Sibling Rivalry: Conceptualizing the Relationship between K12 and Postsecondary Education Funding at

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Sibling Rivalry Conceptualizing the Relationship
between K-12 and Postsecondary Education Funding
at the State Level

• Bruce D. Baker
• Christopher Morphew
• University of Kansas

2
Other County Municipal Services
Local Intermediate Property Sales Taxes
K-12 Schooling
State General Fund (Sales/ Income)
Economic, Political and Demographic Determinants
of Demand
Economic, Political and Demographic Determinants
of Supply
Postsecondary Schooling (4yr State Public)
Tuition /or User Fees
Other Fee Based Public Services (Roads/
Corrections/ Healthcare)
Baker and Morphew, 2005
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1970s through 1980s
County Municipal Services
(-)
(?)
Local Intermediate Property Sales Taxes
Flow Dependent on total tax burden limitations
K-12 Schooling
(-)
TELs
State Legislative Responses
Increase Flow
Local Intermediate Compensatory Responses
()
State General Fund (Sales/ Income)
Postsecondary Schooling (4yr Public)
(-)
Tuition /or User Fees
()
Increase Flow
(varied)
Other Fee Based Public Services (Roads/
Corrections/ Healthcare)
(varied)
Baker and Morphew, 2005
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1990s Alternatives KS (1992), TX (1995), VT
(1998), NH (1999)
County Municipal Services
(?)
(?)
Local Intermediate Property Sales Taxes
???
TELs
K-12 Schooling
(-)
State Legislative Responses
(0)
State General Fund (Sales/ Income / Targeted
Lotteries, Gaming Property Taxes)
Local Intermediate Compensatory Responses
()
Postsecondary Schooling (4yr Public)
(0)
(?)
Tuition /or Fees
???
(?)
Other Fee Based Public Services (Roads/
Corrections/ Healthcare)
(?)
Baker and Morphew, 2005
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Baker and Morphew, 2005
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Potential Influences
1990s Alternatives KS (1992), TX (1995), VT
(1998), NH (1999)
County Municipal Services
(?)
Limits to local authority
(?)
Local Intermediate Property Sales Taxes
TELs
K-12 Schooling
Constitutional status (Equity vs.
Adequacy) Limits to local authority
(-)
State Legislative Responses
State General Fund (Sales/ Income / Targeted
Lotteries, Gaming Property Taxes)
(0)
()
Governance Centralization/Control Political
positioning)
Postsecondary Schooling (4yr Public)
(0)
Constitutional Status Fiscal Autonomy
(?)
Tuition /or Fees
(?)
Other Fee Based Public Services (Roads/
Corrections/ Healthcare)
(?)
Baker and Morphew, 2005
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Preliminary Thoughts

• State revenues and expenditures for either or
  both K-12 and postsecondary education must be
  considered in conjunction with local source
  revenues that may be used by local institutions
  to compensate for reductions in state aid.
  Further, revenues considered purely local, such
  as property taxes for K-12 schools, may in fact
  not truly be local. However, reporting may vary
  from state to state.
• On a related note, most existing studies with the
  exception of Baicker Gordon (2004) address
  state budget allocations only, as if they exist
  in a vacuum, ignoring institutional compensation
  mechanisms like tuition in postsecondary
  institutions and local property taxes for K12
  schools most use only one or the other of state
  level or intermediate/municipal level analysis.

Baker and Morphew, 2005
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Preliminary Thoughts

• Most existing studies explore the period from the
  1960s or 1970s through the early 1990s, closing
  with the end of the early 1990s economic
  slowdown. This period is characterized by a
  gradual ramping up of state general expenditures
  on K12 under equity pressures. This period is
  accompanied by the first wave of TELs, which take
  a variety of forms. Further, there remains some
  question regarding the relationship between state
  school finance litigation and TELs and existing
  studies have failed to address this interplay in
  relation to both K-12 and postsecondary education
  funding.
• Finally, among the studies we have reviewed that
  focus on the plight of postsecondary state
  support, we find few that include political and
  governance considerations pertaining specifically
  to public higher education. For example, while
  states constitutional mandate to fund K-12
  education is often the centerpiece of such
  analysis, the constitutional status or governance
  structure of state higher education systems is
  typically ignored altogether.

Baker and Morphew, 2005
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Preliminary Hypotheses

• Stability of both K-12 and Postsecondary
  resources may be a function of stability in and
  increases in property tax revenues as a source of
  funding for K-12 schooling.
• While K-12 litigation and resulting reforms may
  result in increased total state and local effort
  for K-12 schooling, changing the ratio of effort
  between K-12 and postsecondary, we do not
  necessarily expect this change to come at the
  disadvantage of postsecondary education state
  general funding (either measured as institution
  level state share, institution level state
  revenues per pupil, or state level state revenues
  per capita).
• Governance of postsecondary education may matter.
  In particular, highly centralized governance of
  public 4-year institutions may imply either a) a
  state level preference for higher education or
  b) successful advocacy for higher education by
  consolidated boards. Again, we dont necessarily
  expect this to result in adverse effects on K-12
  funding. Rather, high degrees of education
  centralization, even if only indicated by
  postsecondary governance, may yield complementary
  rather than substitution effects.

Baker and Morphew, 2005
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Data

• Census State and Local Government Finances
• NCES CCD K-12 USDs and IPEDS Public 4-year
  Colleges
• 10,000 K-12 Unified Public School Districts
• 600 Public 4-year Colleges

Baker and Morphew, 2005
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Preliminary Findings
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Preliminary Findings
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Preliminary FindingsRevenue Structure of
Selected States
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Preliminary FindingsRevenue Structure of
Selected States
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Preliminary FindingsRevenue Structure of
Education Institutions in Selected States
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Preliminary FindingsModeling Relative Effort
with State Level Data (see page 20)
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Preliminary FindingsModeling Institutional State
Share (see page
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Future Directions

• Data Improvements
• Enriching our panel data by filling in the
  blanks, extending both back to 1992, and adding
  2002 to capture more recent, more dramatic shifts
  in state revenues
• Adding other important political contextual
  variables addressed by a variety of authors
  including Poterba (1994), such as indicators of
  political context like party control of
  legislatures
• Creating classification system to identify the
  implementation of state earmarked revenues to
  compare the relative effects of earmarked
  lottery, gaming and other revenues to shifts in
  other earmarked revenue sources like local
  education property taxes and postsecondary
  tuition

Baker and Morphew, 2005
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Future Directions

• Model Estimation
• Creating classification system for 1990s new and
  existing TELs and classification system for 1990s
  types of court oversight and intervention in K-12
  and reform strategies (including redistribution
  of property tax revenues and improvements to
  equity), and testing interactions between K-12
  school finance reforms and TELs on postsecondary
  educations share of state revenues.
• Testing alternative model specifications
  including structural, two-stage and instrumental
  variables models to account for the simultaneity
  of state legislative decisions in setting tax
  policies and determining expenditure preferences.
  
• Testing mixed model estimation to capture
  relationship between non-varying state
  policies/conditions and within changes in state
  and institution level revenues and expenditures.

Baker and Morphew, 2005