Finance concepts and applications

Finance Discussion

Traditionally, funding and management of the education system has fallen to the state and school district levels. States provided funding, curriculum and oversight. School districts provided further funding and managed the day-to-day operation of the school system. School district financing typically comes from property taxes (U.S. Dept of Education, 2009).

Since the signing into law of No Child Left Behind, the federal government has taken a greater role in the basic education system. They have provided funds to districts under Title I but demand certain standards be met in order that the districts receive the funds. In terms of equity, it is reasonable to conclude that the present system is in equitable. Title I funds are dispensed on the basis of test score levels, but each state has control over the tests. Missouri for one has admitted to weakening the tests to ensure its districts each receive their due funds and other states such as Mississippi and Oklahoma also have relatively easy tests that enable them to receive funding (CBS News, 2007). This runs counter to the pillar of equity -- the funding is intended to set standards but those standards are not applied equally by different states.

With respect to efficiency, the outcomes of federal involvement are also questionable. Given that each state teaches and tests different things to its students, the outputs are patchwork. There is no evidence yet that federal involvement in the education system has improved outputs, which would be a prerequisite for efficiency. Part of this problem is data deficiency -- it is simply too early to tell if students reared under NCLB are more competitive because the first wave have barely left school, if they have left at all.

With respect to Liberty, certainly federal involvement in education funding has constricted liberty. Even a small amount of federal funding can result in a strong federal influence on policy (Shelley, 2007). This influence on the system contributes to the erosion of state control. While the states control the curriculum de jure, they are subject to varying degrees of influence from the federal government, depending on their dependence on Title I financing.