States and school finance

In the US, the share of school district revenues that state and local governments provide for K-12 has changed significantly over the last century. Historically, K-12 education was highly decentralized and funded largely by property taxes of local governments. States played only a supporting role. Today, states, which obtain the biggest portion of tax revenues from income and sales taxes, play a large and increasing role in school funding. This paper uses a hybrid Tiebout model to analyze the impact of the education finance policy change in a general equilibrium framework.