A study to compare the wealth of a central city school district with surrounding suburban school districts

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1975

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Abstract

Purpose The purpose of this study was to make a definitive comparison of the wealth to support education in a selected central city school district with surrounding suburban school districts. Procedures The data for the study included records and reports submitted to various agencies by individual school districts of Texas in the form of financial statements attesting to the fiscal conditions of the respective school districts for the school year 1971-1972, and relevant records and reports of state, county, and federal government agencies. To analyze the data, three models were developed. The Revenue and Drain Model was constructed to show, the available wealth per average daily attendance between the districts compared considering all local taxes and liabilities. The Absolute Wealth Model was constructed to show the wealth of one district when compared with other districts in terms of current market value of taxable real property per average daily attendance. The Illustrative Tax Model was designed to show the potential yield per average daily attendance of a balanced local taxing plan in the twenty-six school districts compared. Hypotheses and Findings On the basis of this investigation, the following hypotheses were proven true or false: (1) The full value of real taxable property per pupil is greater in the suburbs than in the central city. The hypothesis was proven false, because the full value of real taxable property per pupil in the central city was $61,670; and the full value of real taxable property per pupil in the combined suburban districts was $57,793. (2) Income per household or per family is greater in the suburbs than in the central city. The hypothesis was found to be true, because the mean family income in the combined suburban districts in 1970 was $11,424 and the mean family income in the central city was $10,580. (3) Expenditures for community services and the cost of local government services per pupil are greater in the central city than in the suburbs. The hypothesis was found to be true, because the expenditures for community services and the cost of local government services per pupil for the central city in 1972 was $534; and the expenditures for community services and the cost of local government services per pupil in the combined suburban districts was ,$89. (4) The potential yield from a 6 percent tax on retail sales per pupil is greater in the central city than in the suburbs. The hypothesis was found to be false, because the potential yield from a 6 percent tax on retail sales per pupil in the suburbs was $908; and the potential yield of the same tax in the central city was $774. (5) The potential yield from a $4 per $100 assessed valuation tax on real property per pupil is greater in the suburbs than in the central city. The hypothesis was found to be true, because the potential yield from a $4 per $100 assessed valuation tax on real property per pupil in the suburbs was $1,238, and the potential yield from the same tax in the central city was $987. (6) The potential yield from a 1 percent tax on family income is greater per pupil in the suburbs than in the central city. The hypothesis was found to be false, because the yield per pupil from the illustrative 1 percent tax in the central city was $169, and the yield per pupil from the same tax in the suburbs was $73. Conclusions On the basis of the findings of this investigation, it was concluded that the central city school district (Houston, Texas) had more wealth to support education than did the combined suburban districts. A definitive comparison was achieved by applying three independent measures of effective wealth. The Absolute Wealth Model and the Revenue and Drain Model came out with the same answer, that the central city had more wealth to support education than did the combined suburban districts. The Illustrative Tax Model was incomplete but appeared to give slightly the opposite conclusion. The study demonstrated that individual districts can be ranked and compared with respect to their wealth by the absolute wealth method based on full valuation of taxable property. The study also specified eight areas where additional research is needed.

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