Why the Texas School-Finance System Is About to Collapse
My latest NYT column examines how Texas's experiment in school-finance equalization went horribly awry:
Public policy experiments rarely produce complete successes or total failures. They usually leave room for people with different goals or values to keep arguing.
Occasionally, however, there's a policy disaster so catastrophic that everyone agrees that something has to change. California's convoluted attempt to deregulate electricity was one example. Texas's decade-long experiment in school finance equalization - universally referred to as Robin Hood - is another.
"In less than a decade, the system is approaching collapse; it has exhausted its own capacity," write Caroline M. Hoxby and Ilyana Kuziemko, economists at Harvard, in a new working paper for the National Bureau of Economic Research. "We show that the collapse was predictable." (The paper, "Robin Hood and His Not-So-Merry Plan: Capitalization and the Self-Destruction of Texas' School Finance Equalization Plan," is available at http://post.economics.harvard.edu/faculty/hoxby/papers.html.)
As school budgets fall and property taxes rise, Texans know Robin Hood is in trouble. But most do not really understand why.
Some blame the very idea of equalization, others say schools are too dependent on property taxes, and still others argue that taxes are too low. Some declare that schooling has simply become more demanding and expensive.
"Although it is a financially efficient model, the current system, as it is now designed, cannot live up to the standards of our 'outcomes'-based accountability system," Lloyd Jenkins, a school district trustee in the Dallas suburb of Plano, recently wrote in The Dallas Morning News.
In fact, argue the economists, the Robin Hood system is anything but financially efficient. Robin Hood does not just move money from rich school districts to poor school districts. It does so in a way that destroys far more wealth than it transfers, and that erodes the tax base on which school funding depends.
Although Robin Hood's problems get plenty of media coverage in Dallas, I never understood either the system or why it's inherently self-destructive until I read the Hoxby-Kuziemko paper. While the Texas system is particularly stark, many other states are considering similar systems. They should learn from our state's mistakes.