Financial Inequity in Basic Education in Selected OECD Countries

This is a study of financial disparities in primary and secondary education in OECD countries that have a relatively large population and a school finance system with decentralized features. These countries include the United States, Britain, Australia, Spain, Canada, and Japan. There are two major research questions: What are the trends in disparities in per-student education spending during the 1990s and early 2000s period? What government policies or factors may explain these trends? Common statistics such as the coefficient of variation, the restricted range, the federal range ratio, and Gini coefficient are used to measure disparity in per-student spending. Sub-national data for this study are obtained from published government sources. There are three major findings: (1) there was a general trend towards a reduction in inequity in per-student education spending in these countries; (2) this equalization trend was associated with a variety of financing policies implemented in these countries; and (3) a larger share of regional government funding relative to the share of local government funding, intergovernmental transfer, and the design of school funding formulas are crucial factors for enhancing equity in education funding. The policy towards centralization in education finance system also appears to be an important factor in financial equalization.