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School Finance Litigation and Property Tax Revolts

How Undermining Local Control Turns Voters Away

William A. Fischel

January 1998, English

The use of local property taxes to fund public schools in the United States has been under attack since the 1970s as a result of reform-minded lawsuits. Court-ordered reforms typically involve a greater proportion of state funding, more equal expenditures, and less local fiscal control. I explain in nontechnical language why this movement has reduced educational quality. The more extreme cases, such as Serrano v. Priest in California, have contributed to tax revolts that have starved education. The advantage of local fiscal control is that home values rise when schools get better, provided that the additional property-tax bite is not excessive. All homeowners, not just those with school-age children, have an interest in efficiently-run schools when education is financed locally. This fiscal feedback is lost when school funds are provided from statewide tax revenues.


Local Government, Property Taxation, Public Finance, Tax Reform