Who pays for public education? The relationship between school finance and educational outcomes at the organizational level

This study models community characteristics as determinants of the local financial support of schools, school resource allocation, and academic outcomes. Using school districts as the unit of analysis, I examine educational finance and academic outcomes at the organizational level. The model combines public choice, residential segregation, and status attainment theories. Public choice predicts that the preferences of a community's residents will determine the extent to which schools receive local funding. This viewpoint is augmented with a sociological perspective which contends that preferences may be circumscribed by discrimination or the life experiences of the residents.;This study examines the 614 school districts of Ohio, with separate regressions for urban, suburban, town, and rural locations. The data set, The School District Data Book, was released by the U.S. Department of Education in 1994. This is the first time the federal government has mapped census tracts to the universe of U.S. school districts. I model characteristics of communities as determinants of (1) percentage of revenue supplied to school districts by local sources; (2) percentage of the district's salaries allocated to instruction; and (3) percentage of ninth graders who passed the mathematics section of the proficiency test.;I found that: (1) public choice theory is a generally good explanation for local revenue and test pass rate, but not for salary allocation; (2) an undereducated adult population presents a formidable obstacle for school districts; and (3) a high percentage of black residents has negative consequences for revenue, instructional salaries, and test outcomes.;The findings in this study call into question the validity of research that fails to distinguish between revenue streams and expenditure patterns when examining the productivity of schools. More importantly, this study contributes to our understanding of stratification in U.S. public education. These findings support the argument that although state and federal government contributions to public schools have increased, local community conditions continue to be a critical factor in determining educational conditions. The consequence of this entrenched localism is evidenced in the extent to which school districts replicate, rather than ameliorate, the advantage and disadvantage already present in the surrounding community.