Does School Finance Litigation Cause Taxpayer Revolt? Serrano and Proposition 13

Law & Society Review, Sep 2006 by Martin, Isaac

If the Fischel hypothesis is true, then court-ordered school finance equalization is a Pyrrhic victory for reformers. Property tax limitation has had dire consequences for public schools. Tax limitation laws have enforced budgetary restraint, with consequences that range from increased class sizes (Figlio 1997, 1998; Shadbegian 2003) and decreased spending per pupil (Shadbegian 2003) to diminished teacher qualifications (Figlio & Rueben 2001) and lower test scores (Figlio 1997; Downes et al. 1998; Downes & Figlio 1999).

But is the Fischel hypothesis true? In this article, I subject it to empirical scrutiny. A substantial literature on the causes of property tax limitation predates Fischel's work and does not address his hypothesis (Courant et al. 1980; Ladd & Wilson 1983; Lowery & Sigelman 1981; Sigelman et al. 1983; Hansen 1983; Stein et al. 1983; Sears & Citrin 1985; Neiman & Riposa 1986). A handful of recent publications attempts to test the hypothesis indirecdy, with mixed results (Fischel 2001, 2004; Stark & Zasloff 2003). This article is the first to test the hypothesis directly with survey data on individuals' voting behavior. I draw on two archived data sets drawn from independent samples of Californians who voted in the 1978 primary election. I also exploit geographic information in the Master Area Reference Files (MARFs) from the 1980 census (U.S. Bureau of the Census 1983a, 1983b) to match a subset of individual survey respondents to institutional data on school districts. This novel method allows me to test whether voters defined their interests along school district lines, as the Fischel hypothesis would predict.

To preview my conclusions, I find no support for the Fischel hypothesis. I conclude that the popularity of die hypothesis derives from the unwarranted inference that two dramatic events that were roughly coincident in time and place (California in the late 1970s) were therefore also causally related. Future research on the impact of school finance litigation-and judicial policy in general-should subject claims about unintended outcomes to the same close scrutiny that greets claims about intended outcomes.

The remainder of this article has four sections. To explain why both advocates and critics of the Fischel hypothesis see California as a crucial test case, the first section offers a brief historical overview of school finance equalization and property tax limitation in California. The second section describes Fischel's theoretical argument and reviews previous attempts to test his hypothesis. The third section describes the data and methods I use to test the Fischel hypothesis, and the fourth discusses the results.

School Finances and lax Revolt in California

In the early 1960s, civil rights advocates in California and throughout the United States began to question the constitutional basis for local financing of public schools (Elmore & McLaughlin 1982; Minorini & Sugarman 1999). The ideal of equal educational opportunity articulated in Brown v. Board of Education (347 U.S. 483 [1954]) and championed by the civil rights movement seemed to many advocates to imply more than desegregation. Even schools that were not legally segregated by race might nevertheless fail to provide equal opportunity if they allocated opportunity according to wealth. This critique implied that the local property tax was a poor basis for funding public schools, for as long as school revenues came from local property taxes, students who attended school in an area of high property values could expect to have greater access to educational resources than their peers who attended school in an area of low property values. By the mid-1960s, activists had articulated a number of legal theories under which such inequalities were unconstitutional. By the end of the decade, civil rights attorneys had initiated challenges to local property tax financing of public schools in Michigan, Illinois, Virginia, Texas, and California (Kirp 1973; Minorini & Sugarman 1999).