Legal constraints and the choice of educational grant structures

Abstract: Recent empirical work suggests that legal constraints are significant in choosing state educational grant structures. Unfortunately, the literature has not taken such constraints into account, thus calling into question particular grant structure recommendations. This paper studies the conditions under which a legislature, under order to reform its educational grant structure, prefers foundation grants over district power equalization grants. A theoretical model is presented in which the choice is shown to depend on the legal basis of the court's decision, and the empirical validity of this conclusion is demonstrated using Connecticut data and a separate model of school district expenditure choice. Article: Introduction This paper studies the conditions under which a legislature, confronted with a court order to reform its educational grant structure, prefers a district power equalization (DPE) grant structure over a foundation grant structure. DPE grants, which became popular as a result of the Serrano case 1 and the controversy over funding equity in public education, provide local school districts with more equal per-pupil tax bases. Foundation grants, which were in use long before the equity controversy arose, provide local school districts with a lump-sum perpupil grant. The literature on this issue has generally focused on assessing the effect of alternative grant structures on local school-district spending behavior but not on the choice of grant structures themselves. Early work concluded that DPE grant structures were neither neutral in their effects However, the more common argument was that some version of a foundation grant structure would be more effective, less expensive, and therefore more desirable 2 More recent empirical work 5 To address this failure, this paper presents a theoretical model of grant structure choice based on Leyden's (1992a) work on legislative response to court mandates. 6 Then, using data from Connecticut's 1980 experience with educational grant structure reform, the empirical validity of the model is tested by estimating a separat

Modified Quadratic Hill-Climbing with SAS /IML

This article describes EZClimb, a set of SAS/IML steps useful in solving numerical optimization problems. The program uses the method of modified quadratic hill-climbing with either analytical or numerical derivatives to maximize a user-defined criterion function. Modified quadratic hill-climbing is one of the more powerful algorithms known for function optimization but is not widely available outside of the software package GQOPT. The efficacy of the SAS steps is illustrated using Rosenbrock's function, Savin and White's Box-Cox extended autoregressive model, and Klein's Model

Intergovernmental grants and successful tax limitation referenda

Analyses of fiscal limitation referenda have typically ignored the role of institutional structure in referenda outcomes. This article demonstrates the importance of such structure through the investigation of intergovernmental grants in a model of federal tax rate determination. Tax limitation referenda are shown to depend upon both the use of tax rates as a grant disbursement criterion as well as the size of the proposed tax cut

Familiarity and Group Productivity

The effects of familiarity on group productivity were examined. Familiarity refers to the specific knowledge workers have of their jobs, co-workers, and work environment. In this study of coal-mining crews, absenteeism led to staffing changes that affected the level of familiarity in the work group. Data from 26 crews in two underground coal mines indicate that lower levels of familiarity are associated with lower productivity

Legal constraints and the choice of educational grant structures

Recent empirical work suggests that legal constraints are significant in choosing state educational grant structures. Unfortunately, the literature has not taken such constraints into account, thus calling into question particular grant structure recommendations. This paper studies the conditions under which a legislature, under order to reform its educational grant structure, prefers foundation grants over district power equalization grants. A theoretical model is presented in which the choice is shown to depend on the legal basis of the court's decision, and the empirical validity of this conclusion is demonstrated using Connecticut data and a separate model of school district expenditure choice

Donor Determined Intergovernmental Grants Structure

The lack of simple language to describe the structure of intergovernmental grant programs and a failure to recognize that such programs are chosen by legislators whose preferences differ from those of recipients has led o an inability to develop a theory of why intergovernmental grants exist and why grant programs take the forms that they do. By reducing the complexities of grant programs o a simple structure of rates bases, and purposes, this article is able to provide a conceptual framework for viewing individual grant programs as components of a comprehensive intergovernmental grants structure chosen through a legislative process in which individual legislators have preferences that are distinct from those of their recipients. Administrative costs play an important role in keeping the resulting grants structure simple, and the existence of categorical grants is shown to depend on the existence of spillover effects, fiscal illusion, or political asymmetry

Knowledge spillovers, collective entrepreneurship, and economic growth: the role of universities

To improve our understanding of the role that universities play in facilitating the transmission of knowledge to private-sector business enterprises so as to generate economic growth, this article builds on the Knowledge Spillover Theory of Entrepreneurship to develop a formal model of university-with-business enterprise collaborative research partnerships in which the outcome is both mutually desirable and feasible. This model shows that if a university seeks to act as a complement to private-sector collaborative R&D so that it will be attractive to both incumbent firms and startup entrepreneurs, it needs to structure its program so that business enterprise revenues increase and business enterprise R&D costs rise by a smaller proportion than revenues increase, if they rise at all (and a fall would be better). Such a structure is consistent with both business enterprise and university interests, but is only likely to be feasible if the university is subsidized to cover the cost of such public-private collaborative research partnerships. In the absence of such support, the university will have to cover its costs through a fee charged to participating business enterprises and that will result in the university being seen as a substitute rather than a complement to private-sector collaborative R&D, and thus the university will be seen as an unattractive partner for many business enterprises

The effects of governmental financing on firms' R&D activities: a theoretical and empirical investigation

There is a long history of governmental support for private innovative activity in the U.S.A. However, the economic research on this topic has been narrow in focus, emphasizing primarily the relationship between the level of governmental R&D and the corresponding (in a causal sense) level of private R&D. In this paper, we explore the effects of governmental financing on another aspect of private innovative behavior—the sharing by firms of innovation-related knowledge. Based on a simple model of private innovative activity in the face of an exogenous governmental R&D contracts/grants structure, we find, among other things, that governmental R&D allocations spur industrial R&D laboratories toward greater sharing of their innovation-related knowledge

Research risk and public policy in a knowledge-based economy: the relative research efficiency of government versus university labs

This paper contributes to the burgeoning literature about the knowledge economy by addressing the question of which intellectual-based institutions in an economy contribute the greatest amount to economic growth. In particular, we posit a theoretical model that compares the research efficiency of government research labs to university research labs. We conclude that there is merit in shifting public moneys from government research labs to university research labs from an efficiency perspective. This result opens the door for empirical research on relative research efficiencies and the implications for efficiency gains on economic growth

Regional Appropriation of University-Based Knowledge and Technology for Economic Development

Economic development practitioners and scholars recognize the link between universities and regional economic development. It is predicated on the spillover of knowledge from universities to commercialization. The literature has focused on the supply side, which involves university research and technology transfer mechanisms. We examine the role played by the demand for university-based knowledge and university-developed technology. We identify links between businesses and the university as a key conduit facilitating the spillover of knowledge using data on the Department of Energy’s Small Business Innovation Research (SBIR) program. We provide supply-side evidence on university research relationships and how the use of knowledge and technologies that flow from a university affect economic growth. We identify the role that SBIR-funded businesses play in the spillover of knowledge from the creating organization to where that knowledge is used and commercialized. Our results suggest that knowledge is systematically transmitted through university-related research