A MODEL FOR THE DISTRIBUTION OF CAPITAL OUTLAY FUNDS FOR FINANCING PUBLIC SCHOOL FACILITIES IN INDIANA (EQUITY)
Abstract
The purpose of this study was to examine methods of financing capital outlay and debt service to develop a model for the distribution of capital outlay funds in Indiana in an equitable manner. To determine the factors which were incorporated in the model, selected methods used by other states were investigated. Ancillary questions answered first were: (a) What is the current degree of fiscal equity in the funding of capital outlay and debt service in Indiana, and (b) Do the methods of funding capital outlay and dept service employed by other states, if applied to Indiana, have a greater equalizing effect? The population for this study included the 302 of 305 school corporations in Indiana which had budgeted capital outlay and/or debt service expenditures for the 1984-85 school year. The current method of assistance for capital outlay in Indiana is a $40 per pupil flat grant based on average daily attendance in grades one through twelve. Revenue distributions were generated for each of the school corporations in the study using the methods for capital outlay assistance employed by Connecticut, Massachusetts, New Jersey, New York, Tennessee, and Washington. To eliminate the effects of varying levels of budgeted capital outlay, the percentage of assistance for each method was compared. The horizontal equity for students of each of the distributions was determined using the range, restricted range, Federal range ratio, McLoone index, Lorenz curve and Gini index. The correlation coefficient was used as an indication of vertical equity for taxpayers. The results of this part of the investigation revealed that the Connecticut method, if used in Indiana, would yield the greatest equity. Using the Connecticut method as a basis, several models were proposed, revenue distributions generated, and the equity measures applied again. The proposed models were divided into two categories: (1) restricted to the funding available for the year of the study, and (2) unlimited funding available. Two models were recommended. Under the restriction of limited funding, the Connecticut percentage equalizing method reduced proportionally by the funds available would provide the greatest equity of the models tested. If no restriction is imposed, a percentage equalizing method with a percentage from zero to 100 assigned to each school corporation on the basis of assessed valuation per pupil would provide the greatest overall horizontal as well as vertical equity.
Degree
Ph.D.
Subject Area
School finance
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