Do tax increases really result in more school funding?

Many states garnered favorable publicity for their efforts to improve school funding in the 1980s. Much of the positive aura was attached to "education governors," such as Tennessee's Lamar Alexander, South Carolina's Richard Riley and Arkansas' Bill Clinton. Each of these states increased the sales tax so that schools would have more money.

But the political spin can distort reality. A new booklet, Separating the Wheat from the Chaff: How Much Do Schools Really Benefit When States Raise Taxes on Their Behalf? takes a hard look at a dozen states that acted to augment school funding between 1982 and 1992. Ten of these states raised taxes, one enacted a lottery and one made a big commitment to school spending without raising taxes at all.

The booklet was written by Steven D. Gold, now a senior fellow with the Urban Institute in Washington, D.C. It focuses on whether revenue per pupil actually rose relative to the national average after a state began its education initiative. In three states initial efforts were considered inadequate and second initiatives were mounted in the early 1990s. One such case was Arkansas, which raised its sales tax for schools in 1983 and again in 1991; Tennessee went back to the well in 1992 after raising the sales tax in 1984; and Kentucky enacted a big tax increase in 1990 following a more modest effort in 1985.

The verdict is mixed: In three states revenue actually fell compared to the national average - Arkansas (1983), California (1984) and Texas (1984). The biggest increases in school revenue occurred in Indiana (1987) and Vermont (1982).

A common pattern was a large initial increase in revenue that tended to be eroded over time. Tennessee, South Carolina and Virginia - all of which undertook their initiatives in 1984 - are examples.

Nearly all of the states studied were "playing catch-up" in the sense that they started with relatively low revenue per pupil and still were considerably below average even after increasing taxes.

The study also analyzed revenue increases between 1983 and 1993 in all states except Alaska. It found...