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Title: Comparable Wages, Inflation and School Finance Equity
Citation Type: Journal Article
Publication Year: 2006
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Abstract: Educational dollars dont go quite as far in some parts of the country as they do in others. Therefore, there is considerable interest in developing a measure of the cost of education that can facilitate cross-state comparisons of school district expenditures and be used to adjust school finance formula. One attractive mechanism for measuring geographic variations in cost is the Comparable Wage index (CWI). A CWI reflects systematic, regional variations in the salaries of workers who are not educators. Provided that those non-educators are similar to educators in terms of age, educational background and tastes for local amenities, a Comparable Wage index can be used to measure uncontrollable variations in the wages paid to educators. Together, the 2000 Census and the Occupational Employment Statistics (OES) survey support the construction of just such an index. The resulting panel of index values measures the wage level for college graduates in all parts of the US for the years 1997 through 2003 and reveals substantial variation in purchasing power both across districts and across time. Interestingly the index suggests that in California, New York, Texas, Virginia, Illinois and New Mexico, the educational dollar can stretch at least 40 percent farther in one part of the state than in another. Such inequalities in purchasing power undermine the equity and adequacy goals of school finance formulas. If states were successfully directing additional resources to school districts in high cost environments, then measured inequality within states should fall when differences in purchasing power are taken into account. Instead, cost adjustment widens the spending gap in all but a handful of states
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Authors: Taylor, Lori L.
Periodical (Full): Education Finance and Policy
Issue: 3
Volume: 1
Pages: 349-371
Data Collections: IPUMS USA
Topics: Education, Labor Force and Occupational Structure
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