Municipal Overburden: Its Influence on Education Expenditures in Cities.

The study reported in this document found no evidence for the minicipal overburden (m/o) hypothesis of urban school finance. The theory asserts that there is a causal relationship between high levels of non-school municipal expenditure or tax rates and low levels of school spending. Demand for expenditure on education in a sample of school districts in Connecticut, New Jersey, and Virginia was estimated using a median voter model and the hypothesis was tested by including in the estimating equation several versions of a variable representing municipal overburden. The following conclusions are reported: (1) m/o does not influence the demand for expenditure on education are demand for municipal services and demand for education are influenced by much the same factors, so that where the demand for one is high the demand for the other is also likely to be high; (3) demand for education behaves similarly to demand for any other good in that the quantity demanded responds positively to income and negatively to price, with elasticities that are within the expected range for a good that absorbs an appreciable fraction of income, for which quantity can be varied, and for which there are substitutes; (4) proxies for preferences also play expected roles; (5) federal and state aid influence demand for education in ways that are not satisfactorily explained by either the income-constraint expanding role or the "flypaper" mode; and (6) none of the forces often alleged to lead "inexorably" to high expenditures for municipal functions is found to do so. Two tables of statistical data are included. A discussion of the methodology used to estimate the demand for municipal services, details of the regressions used as tests of the municipal overburden hypothesis, and a list of five references are appended. (FMW)