FISCAL CAPACITY: THE ABILITY TO FUND EDUCATION

Capacity reveals the ability of a locality, state, or nation to fund those services it deems important. Fiscal

capacity can be defined as the tax base of a locality, a state, or a nation as measured by some form of

economic income or wealth. Capacity can be measured using various methods. For example, a county’s fiscal

capacity might be measured by residents’ per capita property value or per capita income. At the state level,

fiscal capacity may be represented by state residents’ per capita income or the gross state product. As a

nation, we can examine fiscal capacity by comparing our gross domestic product (GDP) to that of other

nations. Depending on the criteria used—property, income, and/or GDP—widely varying levels of capacity may result.

It is helpful to think of capacity and effort as a two-axis construct (see Figure 6.1). On the vertical axis,

capacity ranges from low to high. On the horizontal axis, effort ranges from low to high. This yields four

quadrants within which various levels of funding education systems may fall. For example, government entities

may possess or have access to a great deal of capacity, yet choose not to fund education commensurate with that capacity. On the other hand, localities may have moderate or low capacity but decide to put more effort into funding education programs.

Obviously, not all localities within a state have the same fiscal capacity. Some localities are relatively

wealthy while others struggle to keep the lights on in the municipal building. Yet communities and policy

makers expect school districts to raise the achievement of students in all subgroups—affluent, middle-class,

low-income, minority, students with disabilities, and English language learners—to the same high state

standards. Financially struggling localities, however, cannot be expected to bring the same level of resources to the table as wealthy localities do.