the common school movement of the mid-1800s, before which schools had primarily been reserved for the rich. The movement pushed to make education a right instead of a luxury and, as it gained momentum, the people clamored for schools. They turned to the states, and the states, which did not yet have income or sales taxes as options, turned to the only thing they could, the levy that had existed in some form since colonial times: property taxes. States granted local districts the right to tax their citizens, and the American tradition of local school taxation and control was born.

The systems problems were apparent right from the start. In the days before state aid - and General Motors - poor districts had nowhere to go for funding help. When poor schools ran out of money, their doors closed and the school year came to an abrupt end. Those drastic funding problems were slowly mended with the rise of state income taxes in the 1910s and state sales taxes in the 1930s, both of which gave the states new revenue streams to tap. Until then, property taxes accounted for 80 percent of all state and local tax collections.

But disparities remain. Although on average the states pick up almost half of the cost - 47 percent - of public schooling (localities provide 46 percent and the feds 7 percent), some states rely much more heavily on property taxes than others. In New Hampshire, for instance, N percent of public school funding comes from local property taxes. But even in states where the figures sound a bit more evenly split, there are often wide disparities in per-pupil funding.

New Jerseys local/state funding split, 54 percent to 43 percent, sounds fairly even, but the state supreme court says it is not good enough. Why? The towns of Alpine and Closter suggest an explanation. The metro New York-area cities sit next to each other on New Jersey Route 502. But their public school students get vastly different treatment. A student in Alpine, a small, well-to-do district, will have $13,394 spent on her general education this year. If that students family suddenly decides to relocate to Closter, that figure drops to $7,889 - a $5,505 difference in a five-mile move.