In the wake of school funding cuts across Arizona, the Phoenix Union School District is directly impacted. While such adjustments make for thin budgets on paper, the real-world impact of these downsizing actions has reduced the amount of time available for kindergarten classes. In addition, teachers in grades one through five now must take on increasingly large numbers of students starting in classrooms of thirty and more. Above all, our students bear the brunt of such setbacks. At the high school level, alternative programs designed to engage student development and prevent dropouts are being eliminated for lack of funding. The net result places an ominous cloud over the future of public education.
In light of such changes, I would respectfully solicit for your consideration, the esteemed congressmen and congresswomen of the State of Arizona, a call to consider the impact of these decisive decisions. Together, we can work for greater equalization of local, county, and state funding systems. Subsequently, I will address the impact that district power equalization makes. Thirdly, the importance of a fair, equitable, and adequate tax system will be reaffirmed along with a description of its characteristics and function. Above all, Phoenix Union Schools and Central High School need alternative sources of income. Proposals for generating education dollars in spite of these tax cuts make for an important conclusion to this report.
Since the 1970s, lower courts and the Supreme Court have differed in the role that state funding should be allowed to play in the permissible taxable wealth of local communities in pursuit of greater educational funding. In spite of Supreme Court rulings establishing that education funding can come from local sources as in the case of Rodriguez v. San Antonio (1973), the ruling only communicated the limits of federal authority (Feldstein, 1975, p. 75). In many states, pressure for equality and improvement of public schools has led to an overriding call for state-funded distribution that does not take into account differences in socio-economic wealth as in the state of New Jersey (p. 75). Indeed, Feldstein views the matter as a case of letting local markets perform without extrinsic financial impositions, thereby allowing decentralized funding to provide equal access to public services for everyone.
Although the level of local spending may be nonoptimal because of inter-community externalities and because of the method of local budget analysis and determination, fiscal decentralization still remains the only alternative to the insuperable problem of determining the optimal level of expenditure on a public service provided by a central government (p. 75).
In such a setting, public systems deserve equal access for all no matter what their socioeconomic status may be. Feldstein’s arguments, however, do not exist in a vacuum. The studies of Wallace E. Oates employ a mathematical examination of the Tiebout hypothesis, which postulates that consumers will shop for public services, picking communities that offer the best public services for the lowest rates (Oates, 1969, p. 957). In spite of limiting circumstances due to work and family ties, the increasing urbanization of society suggests that such a formula is possible. In relation to public education, we must carefully examine how this may affect the development of our local communities. Ultimately, Oates concludes that people will accept to pay higher tax rates when accompanied by just application into the public school system and other public services or when public schools manage to provide the same level of services as other areas for a reduced rate (p. 967). In effect, it is not the implementation of the tax itself but a question of how it is used. These divergences between communities allow for unequal interference of public funding and should be limited to state control.
District power equalization (DPE) plays a key role in the advancement of fair per-student expenditures. Importantly, this does not mean that applying an equal tax rate to poor and rich neighborhoods alike corresponds to an equal net educational effect. John Hilley argues against the possibility of this variety of arrangement. Strict DPE cannot work in situations where socio-economic levels remain unequal as families will not have the same degree of residual income left over to invest in their children. The key to achieving horizontal equality in DPE depends on a sliding scale, where “the state pays a portion of a school district’s budget where the portion is inversely related to a district’s fiscal capacity” (Hilley, 1980, p. 321). The closer a district arrives to managing its own fiscal requirements, the less the state will contribute to the management of the budget. “A district that is half as rich as the key district has half of its budget paid by the state and must therefore pay only $.50 for every dollar of educational expenditure” (p. 321). In this way, every student ends up with the same net effect to cover his or her educational costs. The function of the DPE makes a concrete figure determining how much each district should contribute to the tax base.
In the push for a fair tax system, care must be taken to analyze data not only in terms of dollars spent per student but also in the net impact on educational achievement. Because much funding for schools still comes in the form of local taxes, all other settings being equal, districts will not all achieve the same degree of revenue in local settings. A less financially endowed district, however, should not be shorthanded due to a perceived lessened interest in learning (Moser & Rubinstein, 2002, p. 64). As mentioned by Feldstein, the Rodriguez v. San Antonio court decision mandated education-based funding to exist within the role of individual state decisions. Above all, effective and equitable taxation rests with broad treatment handed down from the state level.
Nevertheless, fair taxation should have a fair net effect on constituents. This may pose a paradox, but its importance must not be understated. As reported by Weisbrod (1962), “the earnings differentials associated with education-attainment differentials would have to be adjusted for differences in ability, ambition, and other variables before we could isolate the education effects” (p. 109). A fair and equitable tax system could extend beyond the point of taxing everyone equally across all districts to forming legislature where the graded contribution into the tax system begets them an equal result alongside their peers. In other words, if a tax system invests in ensuring that each student has the opportunity to obtain a high school diploma, the net effect of everyone achieving that high school diploma means both an opportunity to expand on the education and have a higher earning power (p. 110). By the equitable opportunity for acquisition of the diploma, an enabling tax system is implemented in pursuant to placing students on an equal plane for achievement.
In conclusion of this discussion, Arizona is faced with a need for fair treatment between school districts and socio-economic groups. Coupled with diminishing funds throughout the state, steps need to be taken to rectify our losses through comprehensive taxation measures that can specifically benefit Central High School (CHS) in Phoenix. CHS stands as a leading example of cultural diversity with 60% of students representing Hispanic populations. In addition, many Native American students attend school at CHS in line with the state average at 6%. In the continuing effort for equal opportunity, such schools should not be overlooked. By invoking further investment in the foreign languages program beyond the variety already taught in Chinese, French, Japanese, Latin, and Spanish, students can communicate confidently in the twenty-first century as cultures continue to collide and interact.
One way to generate additional funding for our schools could come in the form of a value-added tax (VAT). This would not be an equal tax as it would affect poorer communities more directly, but it would also directly benefit lower-class students, often the typical students placed in public schools. Such a tax would be implemented directly to fund Arizona public school systems and language programs at CHS and all over the state. History shows that this proposition is not new. In 1972, none less than President Nixon proposed a VAT system to replace residential school property taxes (Merriam, 1972, p. ii). It was quickly rebutted by Chairman Robert Merriam of the Advisory Commission on Intergovernmental Relations on the grounds that the states ought to undertake greater responsibility for school funding (p. iii). Esteemed congressmen and congresswomen of Arizona, that day has come.
The addition of a VAT would put Arizona in a position to more fully harness the economic potential of its citizens in a way that treats invests directly back into the educational system from which so many of us have come. With a history of light tax burden as compared to other industrialized nations (p. 2), taxes are not the inherent cause of back-breaking issues in society. By empowering the next generation with the support of state governance, we can make a positive impact on language programs and in schools like CHS.
As argued by Oates and referenced on page three, additional funding alone will not solve our state educational issues. They will, however, keep the doors of our schools open for young children, ensure ideal class sizes for effective learning, and help implement programs that were already in existence designed to keep students engaged in school. Research demonstrates that funding systems benefit from de-centralized management strategies that support schools where they are and encourage them to grow through district power equalization and a fair tax system. With such strategies, Arizona can continue to provide meaningful opportunities for learning.
Feldstein, M. S. (1975). Wealth neutrality and local choice in public education. The American Economic Review, 65(1), 75-89.
Hilley, J. (1980). District power equalization, horizontal equity and the property mix. Journal of Education Finance, 5(3), 320-328.
Merriam, R. E. (1973). The value added tax and alternative sources of federal revenue. Advisory Commission on Intergovernmental Relations, M-78, i-86.
Moser, M., & Rubenstein, R. (2002). The equality of public school district funding in the United States: A national status report. Public Administration Review, 62(1), 63-72.
Oates, W. E. (1969). The effects of property taxes and local public spending on property values: an empirical study of tax capitalization and the Tiebout hypothesis. Journal of Political Economy, 77(6), 957.
Weisbrod, B. A. (1962). Education and investment in human capital. Journal of Political Economy, 70(S5), 106.