The Supply and Cost of Education and the Vote: A Political-Economic Theory of School Finance Elections.

The recent marked increase in voter-taxpayer rejection of school budget and school bond issues at polls across the United States -- a phenomenon popularly called the "taxpayers' revolt" -- has given rise to the widespread claim that public school finance is in a state of crisis. This paper develops a simplified model of a political marketplace, linking together individual demand for a public good and the vote in fiscal elections to set the supply and the tax-cost of such a good, where both the system of elections and the system of taxation are taken as givens. Data from school budget elections in Oregon are applied to the model and the demand for education under varying tax-cost conditions and overtime in Oregon is estimated. The resultant analysis leads to a markedly different interpretation of the increase in rejection of school finance proposals than that of a "taxpayers' revolt." Moreover, the analysis traces directly the linkage between demand for education and the tax-cost of education and indirectly the linkage between demand for education and the quality or valuation of education. Such findings have major implications in assessing the present state of public school finance and in formulating public school finance policy. (Author)