IT'S A TRAP: A NEW ECONOMIC MODEL ADDRESSING AMERICAN PUBLIC EDUCATION.

• Author: Gulati, Nikhil A.

[I]f a nation expects to be ignorant & free, in a state of civilisation, it expects what never was & never will be.... [N]or can [the people] be safe... without information. [W]here the press is free and every man able to read, all is safe. --Thomas Jefferson, 1816 (1) INTRODUCTION

The United States arguably has the greatest collection of higher education, or postsecondary education, in the world. Of the top twenty-five universities in the world, sixteen of them call the United States home. (2) However, numerous measurements indicate that American primary schools fall well behind those of other countries, including numerous members of the Organisation for Economic Cooperation and Development (OECD). (3) Critics of American public education point to a number of potential causes, including the increased focus on standardized testing, the proliferation of overcrowding in declining facilities, the decline in teacher salaries, and the lack of sufficient funding from governmental sources. (4) In addition, federal programs like the Common Core State Standards Initiative have failed to improve public education. (5) Student performance has remained stagnant, the achievement gap between high and low performers has grown, and reading ability has declined in many states. (6)

While all these reasons have undoubtedly played a role in the decline of American primary school education, the design of the system itself deserves examination and blame. American public education is essentially a centuries-long experiment in federalism; (7) states and local municipal governments are responsible for the creation, maintenance, and execution of their own education systems. Consequently, when one speaks about the quintessential "American public school," she is referencing an amalgamation of thousands of local school districts. Despite this, the conversation about reform and other solutions often tends to come from national organizations espousing national solutions. (8) These conversations are relevant to driving change, but they often focus on the education system on a national level while ignoring the incentives of local districts, communities, and citizens.

The local-centric focus of American public education has led to widespread discrepancies in the quality of education both between states (9) and within a single state. (10) Between states, the vast differences in quality diminish the overall strength of the educational system, which negatively affects the country's economy because the "economic growth of a state is directly related to the skills of its workforce," which are "heavily dependent on the state's schools." (11) Within states, differences in funding across school districts create educational inequities as students in better funded districts have access to additional resources, thereby enhancing student outcomes. (12) Further, school funding is directly correlated with academic success. (13) Equalizing quality and financing will increase student achievement across a state. (14) Given that public schools are primarily a local matter, a conversation about the education system is incomplete without examining the key local stakeholders: the local voter and the local government. Participation across the country in local voting is relatively low. (15) However, homeowners are active participants in local elections because of their desire to protect their own economic self-interests. (16) These interests include the quality of school districts, property values, and land use, among other things. Homeowners thus tend to he the driving force behind regulation and policies addressing schools and land use because "the American public school system [has been] directed by local voters interested in promoting the value of their property." (17) Local governments are the mechanism by which local voters implement their preferred policies related to the local school district. As this Note will discuss, local governments have two tools--property taxes and zoning--at their disposal to improve the quality of school districts in their jurisdictions. Consequently, conversations focused on American public education must include these key stakeholders to appropriately address the issues present in today's system.

Much has been written about the struggles of American public education and potential solutions. Given local voters' entrenched commitment to an education system that serves their best interests and the difficulty of implementing change, it is unlikely that the current public education system will change any time soon. (18) Consequently, this Note will not set forth or argue for another potential solution. Rather, this Note will contribute to the current literature by describing a novel economic model aimed at theoretically identifying which school districts would benefit most from additional sources of funding. The model could be used by state and local governments to focus their improvement efforts in a more effective, efficient manner.

This Note will argue that, when looking at the quality of a school district, there is some theoretical threshold that determines whether the use of local property tax and zoning by a local government will be effective in increasing the quality of the locality's schools. This theoretical threshold is conceptually akin to the basic economic idea of a poverty trap. (19) If a locality's schools are above this quality threshold, the corresponding local government will be able to effectively utilize property taxes and zoning to increase the quality of its schools. However, if it is below the threshold, the local government will not be able to increase the quality of schools by only using property taxes and zoning. It is these districts that need additional, external support to improve the quality of the schools and therefore improve the economic outlook for their students.

It is important to note that this Note will lay out the theoretical foundation of this economic model. The model has not been empirically verified with real life examples from school districts and local governments today. As a result, there remains room for additional literature to build upon this Note's model. Primarily, there is an opportunity for significant empirical studies to test the legitimacy of the model, and hopefully further studies and literature will be completed to build upon this idea and model.

This Note will lay out the necessary assumptions in the following order before explaining the proposed model in depth. Part I of this Note will briefly examine the history of public schools in the United States in an effort to explain how the current system evolved into its current shape. Part II examines the economic incentives and considerations that undergird local residents, governments, and school districts. Part III will focus on the intersection of property taxes and zoning--an area in which there is surprisingly little literature--and the ways communities use these local governance mechanisms to further their economic interests. Part IV of this Note will describe the model and apply the model to hypothetical situations to demonstrate the predictive power of the model. The Note will then briefly conclude.

1. THE STRUCTURE OF AMERICAN PUBLIC EDUCATION

   This Part of the Note will describe the public education system in the United States. However, in order to understand how the system is set up today, one must understand the historical evolution of public education in the United States. After examining the history of public education, this Part will outline the current system of education today.

   1. The History of American Public Education

      While millions of Americans expect and depend upon free public education, access to such services is not a constitutional right. (20) However, the integration of free public education into American life has led some, including President Lyndon B. Johnson, to proclaim education is the fifth freedom for which America stands. (21) A brief review of public education in the United States explains why Americans have come to embrace, and expect, free public education.

      For nearly fifty years after gaining independence, neither the United States nor individual states outside New England had systems of public education in place. (22) Despite the inclusion of state-funded education in five state constitutions, states failed to institute education systems early on. (23) At the start of the eighteenth century, the general feeling across the country was that education was a luxury and providing free education would lead to demands for other free services. (24) In states where schools were available, they were "neither free nor public." (25)

      However, prior to the Revolutionary War, New England provided free schools and continued that education to those who could already read and write after independence. (26) These schools were funded with local taxes and fees, but they were inequitable; wealthier children could stay in school longer while poorer children had limited access. (27)

      In 1827, then-state Senator Horace Mann pushed for the creation of the Massachusetts State Board of Education. (28) Ten years later, Mann was appointed to be Secretary of the Board, a role he used to lobby for the adoption of a state-sponsored public school system. (29) Mann's efforts culminated in the creation of the country's first state public school system, comprised of "common" schools. (30) Mann "believed in the absolute right of every individual who comes into this world to an education," and that education "must be free, universal, and democratic" without promoting a political cause. (31) To fund this system, Mann advocated for the use of tax dollars to ensure all children had equal access to the free schools, regardless of their economic-class. (32) Fueling Mann's emphasis on free public schools was his thought that "[e]ducation then, beyond all other devices of human origin, is the equalizer of the conditions of...