School District Tax Autonomy and Efficient Provision of Education Services

• In Event: In Honor of Ronald C. Fisher and His Landmark Text on State and Local Public Finance: The Necessity of Non-Economic Considerations in Property Value Assessment

Abstract

School districts across the nation face increasing pressure to optimize educational outcomes while managing limited financial resources. This study examines how varying degrees of tax autonomy influence spending efficiency in school districts, addressing the critical policy question of whether local control over taxation leads to more effective resource allocation. Utilizing a sample of 7,319 school districts across the US from 2009 to 2019, the study estimates both cost and production efficiency through panel data stochastic frontier analysis (SFA). Findings reveal a generally positive association between higher levels of tax autonomy and spending efficiency, though the relationship is non-linear. Districts with moderate and high autonomy demonstrate the greatest gains in cost efficiency, while production efficiency benefits are most consistent for districts with high autonomy. This study also shows that both intra- and inter-district competition shows no or negative impacts on spending efficiency, but local accountability shows consistent positive effects on school district efficiency. These results contribute to the ongoing debate about fiscal federalism in public education financing.

Authors

• Laiyang Ke, University of North Texas

• Jorge Martinez, Georgia State University