Local Authorities Private Funding in Public Schools: What Values Drive the Decision-Making Process?

• In Event: Developments and challenges in economics and finance of education: Evidence from LMICs and high-income countries

Proposal

Fiscal decentralization in education shifts financial responsibilities to local authorities (LAs), complicating decision-making due to competing values such as equity and liberty (Stone, 2022). This study examines disparities in private funding of public education and the values influencing local authorities' policymaking in Israel. We found that affluent, centrally located authorities prioritize choice and excellence, while less affluent ones emphasize equity and need-based allocation. Our findings contribute to the framework by adding innovation as a more contemporary value that underlies the decision-making process and highlight the need for reforms that prioritize equitable education.

1. Literature Review
Fiscal decentralization in education transfers financial responsibilities from central to local governments, aiming to enhance efficiency and equity. However, research shows it can lead to funding disparities between affluent and less affluent areas (Arends, 2020; Fiske & Ladd, 2021; Garritzmann et al., 2021; Park, 2022). Decision-making in education policy involves complex trade-offs between conflicting values such as equity, liberty, efficiency, and welfare. Stone's (2022) framework emphasizes the dynamic nature of these values, with new ones emerging over time. Local policymakers must navigate diverse interests, political pressures, and voter demands, often requiring compromises (Brighouse et al., 2018; Fiske & Ladd, 2021; Stone, 2022; Viennet & Pont, 2017).
2. Method
The study employs a mixed methods design to analyze education funding disparities among Israeli LAs, focusing on how LA characteristics and values affect resource distribution. Quantitative analysis, using data from 251 LAs categorized by socioeconomic status, geographic location, and ethnicity, utilizes descriptive statistics, T-tests, ANOVA, and Chi-square tests to explore resource distribution differences. Qualitative analysis includes interviews with education department heads from 46 representative LAs, integrating Yanow’s (2015) interpretive policy analysis and Schmidt’s (2015) value-critical policy analysis to understand the values driving decision-making.
3. Findings
The study reveals disparities in educational resource allocation among LAs. LAs with predominantly majority populations and higher SES allocate significantly more supplemental resources to education compared to those with minority populations and lower SES. Central and very remote LAs tend to allocate more than remote ones. Additionally, the decision-making process for allocations is influenced by values such as equality, choice, needs-based funding, excellence, and innovation. High SES LAs often prioritize choice and excellence, while low SES LAs focus more on needs-based considerations. These findings highlight challenges in achieving equity in school finance.
4. Discussion and Conclusions
This study reveals significant disparities in supplemental funding among LAs in Israel’s education system, with higher SES allocating more resources. Additionally, the decision-making process is shaped by six key values: equity, choice, needs-based funding, excellence, innovation, and traditional learning, with different priorities based on SES. These findings align with international trends but also highlight unique aspects of Israel's system.
To reduce these inequities, policy reforms should revise central government allocation methods to better account for SES and minority representation. Future research should explore trends in equity within local education funding and the long-term effects of value-driven funding on student outcomes.

Authors

• Ruth Meoded, Bar Ilan University

• Iris BenDavid-Hadar, Bar Ilan University