The Federalist Voter : Education Finance Reform in California

Abstract

The literature on direct democracy presents a false assumption that its institutions create good governance. A study on education finance reform in California (1978‐2012) illustrates the paucity of support for this assertion. This paper shows that voter‐determined fiscal policy had not only crippled the California budget but also reduced the quality of public education. The externalities caused by state and municipal fiscal tribulations altered the balance of power in California regarding the responsibility for education finance. Before 1978 this was largely a local matter; feedback effects caused by voter trends in supporting lower taxes and education funding centralized the state role by controlling expenditures, while diminishing the states ability to meet its basic obligations ‐ resulting in increased reliance on federal block grants and direct to local funding. While voters do not vote with federalism in mind, the results of their actions increased federal encroachment into state and local education.